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2019 (12) TMI 136

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..... for the Respondent. ORDER 1. This is assessee's appeal against the order of the ld. CIT(A)-2, Lucknow, dated 29/8/2018, confirming the Assessing Officer's action in making the addition of ₹ 3.45 lakhs, comprising of ₹ 3.15 lakhs paid as stamp duty and ₹ 30,000/- paid in cash, on purchase of a residential property. The following are the grounds raised: 1. BECAUSE the CIT(A) has erred in law and on facts in holding that the "Dy. Commissioner of Income-tax, Range-6, Lucknow (in short "Dy. CIT"), was validly vested with jurisdiction of Assessing Officer in the case of the "appellant" and on that basis in upholding the validity of re-assessment order dated 11.02.2015. 2. BECAUSE there being no valid transfer of jurisdiction from Income-tax Officer-1(3), Lucknow to "Dy. CIT", as per provisions of law, the reassessment order passed by the latter was without jurisdiction and consequently the re-assessment order deserved to be held as illegal. 3. BECAUSE even if it is held that the "Dy. CIT" was vested with the jurisdiction of Assessing Officer in the case of the "appellant", then also the re-assessment order .....

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..... ection 148 of the Act, dated 26/9/2013 (APB:8); and that during the course of assessment proceedings, the assessee had submitted to the ITO-1(3) that he was a Director in M/s Surat Construction Pvt. Ltd., which was assessed in Range-6 and that accordingly, the jurisdiction in the case of the assessee was with ITO-6(3). A copy of the submission dated 22/8/2014, in this regard, is placed at page No.88 of the APB-I. Reference has been made to copy of A.O. Code list downloaded from NSDL Tax Information Network (TIN), showing particulars of jurisdiction of the Assessing Officers in Lucknow, APB:III pages 159 to 164, the relevant portion at APB-III, page 159, the third item, which is as under: "Income Tax PAN Service Unit NSDL Technology, Trust & Reach AO Code search for PAN Select Ward/circle /range / Commissioner Description Area Code Assessing Officer Type Range Code Assessing Officer Number DCIT-6, Lucknow-NEW (i) All company cases starting with ?S? to ?Z? letter of English Alphabet, having return income/loss, exceeding ₹ 15 lakhs & above and their Directors & Managing Directors in the Revenue District of Lucknow. ii) All non-company cases where return income/l .....

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..... section 148 of the Act. The ITO-1(3) undisputedly did not have jurisdiction over the matter. The matter was transferred, on the assessee's request, to the DCIT, Range-6, who, admittedly, was the Assessing Officer having jurisdiction. The DCIT, Range-6 passed the reassessment order, without issuance of any notice, either under section 148, or under section 143(2) of the Act. Thus, the first question is whether the assessment made by the Assessing Officer after transfer of the case from the stage when another Officer had already issued notice under section 148, though he had no jurisdiction in the matter, and the transferee Assessing Officer, who was actually vested with jurisdiction over the matter, did not issue any fresh notice, can be said to be valid. 6. Section 148(1) of the Act reads as follows: "(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the r .....

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..... 8 of Act, 1961 which was mandatory, being a jurisdictional step. Earlier notice issued by an authority having no jurisdiction would vitiate the entire proceedings as said notice issued by an incompetent Authority will not be a valid notice under section 148 of the Act. ** ** ** 33. Notice under Section 148 was not issued by A.O. having jurisdiction over Assessee and instead it was issued by Designated Officer authorized to collect AIR information and make inquiry in this regard No notice was issued under Section 148 admittedly by Jurisdictional A.O. 34. Section 148 clearly talks of issue of notice by A.O. Meaning thereby, A.O. having jurisdiction over Assessee. In fact, it is his satisfaction which is to be recorded for justifying reopening of assessment/reassessment proceedings as contemplated under Section 147 and recording of reasons for the same purpose is mandatory. The satisfaction of Assessing Officer could not have been hired or be delegated to any other authority. 35. In Commissioner of Income Tax, Kerala v. 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 p .....

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..... A.O. only who has jurisdiction in the matter and not of any third party. 44. We, therefore, hold that in the present case, no valid notice under Section 148 was issued by Jurisdictional A.O. before making assessment/reassessment and, therefore, proceedings of reassessment pursuant to notice issued under Section 148 by an incompetent Officer are void and ab initio. 45. When a notice under Section 147/148 issued is a jurisdictional step, it cannot be treated to be mere irregularity curable under Section 292BB. In fact, Section 292BB has no application to a case where no valid notice has been issued by Competent A.O. This is clear from a bare reading of Section 292BB of Act, 1961 which reads as under: - "292BB. Where an assessee has appeared in any proceedings 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) .....

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..... 138 ITR 462 (Alld.). 54. In Mir Iqbal Husain v. State of U.P. 1963 50 ITR 40 (SC), it was held that requirement of valid notice cannot be waived. The mere fact that Assessee filed Return of Income pursuant to invalid notice would not render notice valid or validate subsequent proceedings which are vitiated in law for want of valid notice. 55. In Raza Textile Ltd. v. Income Tax Officer, Rampur (1973) 87 ITR 539 (SC), Court said that it is incomprehensible to think that a quasi-judicial authority like A.O. can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen. 56. If an order is passed by a judicial or quasi-judicial authority having no jurisdiction, it is an obligation of Appellate Court to rectify the error and set aside order passed by authority or forum having no jurisdiction. This is what was held in State of Gujarat Vs. Rajesh Kumar Chimanlal Barot and another AIR 1996 SC 2664. 57. In view of above discussion, we have no manner of doubt to answer all the four questions against Revenue and in favour of assessee.' 9. Principal CIT-II, Lucknow v. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, Lucknow (supra), thus, in effect, hol .....

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