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TMI Blog2025 (2) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... ect in terms of the Income Tax Act. We find force in the contention of the ld. A/R. Therefore, notice under section 148 and consequent proceedings undertaken on the strength of such illegal notice are quashed. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... delay of 21 days caused may kindly be condoned. 3. Considering the reasons mentioned in the said application, we feel that the reasons mentioned by the assessee constitute sufficient cause for not filing the appeal within the time before us. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay of 21 days in filing the appeal before us. 4. The brief facts of the case are that the assessee is an Individual and was residing in Delhi. During the year under consideration the assessee had income from professional receipt from the company named Synergy Property Development Services Pvt. Ltd., Delhi. The assessee did not file his return of income under section 139(1) of the I.T. Act, 1961 for the relevant year. The case of the was reopened under section 147 of the Act on the basis of information about professional receipt of Rs. 19,75,000/- and credit card bill payment of Rs. 2,89,995/-. Notice under section 148 of the IT Act, dated 25.03.2017 was issued and served on the assessee. In response to the notice, the assessee filed his return of income on 23.04.2017 decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, while filing his income tax return in response to the notice u/s 148 of the act mention his address of Delhi, which comes under the territorial jurisdiction this address is belonged to the Income Tax Officer Ward 70(3) New Delhi. Further, it is worth mentioning here that this address of Delhi is being quoted continuously by the assessee appellant from long time on his all statutory documents including Income Tax Return as the assessee is an Income Tax payer since long back and filling his Income Tax return from many years on the address belonged to Delhi and mentioned in point number (iii) of this ground copies of Acknowledgment of Income Tax Returns (ITR V) since AY 2010-11 to 2019-20 are being annexed with the submission at (ANNEXURE 2 & 4) PB "18-46"for your kind perusal. Further we submit that the assessee is an individual and therefore territorial jurisdiction should be followed according to under section 124 of the Income Tax Act, 1961. From the perusal of the documents and other material as available on record it is very much clear that assessee is an Individual and carrying out his professional activities from Delhi at above mentioned address and residing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax authority authorised by it may have regard to any one or more of the following criteria, namely :- (a) territorial area ; (b) persons or classes of persons ; (c) incomes or classes of income ; and (d) cases or classes of cases. 124. Jurisdiction of Assessing Officers.- (1) Where by virtue of any direction or order issued under sub-section (1) or subsection (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. (2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Principal Director-General or the Principal Chief Commissioner or the Principal Commissioner; or where the question is one rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 2012 as her father was a Central Government employee, then posted in Mumbai. According to assessee, she initially migrated to New Delhi in the year 2012 and then to Bangalore in the year 2015 on account of her marriage. She is a practising lawyer practising at Bangalore. It is also a matter of record that the first return of income was filed by the appellant relevant to assessment year 2016-17, as according to her, in the prior years she had no taxable income. The assessment which is subject matter of challenge in this appeal is for assessment year 2017-18. It is further undisputed that the assessee upon receipt of notice under Section 143(2) of the Act had raised an objection to the territorial jurisdiction of AO within 30 days as mandated by Section 124(3) of the said Act. The record further discloses that she had also made request for change of address/migration of PAN to Bangalore on the basis of her residence/place of profession. The address was changed in the records prior to passing of the assessment order and subsequent thereto, the PAN has been migrated on 26.02.2021. The record also discloses that notices were served to the appellant on her Bangalore address. Thus, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act extends to Ward D of the Municipal Corporation of Greater Mumbai, excepting the areas set out in the said notification. We, therefore, find that the AO of Ward 19(2)(4), Mumbai lacked territorial jurisdiction to pass the impugned assessment order. As noticed earlier, it is not in dispute that such an objection was raised within the stipulated time and was not dealt with by the AO. 14. A perusal of para 5 of the order of CIT(A) would also go to show that CIT(A) has not dealt with this aspect, inasmuch as ground nos. 1 and 2 were separate and distinct grounds, than those on merits and thus, the disposal of the grounds on merits cannot "amount to disposal" of grounds nos. 1 and 2 as held by the CIT(A). 15. In the view which we are inclined to take, it is not necessary to multiply authorities on the point. However, a brief reference can be made to the decision of Hon'ble Madras High Court in Abdul Azeez Haroonvs DCIT (IT) [2020] 115 taxmann.com 289 (Madras) and the decision of Pune Bench of this Tribunal in Capstone Securities Analysis Pvt. Ltd. vs. Dy. Commissioner of Income Tax, Circle1(1), Pune [2017] 85 taxmann.com 270 (Pune - Trib.) (supra) which has been confirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or migration of PAN are not strictly relevant in the matter where the jurisdiction is governed by the statutory provisions as contained in Section 120 read with Section 124 of the Act and the notification issued by the Board. 20. Thus, in our opinion, the appeal has to succeed on ground nos. 1 and 2 alone. The appeal accordingly stands allowed as aforesaid. Order pronounced in the open court on 15/01/2024." In the matter of Bidi Supply Co. v. Union of India (1956) 29 ITR 717 (SC), the Constitution Bench has held that; (a) that the order of transfer, which was expressed in general terms without any reference to any particular case (i.e. assessment year) and without any limitation as to time, was not contemplated by section 5(7A) and was beyond the competence of the Central Board of Revenue; the sub-section contemplated only the transfer of an assessment case for particular year actually pending before an Income-tax Officer; (b) that the petitioner was, therefore, entitled to the benefit of the provisions of section 64(1) and (2) and had the right along with other bidi merchants to have its assessment proceedings before the Income Tax Officer of the area in which its pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has made payment for credit card bills of Rs. 2,89,995/- and received fees for professional or technical services for Rs. 19,75,000/-, and the above amount was treated by the Ld. AO as unexplained income merely on the basis of AIR information while the assessee has filed his Income Tax Return under section 148 and duly declared his income as also shown in Form 26AS. The Ld. AO has made the addition without making further enquiry and without applying their mind. The Ld. AO arbitrarily issued notice u/s 148 by becoming a part of mechanical process where he did not apply his mind for taking the decision whether this case is fit for issuing notice under section 147/148 or not. Further, the impugned initiation of assessment proceedings had started by the Ld. AO on borrowed satisfaction but not their own which is mandatory condition of the law as provided for re -opening of any assessment, section 147 of Act clearly specify. In the instant case the Ld. AO had claimed that assessee received income from professional services and paid some credit card expenses on the basis of AIR but could not conduct any enquiry regarding both the facts and without conducting any enquiry/inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case the Ld. AO has grossly erred in initiating the section 147 as the initiation is based on the borrowed satisfaction therefore being a hyper mechanical proceeding without application of mind of Ld. AO, it should be quashed. Submission; In the impugned case the Ld. AO has reopened the case merely on the basis of information as received from AIR and further no enquiry has been done on behalf of the Ld. AO thus the reopening is completely based on the borrowed satisfaction which is also not based on tangible material. Further after going through the reasons recorded by the Ld. AO/ACIT, Circle-I, Jaipur for reopening and the approval thereof by the Ld. Pr. Commissioner of Income tax-I, it is noted that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has been escaped by the assessee during the year under consideration. Interestingly, reason are vague and are not based on any tangible material as well as are not acceptable in the eye of law. The AO has mechanically issued notice u/s 148 of the Act, on the basis of information as received from Annual information return (AIR). Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee encountering the assessment order as invalid and beyond jurisdiction. It is noted on perusal of the reasons recorded and approval u/s 151 by the competent authority indicates that Pr. CIT has not applied his mind on the reasons recorded by lower authorities and he has only expressed or mentioned 'Yes' on the reason forwarded (PBP-5). It is worthwhile to mention that as per decision of Hon'ble Delhi High Court in the case of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 where in it has been held that Section 151 of the Act clearly stipulates that the CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' or 'Yes' says nothing. It is not as if the CIT has to record elaborate reasons for agreeing with the noting put up before him. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning u/s 147 of the Act. Thereafter the AO framed assessment u/s. 144 r.w.s. 147 of the Act by making addition of Rs.1,15,00,000/- and the ld. CIT(A) upheld the order of AO. Before us the ld. A/R has drawn our attention to the reasons recorded and satisfaction of the Pr. CIT and Addl. CIT placed at page No. 10-11 of the assessee's paper book where the Addl. CIT has mentioned only "Recommended" and Pr. CIT has mentioned only "Yes", which shows no application of mind and proper satisfaction by them on the reasons recorded by the AO. In this regard, we draw strength from the decision in the case of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 Del HC wherein it has been held that Section 151 of the Act clearly stipulates that the CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance notice 148 of the Act and all the consequent proceedings and assessment order passed was not in accordance with law. The case laws relied upon by the ld. DR are not tenable in the facts and circumstances of present case, therefore, considering the totality of facts and circumstances of the case as well as the judicial pronouncements qua the issue under consideration, we find merit in the contention of the ld AR, therefore, we quash the proceedings U/s 147 of the Act. Once, we quash the proceeding U/s 147 of the Act, therefore, there is no need to adjudicate the other grounds raised in this appeal." Hence, in view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be not a reason to issue notice under Section 148. Further, the Commissioner had noted the word 'Yes' as an approval without anything more. Honorable Madhya Pradesh High Court in the matter of CIT VS. GOYANKA LIME & CHEMICAL LDT. has held that; "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- "The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material." 8- If the case in hand is analysed on the basis of the aforesaid principle, the mec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO made an opinion on the basis of information as received by him without providing opportunity of being heard and violated the fundamental right of assessee appellant. Cross examination is fundamental right of the assessee, specially where a huge addition is being done on the basis of AIR and such information are not related as unexplained income. (iii) Here it is noted that the evidence collected by the department is not worthy of credence as there is no independent evidence on the record, therefore, we are of the view that addition with the help of this much information cannot be made. Therefore, addition made is not sustainable in law. (iv) It is necessary in the interest of justice that all relevant evidence must be submitted, the party must be informed on the evidence on which reliance is placed and to allow witnesses to be questioned and to allow evidence and cross-examination on the same. (v) Any statement which is recorded by the Department, an assessee is entitled to get the copy of the statement/information so collected, using evidence behind the back of the assessee is against the principles of natural justice. Also where copies of reports or documents or statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported the order of the ld. CIT (A). Ground No. 1 7. We have heard the rival submission and perused the material on record. We note before the Ld CIT(A), the assessee has challenged the notice under section 148 on the ground of jurisdiction. The ld. AR for the assessee submitted that the assessee has been residing at Delhi and also carrying on his professional activities from Delhi only since last so many years. In support of the same, he has provided the copies of ITR acknowledgements of the assessee from the assessment years 2010-11 to 2019-20 and has also provided copy of bank statement for the period from 01.04.2009 to 31.03.2010, wherein the address of the assessee has been mentioned as C-70, Shakti Nagar Extension, Delhi-110 052.Further We note The ld. A/R submitted that the notice under section 148 of the IT Act which has been issued by ACIT Circle-1, Jaipur is without jurisdiction. By virtue of section 124 of the IT Act, 1961 it comes under the territorial jurisdiction of ITO Ward 70(3), Delhi, therefore, the jurisdiction of the case of the assessee lies with ITO Ward 70(3), Delhi. In support of his contention, he has relied on the order of the Coordinate Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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