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2024 (4) TMI 202 - HC - Income TaxValidity of Reopening proceedings - jurisdiction to issue the notice u/s 148A(b) - Petitioner has been filing returns as a Non-resident - notice was issued by Respondent No. 1, Assistant Commissioner of Income Tax, Circle-32(1), Mumbai - information relies on the statement recorded during the course of search and seizure action conducted u/s 132 in the case of one Ashwin Kumar Mali - Assessee allegedly had entered into fictitious loan transactions with SEPL, which provides accommodation entries, which suggest income chargeable to tax has escaped assessment HELD THAT:- Petitioner replied by a letter in which Petitioner denied having any financial transaction. Petitioner explained that he had only taken loanwhich has also been repaid during the next financial year and since the amount was below Rs. 50,00,000/- and the assessment was being reopened after the expiry of three years from the end of relevant assessment year, under the provisions of Section 149(1)(d) of the Act no notice under Section 148 of Act could be issued. Petitioner also brought to the notice of Assessing Officer (“AO”), i.e., Respondent No. 1 that Petitioner has been an NRI since last six years and has been filing his Income Tax Returns as NRI and even the e-filing portal shows Petitioner’s residential status as “Non-resident”. Hence, the jurisdiction would lie with Income Tax Officer (International Taxation), Ward-3(2)(1). In effect Assessee/Petitioner informed Respondent No. 1 that he had no jurisdiction to issue the notice under Section 148A(b) of the Act. AO has, in our view, taken an unacceptable stand that Assessee has not proved with substantial evidence and documents and has not been able substantiate his claim as an NRI. We also fail to understand what evidence Assessee has to show when Assessee makes the statement that in the income tax returns filed by him, his residential status appears as “Non-resident”. So also, in the income tax portal, his residential status shown as “Non-resident”. In fact the intimation under Section 143(1) of the Act issued to Assessee for AYs 2019-2020, 2021-2022, 2022-2023 and 2023-2024, all show the residential status of Petitioner as “Non-resident”. Therefore, we would not hesitate to observe that the stand taken by the AO is a dishonest stand. Respondent No. 1 thereafter passed the impugned order u/s 148A(d) in which, according to us, the AO has accepted that he had no jurisdiction, but because there was no time to mitigate the PAN at the stage it was, he went ahead and has issued the reassessment notice. Since in the affidavit-in-reply a stand is taken that the file can be transferred now to the AO who had jurisdiction over Petitioner, Dr. Shivram submitted, relying on Commissioner of Income Tax v. M.I. Builders (P.) Limited [2013 (7) TMI 654 - ALLAHABAD HIGH COURT] that the notice issued by Non-jurisdictional Assessing Officer is invalid, no records can be transferred when the proceedings were invalid ab-initio and such transfer cannot validate any proceedings taken in continuation thereof. This Court in Pavan Morarka [2022 (2) TMI 1094 - BOMBAY HIGH COURT] has held that a notice issued by an officer who did not have jurisdiction over Assessee, would be invalid. The fact that Petitioner has been filing returns as a Non-resident, cannot be disputed. The fact that the Income Tax Officer (International Taxation) would be the AO who had jurisdiction over Petitioner, cannot be disputed. Respondent No. 1 has also in effect admitted that he has no jurisdiction over Assessee, but he issued the notice because the information and PAN of Assessee were transferred to the charge of Respondent No. 1 at the fag end of March 2023 for issuing notice under Section 148A(b) of the Act and it was getting time barred by limitation on 31st March 2023 - We are not satisfied with the explanation offered of shortage of time and that still cannot give jurisdiction to the AO, who did not have jurisdiction. Reassessment proceedings set aside - Decided in favour of assessee.
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