TMI Blog2016 (9) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... quent thereto remains un-rebutted. Further, the reasons have been recorded under section 148(2) in the name of the Individual ‘Shri Dnyaneshwar Govind Kalbhor’ whereas the notice has been issued in the name of HUF i.e. ‘Shri Dnyaneshwar Govind Kalbhor (HUF)’. The fact of non existence of HUF is paramount and strikes to the very root of purported jurisdiction sought to be acquired by the AO under S. 147 of the Act. In the background of these discernible facts, it is manifest that the notice issued under section 148 purporting to grant jurisdiction to the Assessing Officer is void ab initio and bad in law. Consequent order passed by the Assessing Officer without jurisdiction thus is a nullity. Assessing Officer has nowhere indicated the quantum of income which has escaped or is likely to have escaped assessment. Thus, the entire process so initiated appears to be vague and listless. The formation of ‘reason to believe’ is expected to be qua the quantum of income that has escaped assessment on prima facie consideration of relevant material. The escapement in generic terms stated to be in millions without formulating any belief thereon is bizarre & inexplicable. On this ground also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law on the following grounds:- i. The notice u/s. 148 has been issued to the appellant HUF which in fact was not in existence. ii. Notice u/s. 148 issued in the name of the appellant mentioning the PAN of Shri. D.G. Kalbhor - Individual. iii. The reasons recorded for issuing the notice u/s. 148 are not relevant to the appellant which in fact was not in existence. iv. Notice is issued u/s. 143(2) based on the return filed by Shri. Dnyneshwar G. Kalbhor (Individual), while the appellant has not filed the return. v. The assessment order is inconclusive hence not an order as the Assessing Officer requests the appellate authority to pass the Assessment Order by adjudicating all the vital issues namely the:- a. Taxable entity, b. Year of taxability, c. Value as of 01/04/1981, d. Determination of correct Capital Gain. 2. On the facts and in the circumstances of the case and without prejudice to above grounds the CIT(A) has erred in interpreting the development agreement as constituting the transfer within the meaning of section 2(47) and in the process has erred in assessing the Long Term Capital Gain and that too in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer under section 143(3) r.w.s. 147 dated 30.12.2010 as bad in law. Since the assessee has challenged legality of reopening action which being jurisdictional issue and goes to the root of the matter, it will be appropriate to adjudicate this aspect of the appeal first. 6. The relevant facts germane to the adjudication of jurisdictional issue are as follows. A return of income was filed by Shri Dnyaneshwar Govind Kalbhor in his individual capacity on 28.01.2008 declaring total income of ₹ 1,07,095/- for the assessment year 2007-08. No return of income was filed by the assessee HUF namely Shri Dnyaneshwar Govind Kalbhor (HUF). From the material placed on record, it is borne out that one M/s N. D. Construction (a partnership firm) entered into a development agreement dated 14.10.2006 collectively with the owners of certain piece and parcel of land situated at Village Akurdi, Pune namely (i) Shri Govind Keshav Kalbhor, (ii) Smt. Anusaya Keshav Kalbhor, (iii) Shri Dnyaneshwar Govind Kalbhor and (iv) Smt. Ujwalla Govind Kalbhor. The Assessing Officer observed that from the records of the M/s N. D. Constructions for the assessment year 2007-08, it was found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. 6.3 The assessee HUF did not file its return of income in response to impugned notice under section 148 of the Act. As a sequel to notice under section 148, notice under section 143(2) and 142(1) was issued and the assessment was completed. Before the Assessing Officer, the assessee did not raise any formal objection to validity of notice under section 148 of the Act. Long term capital gain amounting to ₹ 5,64,65,159/- was consequently brought to tax in the hands of the assessee (HUF). 7. Before the CIT(A) however, the assessee questioned the validity of action under section 147/148 of the Act and pleaded that the assessment order under section 143(3) r.w.s. 147 is bad in law. The CIT(A) nevertheless rejected the objection on assumption of jurisdiction under section 147 of the Act and consequent re-assessment order and upheld the action of the Assessing Officer in this regard. 8. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. 9. The Ld. Authorized Representative (AR) for the assessee Shri S.N. Doshi, at the outset, submitted that the jurisdiction assumed by the Assessing Officer under section 147/148 of the Act is void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned notice issued under section 143(2) dated 13.12.2010 is non-est and bad in law and consequently, assessment framed under section 143(3) r.w.s. 147 of the Act suffers from the lack of jurisdiction and thus vitiated in law. The Ld. AR for the assessee thereafter with a view to pre-empt the argument on behalf of the Revenue submitted that the defects pointed out above impinges upon the jurisdiction and thus goes to the root of the matter. The defects are substantive in nature and not merely technical defect and accordingly such substantive defects in the re-opening notice and the re-assessment order cannot be cured by taking shelter of section 292B or 292BB of the Act. The Ld. AR accordingly pleaded that the re-opening of notice under section 148 and re-assessment order under section 147 requires to be set-aside and quashed. For the proposition that notice under section 148 issued to a non-existent person and assessment framed in the name of non-existing entity is not merely a procedural irregularity of the nature which could be cured by invoking the provisions of section 292B of the Act, the Ld. AR relied upon the decision of the Hon ble Delhi High Court in the case of Spice Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are quite curable. He extensively relied upon the order of the CIT(A) and submitted that the Assessing Officer has committed no illegality while framing the reassessment under section 147 of the Act in the hands of the assessee HUF. He accordingly pleaded that no interference with the order of the CIT(A) is called for. 12. We have examined the purported reasons for initiating action under S. 148/ 147 of the Act and have carefully considered the rival submission on this fundamental aspect of validity of the re-assessment proceedings. The jurisdiction of Assessing Officer to open an assessment under section 148 depends on issuance of valid notice. If the notice issued by the Assessing Officer is invalid for any reason, consequential proceedings taken by him would become void for want of jurisdiction. It is the case of the assessee that the notice under section 148 vesting jurisdiction with the Assessing Officer has been addressed to the HUF entity namely Shri Dnyaneshwar Govind Kalbhor (HUF) whereas the PAN Number mentioned in the notice pertains to the Dnyaneshwar Govind Kalbhor obtained in his individual capacity. We also note the contention of the Assessee that the entire bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of return by assessee HUF but has founded his entire action based on return filed in individual capacity while making additions of purported escapement of income. To reiterate, in the absence of return of income filed by the assessee, the impugned action taken under section 143(2) is a complete non-starter. Section 148 confers jurisdiction merely to issue notice and calling for a return in cases where income has escaped assessment for making assessment as provided under section 147. Notice issued under section 143(2) must be a valid notice and not a mere empty formality to grant jurisdiction to complete assessment. It is not the case of the AO that the assessee has not filed any return of income to say that notice under S. 143(2) was not required at all. Thus, on this score also, the action of the Assessing Officer in completing the assessment under section 143(3) r.w.s. 147 is vitiated in law. 14. On a close scrutiny of the reasons recorded, we simultaneously notice that the Assessing Officer has nowhere indicated the quantum of income which has escaped or is likely to have escaped assessment. Thus, the entire process so initiated appears to be vague and listless. The format ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing section 292B of the Act. There is a marked distinction between want of basic and inherent jurisdiction and irregular exercise of jurisdiction. Defect on irregular exercise of jurisdiction alone can possibly be cured by taking shelter of section 292B. As noted, the action of the AO starting from issuance of notice to the completion of reassessment suffers from multi faceted defects of cardinal nature in serious transgression of statutory requirements. The notice was issued to HUF under a wrong PAN while the underlying reasons giving cause of action thereon were recorded in the hands of other person i.e. Individual. Thus, legally speaking, the reasons were not recorded qua the HUF. Similarly, the basis for issuance of notice under section 143(2) addressed to HUF is found to be non-existent as the HUF is stated to have not taken birth in the impugned assessment year. Invalid notice under section 143(2) was issued without any return of income from the assessee HUF. Such fundamental infirmities of substantive nature while usurping jurisdiction cannot be called a mere technical defect or a procedural irregularity. Such vital infirmities, in our considered view, cannot be cured or o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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