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2022 (12) TMI 1161 - AT - Income TaxReopening of assessment u/s 147 - ITO Raipur jurisdiction over the case of the assessee - addition of bogus purchases - HELD THAT - ITO-1(3), Raipur at the time of issuance of notice u/s.148 was not vested with any jurisdiction over the case of the assessee, which as per the Notification No.1/2014-15 dated 15.11.2014 remained with the ITO-1(1), Raipur, therefore, as the notice u/s.148 issued by the ITO-1(3), Raipur was nothing short of a notice issued by an A.O who lacked inherent jurisdiction, thus, the provisions of Sec. 124(3) could not have been triggered to fasten an obligation upon the assessee to call in question the jurisdiction of the said officer, i.e., ITO- 1(3), Raipur. The reliance placed by the Ld. DR on the judgment of the Hon ble High Court of Delhi in the case of Abhishek Jain Vs. ITO, Ward-55(1), New Delhi 2018 (6) TMI 211 - DELHI HIGH COURT being distinguishable on facts would also not assist its case. As the ITO-1(1), Raipur had framed the impugned assessment u/s.143(3) r.w.s. 147 on the basis of a notice u/s.148 of the Act, issued by the ITO-1(3), Raipur, i.e., an A.O who at the time of issuance of the aforesaid notice lacked inherent jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be quashed. Accordingly, quash the assessment framed by the ITO-1(1), Raipur vide his order passed u/s.143(3) r.w.s. 147 for want of valid assumption of jurisdiction on his part. Decided in favour of assessee.
Issues Involved:
1. Validity of rejecting books of account and applying Section 145(3). 2. Treatment of purchases as bogus and disallowance of 25% of such purchases. 3. Validity of the notice issued under Section 148 by a non-jurisdictional officer. Issue-wise Detailed Analysis: 1. Validity of Rejecting Books of Account and Applying Section 145(3): The assessee challenged the rejection of its books of account under Section 145(3) of the Income-tax Act, 1961, arguing that the Assessing Officer (AO) and the Commissioner of Income-Tax (Appeals) erred in rejecting the books in the absence of multiple defects. The Tribunal did not delve into this issue as it quashed the assessment on jurisdictional grounds. 2. Treatment of Purchases as Bogus and Disallowance of 25% of Such Purchases: The AO treated purchases worth Rs. 7,58,800 from 'Goyal Jute Udyog' as bogus and disallowed 25% of these purchases, amounting to Rs. 1,89,700, based on presumptions and without corroborative evidence. The Tribunal did not address the merits of this issue as the assessment was quashed on jurisdictional grounds. 3. Validity of the Notice Issued Under Section 148 by a Non-Jurisdictional Officer: The core issue was the validity of the notice issued under Section 148 by ITO-1(3), Raipur, who did not have jurisdiction over the assessee at the relevant time. The Tribunal admitted this additional ground as it involved a pure question of law. The Tribunal found that the ITO-1(3), Raipur, issued the notice on 25.03.2018, while the jurisdiction over the assessee was vested with ITO-1(1), Raipur, as per Notification No.1/2014-15 dated 15.11.2014. The Tribunal relied on various judicial precedents, including the Supreme Court's judgment in National Thermal Power Company Ltd. Vs. CIT and the Bombay High Court's judgment in Pavan Morarka Vs. ACIT, to conclude that an assessment based on a notice issued by a non-jurisdictional officer is invalid. The Tribunal held that the assessment framed by ITO-1(1), Raipur, based on the invalid notice issued by ITO-1(3), Raipur, was devoid of any force of law and quashed the assessment. The Tribunal also rejected the Department's argument that the assessee should have challenged the jurisdiction within the stipulated time under Section 124(3), as the notice was issued by an officer who did not have inherent jurisdiction. Conclusion: The Tribunal quashed the assessment framed by ITO-1(1), Raipur, under Section 143(3) read with Section 147, dated 30.12.2018, due to the invalidity of the notice issued under Section 148 by ITO-1(3), Raipur, who lacked jurisdiction. Consequently, the Tribunal did not address other grounds related to the merits of the additions. The appeal of the assessee was allowed based on the jurisdictional issue.
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