2017 (8) TMI 911 - AT - Income Tax

Reopening of assessment - Jurisdictional AO has not issued any notice u/s 148 - Held that - Assessee had its registered office in New Delhi since the date of its incorporation; filing its ITR at New Delhi right since the date of its incorporation and ITR for AY under appeal was filed on 30.11.2006 and PAN details since its incorporation also lies with the Delhi income tax authorities. And based on information received from the ADIT, Faridabad, the AO, Ward 1(1), Faridabad who did not had any jurisdiction over the assessee issued notice u/s. 148 of the Act and also issued notice u/s. 142(1). The Assessee informed the AO about its jurisdiction to be assessed at Delhi and requested for transfer of records at Delhi and accordingly, the case was transferred. Accordingly, the notice u/s.142(1) and 143(2) was issued by the Jurisdictional AO Ward 18(2), New Delhi for the first time on 15.10.2013 and no notice u/s. 148 was ever issued by the jurisdictional AO. Hence, the Ld. CIT(A) s action of confirming the validity of assessment made by the ITO, Ward 28(2), New Delhi without service of valid notice under section 148 is not sustainable in the eyes of law and needs to be quashed. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment based on notice under section 148
2. Additions made on account of purchases from a specific entity
3. Use of alleged statement against the appellant
4. Request for permission to modify grounds of appeal

Issue 1: Validity of assessment based on notice under section 148

The appeal was filed challenging the order passed by the Ld. CIT(A)-22, New Delhi relevant to assessment year 2006-07. The assessee objected to the validity of the assessment made by the ITO, Ward 28(2), New Delhi without proper service of a valid notice under section 148. The AO completed the reassessment despite the objection raised by the assessee. The Ld. CIT(A) confirmed the addition made by partly allowing the appeal of the assessee. The assessee contended that the AO who issued the notice u/s 148 did not have jurisdiction over the assessee, and the reassessment order was without jurisdiction. The Tribunal found merit in the assessee's contention, stating that the reassessment order was invalid as the jurisdictional AO did not issue a notice u/s 148. Citing a precedent, the Tribunal set aside the reassessment order, declaring it invalid and void ab initio.

Issue 2: Additions made on account of purchases from a specific entity

The Ld. CIT(A) confirmed the additions made on account of purchases amounting to ?5,58,076 from a specific entity, considering them as bogus. The appellant raised objections to the validity of these additions and the use of the alleged statement of the proprietor of the entity against the appellant. However, since the Tribunal found the reassessment order invalid based on the issue of jurisdiction, the additions made on merit became academic and were not adjudicated.

Issue 3: Use of alleged statement against the appellant

The appellant argued that the Ld. CIT(A) was not justified in using the alleged statement of the proprietor of the entity against the appellant. However, since the reassessment order was deemed invalid due to the lack of a valid notice under section 148, the issue of using the alleged statement became irrelevant and was not further discussed by the Tribunal.

Issue 4: Request for permission to modify grounds of appeal

The appellant prayed for permission to add, alter, modify, or substitute any or all of the grounds of appeal. However, since the reassessment order was declared invalid, the Tribunal allowed the appeal of the assessee based on the jurisdictional issue, making the request for modifying the grounds of appeal unnecessary.

In conclusion, the Tribunal allowed the appeal of the Assessee, setting aside the reassessment order as invalid due to the lack of a valid notice under section 148. As a result, the additions made on merit were not adjudicated, and the reassessment order, as well as the appellate order, were cancelled.