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2017 (3) TMI 1792

..... roceeded to make assessment without issuing notice u/s 148 which was mandatory, being a jurisdictional step - HELD THAT:- The curability permitted u/s 292BB is with regard to service of notice upon Assessee and not with regard to competence of authority who has issued notice. A similar question was considered in Commissioner of Income Tax, Gujarat-II Vs. Kurban Hussain Ibrahimji Mithiborwala [1971 (9) TMI 9 - SUPREME COURT] and Court said "Income Tax Officer's jurisdiction to reopen an assessment under Section 34 depends upon issuance of a valid notice. If notice issued by him is invalid for any reason, entire proceedings taken by him would become void for want of jurisdiction." Court then held that notice was invalid as A.O. had no jurisdiction to revise assessment then it cannot be treated to be mere irregularity so as to validate proceedings of assessment if the Assessee had participated. Similar is the view taken by a Full Bench of this Court in Laxmi Narain Anand Prakash Vs. Commissioner of Sales Tax, Lucknow [1980 (1) TMI 212 - ALLAHABAD HIGH COURT] The contention of learned counsel for Revenue that participation of Assessee before Jurisdictional A.O. would oper .....

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..... LKW/2015 relating to Assessment Year (hereinafter referred to as "A.Y.") 2010-11. 2. Appellant has formulated six substantial questions of law but, in our view, substantial questions of law arisen in this appeal are:- "(i) Whether notice under Section 148 of Act, 1961 is a procedural step or jurisdictional. (ii) Whether notice issued by an authority having no jurisdiction can attain validity by referring to Section 292BB of Act, 1961 only for the reason that Assessee participated before transferee Assessing Authority. (iii) Whether a jurisdictional issue could have been raised by Assessee at any stage or the objection at the subsequent stage is not permissible in view of Section 124(3)(a). (iv) Whether assessment made by Assessing Officer, after transfer of a case, from the stage when another officer had already issued notice under Section 148, though had no jurisdiction in the matter and transferree authority did not issue any fresh notice, can be said to be valid." 3. Tribunal has found that a notice was issued by designated officer who was authorized to collect Annual Information Return (hereinafter referred to as "AIR") information and to make nece .....

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..... brief factual matrix giving rise to above dispute. 10. For A.Y. 2010-11, Income Tax Department received AIR information from Punjab National Bank, Lucknow (hereinafter referred to as "PNB") stating that Assessee has deposited cash of ₹ 70,19,000/- in Financial Year (hereinafter referred to as "F.Y.") 2009-10 in his bank account. In order to verify source of deposit, a non-statutory notice dated 25.08.2011 was issued by ITO-IV(1), Lucknow requiring Assessee to file details. Shri R.U. Khan, Advocate appeared and filed reply but details were insufficient. Consequently, after recording reasons for initiating proceedings under Section 147 of Act, 1961, a notice under Section 148 of Act, 1961 was issued and served upon Assessee through speed post on 18.11.2011. He was required to file Return of Income for the relevant year. Since Assessee failed to comply with said notice, ITO-IV(1), Lucknow proposed to pass order under Section 144 of Act, 1961 on the basis of material available on record. 11. Case was thereafter transferred to ITO-V(2), Range-V, Lucknow by designated A.O. on 11.04.2012 for the reason that jurisdiction of the case of Assessee was with said Offic .....

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..... nder Section 139(4) of Act, 1961 upto 31.03.2012, i.e., before expiry of one year from the end of relevant A.Y. Return was actually filed by Assessee on 17.02.2012, hence it was within the ambit of Section 139(4) of Act, 1961. Though, there was sufficient time to file Return and even time for issue of notice under Sections 142(1) and 143(2) of Act, 1961 making assessment under Section 143(3) of Act, 1961 was subsisting, a notice under Section 148 of Act, 1961 was issued through speed post on 18.11.2011 by ITO-IV(1), Lucknow who had no jurisdiction over Assessee. It shows that Section 148 of Act, 1961 was invoked as if it is a substitute of Section 142 of Act, 1961 which is misconceived and incorrect. Apparent reason for initiating reassessment proceedings under Section 148 of Act, 1961 is AIR information received from PNB showing cash deposit of ₹ 70,19,000/- in Assessee's Saving Bank Account. Since notice under Section 148 of Act, 1961 dated 18.11.2011 was void having been issued by an Officer having no jurisdiction, further notice issued under Section 143(2) of Act, 1961 by same Officer on 17.02.2012 is also void, ab initio and illegal. 19. Learned counsel for Assessee .....

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..... making assessment, have some bearing on the pending assessment. 25. This Court in Juggilal Kamlapat Cotton and Spinning and Weaving Mills Co. Ltd. Vs. ITO 1983 (142) ITR 710 (Alld) has observed that arriving at such a satisfaction is a part of jurisdictional fact so that A.O. acquires jurisdiction to issue a notice under Section 142(1) for production of any document only, if, after application of mind, he arrived at a conclusion that documents directed to be produced would have a bearing on the assessment and he requires the same for making assessment. 26. Where a Return has been filed under Section 139 or in response to notice under Section 142(1), but A.O., where he has reason to believe that any claim of loss, exemption, deduction, etc. made Return inadmissible, serve on the Assessee a notice specifying particulars of such claim, etc. and may require Assessee to produce relevant evidence as material to justify such need. 27. Where A.O. does not find any reason to issue notice under Section 143(2), it may make assessment summarily under Section 143(1). The period within which notice under Section 143(2) can be served is during F.Y. in which Return is furnished or within six mont .....

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..... ning of assessment/reassessment proceedings as contemplated under Section 147 and recording of reasons for the same purpose is mandatory. The satisfaction of A.O. could not have been hired or be delegated to any other authority. 35. In Commissioner of Income Tax, Kerala Vs. Thayaballi Mulla Jeevaji Kapasi 1967 (66) ITR 147 (SC), Court held that notice under Section 148 cannot be regarded as mere procedural requirement. It is a condition precedent for initiation of proceeding for assessment. 36. In Y. Narayana Chetty and another Vs. Income Tax Officer, Nellore and others 1959 (35) ITR 388 (SC), it was held, that, if notice issued is invalid or not properly served, any proceeding taken by A.O. to back assess, would be illegal and void. 37. A Constitution Bench, in Sardar Baldev Singh Vs. Commissioner of Income Tax, Delhi (1960) 40 ITR 605 (SC), a pari materia provision, i.e., Section 34 under old Indian Income Tax Act, 1922 (hereinafter referred to as "Act, 1922") was considered and it was held that A.O. having power to issue notice should be a particular A.O. having jurisdiction over Assessee at the time of issue of requisite notice. If notice issued by any other A.O. or n .....

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..... edings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 46. The curability permitted under Section 292BB is with regard to service of notice upon Assessee and not with regard to competence of authority who has issued notice. 47. A similar question was considered in Commissioner of Income Tax, Gujarat-II Vs. Kurban Hussain Ibrahimji Mithiborwala 1972 (4) SCC 394 and Court said "Income Tax Officer's jurisdiction to reopen an assessment under Section 34 depends upon issuance of a valid notice. If notice issued by him is invalid for any reason, entire proceedings take .....

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