2024 (1) TMI 968 - AT - Income Tax

Validity of re-assessment proceedings - jurisdiction to issue notice - Validity of notice u/s 143(2) as issued by the ITO, Ward 33(2)(3) who was not empowered - HELD THAT - As decided in Ashok Devichand Jain 2022 (3) TMI 1466 - BOMBAY HIGH COURT as also dealt with the Instruction No.1/2011 dated 31/01/2011 issued by the CBDT which is also under consideration before us and notice u/s 148 of the Act is also a statutory and jurisdictional notice and, therefore, goes to the root of the assessment. The Hon ble High Court has clearly held that ITO who had issued the notice u/s 148 of the Act had no jurisdiction over the petitioner. The notice u/s 148 of the Act is a jurisdictional notice and any inherent defect therein is not a curable one. We further observe that Tribunal in the case of Ketan Tokershi Shah 2023 (8) TMI 874 - ITAT MUMBAI also dealt with the identical issue and the Instruction No.1/2011 as well and following the judgment in the case of Ashok Devichand Jain vs UOI Ors 2022 (3) TMI 1466 - BOMBAY HIGH COURT held the assessment completed u/s 143(3) of the Act by issuing notice u/s 143(2) of the Act by the DCIT, Central Circle-2, Thane as without jurisdiction and consequently quashed the assessment. We further observe that the jurisdictional co-ordinate bench in the case of DCIT Vs Parmar Built Tech 2022 (9) TMI 1547 - ITAT MUMBAI also dealt with the identical issue and by following the judgment of Ashok Devichand Jain (supra), quashed the assessment order in the identical facts. As observe that in the case of Bhagyalaxmi Conclave Pvt Ltd 2021 (2) TMI 181 - ITAT KOLKATA also dealt with the notice issued u/s 143(2) of the Act and ultimately held the notice issued by the DCIT as defective and consequently quashed the assessment by holding that the assessing authority, who passed the order u/s 143(3) i.e. DCIT-13(1), Kolkata has not issued notice u/s 143(2) of the Act and also for the reason that the jurisdiction of these cases lies with the ITO and not the DCIT. It is trite to say that as per dictum in the case of ACIT VS Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT the notice under section 143(2) of the Act is mandatory for making the assessment and therefore the same is required to be issued by the Assessing Officer, who has jurisdiction and is empowered to issue the notice under section 143(2) of the Act and to make the assessment. Hence, considering the peculiar facts and circumstances in totality specific to the effect ITO who issued the jurisdictional notice u/s 143(2) had no jurisdiction and infact was not empowered to make the assessment, and therefore respectfully following the dictum laid down by Hon ble High Court in Ashok Devichand Jain case (supra) to the effect that inherent defect is not curable , we do not have any hesitation to quash the assessment proceedings. Consequently, the assessment order itself is quashed.

Summary

Issues Involved:
1. Applicability of Section 43CA of the Income-tax Act, 1961.
2. Jurisdictional validity of the notice issued under Section 143(2) of the Income-tax Act, 1961.

Summary:

1. Applicability of Section 43CA of the Income-tax Act, 1961:
The Assessee declared an income of Rs. 67,94,660/- for A.Y. 2014-15, which was processed under Section 143(1) of the Act. The case was selected for scrutiny, and the Assessing Officer (AO) made an addition of Rs. 2,05,29,102/- under Section 43CA, stating that the market value of the flats as per the stamp duty authority exceeded the agreement value. The Assessee argued that Section 43CA, effective from 01/04/2014, should not apply as the bookings and sales were made before 01/04/2013. However, the Ld. Commissioner upheld the AO's decision, noting that the sales were registered during the relevant year and the Assessee failed to prove that the entire consideration was received through account payee cheques before 01/04/2013. The Commissioner emphasized that the provisions of Section 43CA apply when the sale deed is executed after 01/04/2013, regardless of prior agreements.

2. Jurisdictional Validity of the Notice Issued Under Section 143(2):
The Assessee raised an additional ground challenging the jurisdiction of the notice issued under Section 143(2) by the Income Tax Officer (ITO) Ward 33(2)(3), arguing that as per CBDT Instruction No. 1/2011, only Deputy Commissioners/Assistant Commissioners (DC/AC) are authorized to issue such notices for cases with income above Rs. 30 lakhs in metropolitan cities. The Tribunal found merit in this claim, referencing the jurisdictional High Court's judgment in Ashok Devichand Jain Vs UOI & Ors, which held that notices issued by officers without jurisdiction are invalid. The Tribunal observed that the notice under Section 143(2) was issued by an ITO who lacked jurisdiction over the Assessee's case, rendering the assessment order void. Consequently, the assessment order dated 30/09/2016 was quashed.

Conclusion:
The appeal filed by the Assessee was allowed, as the Tribunal quashed the assessment order on jurisdictional grounds, making it unnecessary to address the merits of the case. The decision was pronounced in the open court on 21/12/2023.