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TMI Blog2021 (1) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... Urban Development instead of relying on the documents (sale deed) provided by the Department of Archives for (land cost, Cost of construction and cost of improvement) in vicinity of Kalkaji itself. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the cost of Construction of the property in the hands of the assessee should have been taken at NIL. 3. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) erred in holding that number of residential units in a residential building is not relevant for granting exemption U/S 54 ignoring the specific amendment made by Finance Act, 2014." 3. Appellant, Dr. (Mrs.) Kusum Nangia (hereinafter referred to as 'the assessee') by filing the present appeal sought to set aside the impugned order dated 31.10.2019 passed by the Commissioner of Income-tax (Appeals)-43, New Delhi qua the assessment year 2016-17 on the grounds that :- "1. The CIT (Appeals) erred in law and on facts in recomputing the additions made for Long Term and Short Term Capital Gains at Rs. 54,04,128/- and Rs. 58,45,500/- respectively without appreciating that neither any property was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 25,00,000/- from the builder. AO during scrutiny proceedings called upon the assessee to show cause as to why the cost of construction of remaining building borne by the builder should not be included in computation of sale consideration. Declining the contentions raised by the assessee, AO made addition of Rs. 6,47,14,523/- by way of declining exemption u/s 54 of the Income-tax Act, 1961 (for short 'the Act') claimed by the assessee and added the amount to the total income of the assessee as long term capital gain. AO also made addition of Rs. 1,36,03,950/- on account of short term capital gain on sale of flats. 5. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has partly allowed the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), both assessee as well as the Revenue has come up before the Tribunal by way of filing the present cross appeals. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. At the very outset, ld. AR for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R for the assessee challenging the assumption of jurisdiction by the AO/ACIT, Circle International Tax 2(2)(2) contended that when the assessee is a non-resident Indian residing in the USA, which is evident from the Income-tax return filed by the assessee for the year under assessment available at pages 74 to 76 of the paper book, notice u/s 143 (2) of the Act in this case was issued by ITO, Ward 52(2), Delhi which was required to be issued by ITO, (International Taxation) and as such, the entire assessment proceedings are void ab initio. However, on the other hand, ld. DR for the Revenue relied upon the order passed by the AO as well as ld. CIT (A) so far as jurisdiction is concerned and contended that when assessee has duly participated in the assessment proceedings, he has no right to challenge the jurisdiction at this stage. 11. To proceed further, impugned notice issued u/s 143(2) of the Act to initiate the assessment proceedings is extracted for ready perusal as under :- "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD 52(5), DELHI TO, KUSUM NANGIA C/O M/S P N Khanna and Co. C/o. M/s P N Khanna and Co., Shiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no jurisdiction to issue the same. On the basis of notice issued u/s 143 (2) (supra) by the non-jurisdictional AO, the subsequent assessment proceedings on the basis of which assessment order dated 30.12.2018 was framed by the jurisdictional ITO are void ab initio and bad in law. Particularly when AO in para 3 of the assessment order has himself admitted that assessee is a non-resident Indian living in USA. 13. Now, the question arises for consideration is :- "as to whether issuance of notice u/s 143(2) is a mere irregularity curable u/s 292BB of the Act or an illegality making the entire assessment proceedings bad in law?" 14. We are of the considered view that by now, it is settled principle of law that assuming wrong jurisdiction by issuing notice u/s 143 (2) by a non-jurisdictional AO and then framing the assessment by jurisdictional AO is an illegality which is not curable under the law and makes the entire assessment proceedings void ab initio. As per instructions issued by the Central Board of Direct Taxes (CBDT), ITO, International Taxation, Ward 2(2)(2) have the jurisdiction u/s 143 (2) and not the ITO, Ward 52 (5). CBDT issued instructions pursuant to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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