2018 (11) TMI 1417 - AT - Income Tax

Scrutiny assessment u/s 143(2) - no valid and legal notice u/s. 143(2) being issued by assessee s Assessing Officer (ITO Ward 1(5), Faridabad) as defined in Section 2(7A) - transfer of case u/s 127 - Held that - Since assessee was regularly filing return from AY 2012-2013 onwards at Faridabad same Address so he requested that case should be transferred to Faridabad as jurisdiction lies with Faridabad only due to which case was transferred to Faridabad AO as admitted in first para of AO order, vide order u/s 127 dated 28.03.2017 passed by PCIT Hazaribagh. Without any valid notice issued u/s 143(2) of the Act by Faridabad AO, impugned assessment is framed by ITO Ward 1(5) Faridabad, simply in extension to proceedings initiated by Hazaribagh DCIT Circle 2 who is admittedly not AO of assessee within meaning of section 2(7A) of the Act on date of issue of notice u/s 143(2) of the Act. So on this short count itself impugned proceedings deserves to be quashed being unsustainable in the eyes of law. Thus present assessment is void ab inito, hence, the same is quashed and accordingly, the additional legal ground raised by the assessee is allowed.

Summary

Issues:
1. Validity of assessment under section 143(3) based on notice u/s. 143(2)
2. Admission of additional ground under Rule 11 of ITAT Rules

Analysis:
1. The appeal was filed against the Order dated 12.2.2018 passed by the Ld. CIT(A), Faridabad for Assessment Year 2015-16, primarily challenging the addition of ?40,76,656. The Assessee raised an additional ground under Rule 11 of the ITAT Rules, questioning the validity of the assessment under section 143(3) due to a notice u/s. 143(2) issued by a different Assessing Officer. The Assessee argued that the assessment was void ab initio as the notice was issued by DCIT, Circle 2, Hazaribagh, not the Assessee's Assessing Officer in Faridabad. The ITAT allowed the additional ground, citing legal and jurisdictional significance, supported by relevant case laws, including decisions by the Hon'ble Supreme Court and High Courts.

2. The Assessee contended that the assessment was invalid as the notice u/s. 143(2) was issued by a different jurisdictional officer. The ITAT, after considering the arguments and case laws presented, agreed with the Assessee's position. The ITAT noted that the notice was issued by DCIT, Circle 2, Hazaribagh, while the assessment was conducted by ITO, Ward 1(5) Faridabad. Citing precedents like the Al Faheem Meatex Pvt. Ltd. case, the ITAT held that the assessment was void ab initio due to the lack of jurisdiction of the issuing officer. The ITAT quashed the assessment based on this legal ground, rendering the other grounds on merit irrelevant.

3. The ITAT thoroughly analyzed the facts of the case, highlighting the discrepancy in jurisdiction between the issuing officer and the Assessing Officer who conducted the assessment. The ITAT emphasized the importance of a valid notice under section 143(2) by the correct jurisdictional officer, as per the provisions of the Income Tax Act. Relying on the decisions in similar cases, the ITAT concluded that the assessment in question was unsustainable in the eyes of the law. By following established legal principles and precedents, the ITAT allowed the Assessee's appeal, quashing the assessment and upholding the additional ground raised under Rule 11 of the ITAT Rules.

4. In conclusion, the ITAT's judgment in this case centered on the fundamental issue of jurisdiction and the validity of the assessment process under section 143(3). By meticulously examining the legal aspects and relevant case laws, the ITAT determined that the assessment was void ab initio due to the lack of a valid notice issued by the correct Assessing Officer. This decision highlights the significance of procedural compliance and jurisdictional authority in conducting income tax assessments, ensuring fairness and adherence to legal standards in tax matters.