2023 (3) TMI 1242 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - issue of notice by non-jurisdictional officer - validity of the jurisdiction that was assumed by the AO for framing of assessment u/s 144/147 - ITO, Ward- 1(3), Bhilai Jurisdiction to issue notice - whether or not the ITO, Ward-1(3), Bhilai had validly initiated proceedings in the case of the assessee and issued notice u/s.148 dated 09.03.2018? - HELD THAT - The very basis for transferring of the case of the assessee for the year under consideration i.e. A.Y.2013-14 by the ITO, Ward-1(3), Bhilai to the ITO, Ward-2(2), Bhilai was the fact that in light of Notification No.01/2014-15 dated 15.11.2014 of the JCIT, Range-2, Bhilai, the jurisdiction over the case of the assessee was with latter i.e. ITO, Ward- 2(2), Bhilai. On the basis of the aforesaid admitted fact, we are unable to fathom that now when the ITO, Ward-1(3), Bhilai had admitted vide his letter dated 10.04.2018 that pursuant to Notification No.01/2014-15 dated 15.11.2014 of the Joint Commissioner of Income Tax, Range-1, Bhilai, the jurisdiction over the case of the assessee remained with the ITO, Ward-2(2), Bhilai, then on what basis he had issued notice u/s.148 of the Act dated 09.03.2018. It is neither the case of the department nor a fact discernible from the records that at any point of time the jurisdiction over the case of the assessee was either transferred to; or had remained vested with the ITO, Ward-1(3), Bhilai. Now when the ITO, Ward-1(3), Bhilai did not have any jurisdiction over the case of the assessee as on 09.03.2018, i.e. the date of issuance of the notice u/s.148 of the Act, therefore, the inescapable view that can be drawn therefrom is that he had wrongly assumed jurisdiction and initiated proceedings u/s.147 of the Act in the case of the assessee under consideration. When the assessee has assailed the framing of the assessment u/ss.144/147 dated 07.12.2018 on the ground that the initiation of proceedings u/s.147 of the Act by the ITO, Ward-1(3), Bhilai is without authority of law and, therefore, wholly without jurisdiction, the aforesaid objection of the Ld. DR that the failure on the part of the assessee to call in question the jurisdiction of the A.O within the time limit prescribed under sub-section (3) of Section 124 cannot be accepted. Assessment framed on the basis of reasons to believe dated Nil a/w. notice u/s.148 issued by the ITO, Ward-1(3), Bhilai, i.e. a non-jurisdictional Officer, cannot be sustained and is liable to be quashed. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the assessment made under Section 144/147 of the Income-tax Act, 1961 without service of jurisdictional notice under Section 148.
2. Confirmation of addition of Rs.10,24,050/- being 75% of the total deposit of Rs.13,65,400/- in the bank account.
3. Jurisdiction of the Assessing Officer (A.O) in framing the assessment order.

Summary:

Issue 1: Validity of Assessment Without Jurisdictional Notice under Section 148
The assessee contended that the assessment made under Section 144/147 without proper service of jurisdictional notice under Section 148 was erroneous. The Tribunal noted that the ITO, Ward-1(3), Bhilai, initiated the proceedings and issued notice under Section 148 on 09.03.2018. However, the jurisdiction over the assessee's case was vested with ITO, Ward-2(2), Bhilai, as per Notification No.01/2014-15 dated 15.11.2014. The Tribunal concluded that the ITO, Ward-1(3), Bhilai lacked jurisdiction to issue the notice under Section 148, making the initiation of proceedings under Section 147 and the subsequent assessment order invalid.

Issue 2: Confirmation of Addition of Rs.10,24,050/-
The CIT(Appeals) confirmed the addition of Rs.10,24,050/- being 75% of the total deposit of Rs.13,65,400/- in the assessee's bank account, considering it as unexplained income. The Tribunal did not address this issue in detail as it quashed the assessment order on jurisdictional grounds.

Issue 3: Jurisdiction of the Assessing Officer
The Tribunal examined whether the ITO, Ward-1(3), Bhilai, had the authority to initiate proceedings and issue notice under Section 148. It was found that the jurisdiction over the assessee's case was with ITO, Ward-2(2), Bhilai. The Tribunal emphasized that a notice issued by an officer without jurisdiction is null and void. The Tribunal referred to various judicial pronouncements, including the Hon'ble Supreme Court and High Courts, to support its conclusion that the assessment framed by an officer lacking jurisdiction is unsustainable.

Conclusion:
The Tribunal quashed the assessment order dated 07.12.2018 passed under Sections 144/147 due to the invalid assumption of jurisdiction by the ITO, Ward-1(3), Bhilai. Consequently, the appeal of the assessee was allowed, and the other contentions regarding the merits of the case were left open. The order was pronounced in open court on 27th March 2023.