TMI Blog2020 (10) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... -2020 - Shri H. S. Sidhu, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Mrs. Rano Jain, Adv For the Revenue : Sh. Vipul Kashyap, Sr. DR ORDER PER H.S. SIDHU, JM This appeal is filed by the Revenue against the Order dated 12.04.2017 passed by the Ld. CIT(A)-I, New Delhi relating to Assessment Year 2008-09 on the following grounds:- 1. The Ld. CIT(A) has erred on the facts and in law in holding the notice issued u/s 148 as invalid and quashing the assessment order passed u/s 147/143(3) of Income Tax Act, 1961. 2. The appellant craves for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The facts relating to the issue in dispute is that the assessee is an NBFC carrying on the business relating to financiers, merchant bankers, financing agents, financial broker recovery agent and execute all kind of financial operations and has filed its return of income under section 139(1) (hereinafter referred to as the I.T. Act, 1961) for the assessment year 2008-09 declaring NIL income. Assessment under section 147 read with sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Mrs. Uma Loomba vs CIT (2000) 241 ITR 152 (Del) 9. Sec. 120 provides for jurisdiction conferred on the IT authorities to exercise the powers and perform the functions conferred by the Act. The jurisdiction between different authorities can be divided by reference to (i) territorial area, (ii) person or persons, (iii) income and classes of income, and (iv) cases or classes of cases. Sec. 124(1) has relevance to territorial jurisdiction. If area wise jurisdiction has been conferred on the AO then a person carrying on business or profession must find out the AO having jurisdiction over the place within which business or profession is being carried on. If the assessee be a person not carrying on a business or profession then he is subject to the jurisdiction of the AO vested with jurisdiction over the area where he is residing. Sec. 127 does not speak of power to transfer jurisdiction-, it speaks of transfer of case , as defined in the Explanation enacted to s. 127. That being the position of law, we are very clear in our mind that the petitioners having shifted their business/profession and residence-both in July, 1984, from Amritsar to Delhi, the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if they are transferred to a new Officer by an Order under Section 127 of the Act. Sh. Subhash Chand Ajmera vs. ITO, ITA No. 61/Jp/2017, dt. 31.01.2020 Notice u/s 148 was issued to the legal heir on behalf of the deceased assessee by ITO, Ward-1(4), Jaipur after seeking approval of JCIT, Range-1, Jaipur whereas the jurisdiction over the deceased assessee was with ITO, Ward 2(1), Jaipur under JCIT Range-2, Jaipur - HELD THAT:- ITO Ward 1(4), Jaipur herself has stated that the jurisdiction over the case does not lie with her but with ITO Ward 2(1), Jaipur. The aforesaid communication has been written to the Pr. CIT very next month of issuance of notice on 26.03.2015. Apparently, there was no further communication from the office of ld Pr. CIT and PAN of the deceased assessee was not transferred to ITO Ward 2(1) and continues with ITO Ward 1(4) and having issued the notice u/s 148, she continued with the proceedings and passed the assessment order u/s 147 read with 143(3) of the Act. Therefore, even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answer to the said question is not hard to find and the same has been given by ITO Ward 1(4) where she has admitted that she doesn t have the jurisdiction over the matter and jurisdiction lies with ITO Ward 2(1), Jaipur as clear from the letter No. ITO/W-1(4)/JPR/15-16 dated 21.03.2015 written by ITO, Ward 1(4), Jaipur to the Pr. CIT-1, Jaipur and the contents thereof reads as under:- . . . 9. In light of above, it is clear that ITO Ward 1(4), Jaipur herself has stated that the jurisdiction over the case does not lie with her but with ITO Ward 2(1), Jaipur. The aforesaid communication has been written to the Pr. CIT very next month of issuance of notice on 26.03.2015. Apparently, there was no further communication from the office of ld Pr. CIT and PAN of the deceased assessee was not transferred to ITO Ward 2(1) and continues with ITO Ward 1(4) and having issued the notice u/s 148, she continued with the proceedings and passed the assessment order u/s 147 read with 143(3) of the Act. Therefore, even though notice has been issued by ITO, Ward 1(4), Jaipur but once she is clear that the jurisdiction over the matter lies with ITO, Ward 2(1), Jaipur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondence, which showed change in jurisdiction and place of assessment to Delhi, which was accepted and there was of transfer of records, i.e., a transfer under Section 127 of the Act. It was accordingly held that upon transfer the Revenue authorities at Delhi had necessary power and were competent to issue notice under Section 148 of the Act. In Sardar Baldev Singh vs. CIT (1960) 40 ITR 605 (SC) 736 the assessee was a resident of Lahore in the year 1944. On 14th Oct., 1944, he was assessed at Lahore for the asst. yr. 1944-45. After partition in 1947, the assessee shifted to Delhi. The ITO, Delhi, on 10th April, 1948, issued a notice under s. 34 of the Indian IT Act, 1922, to the assessee then residing in Delhi requiring him to file revised return for the year 1944-45 as a part of his income for that year had escaped assessment. The assessee filed the return under protest. The question of jurisdiction arose. Their Lordships opined that the contention of the assessee was without foundation: Now the place where an assessment is to be made pursuant to a notice under s. 22(2) has to be determined under s.64. Indeed that is the only provision in the Act for deciding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute over that. However there is no direction or order or notification u/ s 120(1) or 120(2) of the Act, conferring concurrent jurisdiction to the ITO Ward 33(1) along with ITO Ward 8(3) u/ s 120(1) or u/ s 120(2) of the Act, which is the condition mentioned in section 120(4) and 120(5) of the Act. The Ld DR argued that the assessee did not dispute the jurisdiction u/ s 124(3) of the Act and hence by not disputing the same, the right to challenge the jurisdiction is lost forever. This would have been so, had the ITO, Ward-33(1), Kolkata, had original jurisdiction over the assessee. This is not the case. When an authority does not have jurisdiction, then the act done by such authority is bad in law and is void ab-initio. In view of the above discussion, as the Assessing Officer who had jurisdiction over the assessee i.e., ITO Ward 8(3), Kolkata had not issued the notice to the assessee u/s 143(2) of the Act as mandatorily required under the Act, the assessment framed u/s 143(3) of the Act, is bad in law as held by the Hon ble Supreme Court in the case of ACIT Anr. Vs. Hotel Blue Moon: 321 ITR 362 (SC). In M. Ramasamy Asari vs. ITO (1964) 51 ITR 57 (Mad), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Ahd/2011, dt. 10.02.2012 Under that circumstance how one can say that the jurisdictional AO has acquired jurisdiction to re-assess the income under section 147 of the Act Under the circumstances how it can be said the reasons recorded by other AO was satisfaction to jurisdictional AO. The reasons for reopening must be recorded by jurisdictional AO because he is keeping all relevant and primary record. The basic requirement of section 147 of the Act is that the AO has reason to believe that any income chargeable to tax has escaped assessment. Such belief must be the belief of jurisdictional AO and not any other AO or authority of the department. Therefore, it is well settled that the AO's jurisdiction to reopen an assessment u/s. 147 depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction. ITO vs. Indus Valley Investment and Finance Limited, ITA 4239/Del/2011, dt. 06.07.2012 5. We have heard both the parties and gone through the facts of the case. The issue before us is as to whether the reassessment framed by the AO i.e ITO Ward- 11(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h ITO Ward-11(4), New Delhi, records were transferred to New Delhi. Thereafter, the said ITO proceeded to complete the assessment without even recording reasons to believe stipulated in section 147 or issuing any notice u/s 148 of the Act. As mentioned by the AO in his remand report, the ITO Ward 11(4),New Delhi never issued any notice u/s 148 of the Act .Thus ,he did not assume jurisdiction to reassess the income of the assessee even when original return declaring income of ₹ 37,440/- was filed on 22.10.2002 by the assessee in his ward. Apparently, the ITO Ward 11(4), New Delhi committed an irregularity by not issuing notice u/s. 148 of the Act again and instead continued the proceedings u/s. 148 of the Act, initiated on 31.3.2008 by the ITO Ward- 2, Gurgaon. This was objected to by the assessee vide letter dated 3-12-2008. Apparently, the jurisdictional AO i.e. ITO, Ward-11(4),New Delhi never acquired jurisdiction to re- assess the income of the assessee under section 147 of the Act nor ever recorded the reasons in writing as stipulated in the said section reasons for reopening of any assessment have to be recorded by jurisdictional AO alone because he mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the notice issued under s. 148 on 28th March, 2003 by the then ITO, Ludhiana was without jurisdiction inasmuch as the assessee had shifted from Ludhiana to New Delhi in July, 1997 and had been filing his return of income for asst. yr. 1997-98 onwards at New Delhi. In the case of Ranjeet Singh vs. Asstt. CIT (supra), the Tribunal has held that the notice issued by the ITO, Ward 2(2), Ghaziabad, was not in substance and effect in conformity with the provisions of s. 120 r/w s. 147 of the Act as the notice was issued without jurisdiction . In that case, it was found by the Tribunal that having received the notice under s. 148, the assessee raised the objection immediately by saying that he was assessed to tax by Dy. CIT, Circle 21(2), New Delhi, and notice issued by the ITO, Ghaziabad, was invalid. Dr. Mrs. K.B. Kumar vs. ITO, ITA 4436/Del/2009, 5. The learned Authorised Representative for the assessee contended before us that the reassessment order passed by the ITO, Ward-34, New Delhi was without jurisdiction and liable to be quashed because he has simply framed the reassessment by issuing a notice under section 143(2) on 16-12-2008 without recording any rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 148 on 28-3-2003, when the notice under section 142(1) was issued to the assessee in December, 2003, the assessee by her reply dated 21-1-2004 indicated that her Assessing Officer was not located in Ludhiana, but was at New Delhi. The Tribunal has come to the conclusion on the basis of the facts available on the record and, no substantial question of law arises in the present case. No interference with the impugned order is called for. The appeal is dismissed. Indorama Software Solution Ltd. Vs. ITO, ITA No. NOs. 5211 5290 (MUM.) OF 2011, dt. 07.09.2012 10. We are conscious that the issue of the question of jurisdiction of Assessing Officer cannot be raised first time before us after completion of the assessment but, since the assessee has raised this objection right from the beginning and the Assessing Officer as well as CIT (A) has given a finding, therefore, this issue does not question the jurisdiction of the AO who has completed the re-assessment but questions the validity of Notice u/s 148 and emanates from the impugned orders of the authorities below. The definition of the Assessing Officer as provided u/s 2(7A) of the Income Tax Act means the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has not issued and served any notice u/s. 148 of the Act. Therefore, the assessment proceedings initiated are illegal, unsustainable and untenable under the law. From the records, I note that assessee had its registered office in New Delhi since the date of its incorporation; filing its ITR at New Delhi right since the date of its incorporation and ITR for AY under appeal was filed on 30.11.2006 and PAN details since its incorporation also lies with the Delhi income tax authorities. And based on information received from the ADIT, Faridabad, the AO, Ward 1(1), Faridabad who did not had any jurisdiction over the assessee issued notice u/s. 148 of the Act and also issued notice u/s. 142(1). The Assessee informed the AO about its jurisdiction to be assessed at Delhi and requested for transfer of records at Delhi and accordingly, the case was transferred. Accordingly, the notice u/s. 142(1) and 143(2) was issued by the Jurisdictional AO Ward 18(2), New Delhi for the first time on 15.10.2013 and no notice u/s. 148 was ever issued by the jurisdictional AO. Hence, the Ld. CIT(A)'s action of confirming the validity of assessment made by the ITO, Ward 28(2), New Delhi without se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi wherein the ITO, Ward 2(2), Jaipur himself has mentioned that he had a telephonic talk with the Director of the appellant company and he has informed him that M/s Almak Finance Pvt. Ltd. is being assessed at New Delhi but the PAN of the company was lying with ITO, Ward 2(2). The appellant also contended that vide letter dated 20.05.2014, the ITO, Ward - 2(2), Jaipur himself requested the CIT-I, Jaipur to transfer the cases of appellant company to ITO, Ward - 1(3), New Delhi. The appellant contented that it has filed its audited balance sheets for the FYs 2010-11, 2011-12 2012-13 before the Registrar of Companies, New Delhi. The appellant also contended that after receipt of notice u/s 148 of the I.T. Act for the AY under consideration, appellant vide letter dated 15.11.2014 submitted before the ITO, Ward 2(2) Jaipur stating that it has shifted its registered office from Jaipur to Delhi and address has also been changed in PAN database and therefore, the appellant requested the ITO, Jaipur to transfer the case of the appellant from Jaipur to Delhi. In view of the above facts, the appellant has challenged the assumption of jurisdiction by the Assessing Officer ITO, W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case. No interference with the impugned order is called for. This appeal is dismissed. The appellant further contended that issue of notice u/s 148 of the Act by the jurisdictional AO is a pre-condition for validly assumption of jurisdiction u/s 147 of the I.T. Act, 1961. The issue of notice u/s 148 is not merely a procedural requirement, but for assuming jurisdiction under that section for re-assessment issue of notice by the Jurisdictional Assessing Officer is pre-requisite condition. The appellant has also relied on the judgment of Hon ble Supreme Court in the case of Y. Narayana Chetty v. Income-tax Officer [1959] 35 ITR 388. Held that Service of requisite notice is a condition precedent for validity of reassessment made under section 34 of 1922 Act, and a notice prescribed by section 34 of 1922 Act cannot be regarded as a mere procedural requirement; it is only if said notice is served on assessee as required then ITO would be justified in taking proceedings against him. The appellant also contended that the jurisdictional AO, ITO, Ward - 2(2), New Delhi continued with the proceedings initiated u/s 147 by the assessing officer, ITO, Ward - 2(2), J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned AO, having jurisdiction over the case, who has relevant returns and other material in his possession. Sub section (2) provides that the AO shall, before issuing any notice under this section, record his reasons for doing so. It is the assessing officer, who has jurisdiction over the assessee and records reasons, who can issue notice u/s 148 of the Act. In the instant case, indisputably ITO Ward-11(4), New Delhi had jurisdiction over the assessee company and the assessee is filing return in that ward regularly. The ITO Ward-2, Gurgaon, who did not have jurisdiction over the assessee, issued a notice u/s 148 of the Act as soon as the assessee informed him that jurisdiction over his case was vested with ITO Ward- 11 (4), New Delhi, records were transferred to New Delhi. Thereafter, the said ITO proceeded to complete the assessment without even recording reasons to believe stipulated in section 147 or issuing any notice u/s 148 of the Act. Apparently, the ITO Ward 11(4), New Delhi committed an irregularity by not issuing notice u/s. 148 of the Act again and instead continued the proceedings u/s. 148 of the Act, initiated on 31.3.2008 by the ITO Ward- 2, Gurgaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id and the same is accordingly quashed. Consequently, the order of the learned CIT(A) is set aside on the legal issue raised by the assessee in her appeal. Ground No. 2 raising the legal issue is decided in favour of the assessee. I have considered the submission of the appellant and various case laws relied upon by the appellant in this regard. It is seen that notice u/s 148 was issued by ITO, Ward 2(2), Jaipur on 10.04.2014 after recording reasons. However, on the date of issue of notice, the ITO, Ward'2(2), Jaipur was not having jurisdiction over the case of the appellant as the Director of the appellant had informed the ITO, Ward 2(2) through telephone which is recorded by the ITO, Ward 2(2) in his letter dated 04.03.2014 written to the Director of the appellant company. In the said letter, the Director informed the AO that he is filing his return at Delhi and has already shifted his office to New Delhi. It is also seen that appellant has got its address changed in PAN database and the same was communicated to the appellant by Income Tax PAN Services Unit vide its letter dated 26.03.2014 for change of address at New Delhi. It is also seen that after issue of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven by the learned First Appellate Authority reproduced above, we are of the considered view that notice under section 148 of the Act was issued by the ITO, Ward 2(2), Jaipur on 10.04.2014 after recording reasons at that time ITO, Ward 2(2), was not having jurisdiction over the case of assessee as the Director of the assessee has informed the ITO Ward-2(2), through telephone which is recorded by ITO, Ward-2(2). In his letter dated 04.03.2014 written to the Director of the appellant company. The Director of the company informed the AO that he is filing his return at Delhi and has already shifted his office at New Delhi and got its address changed in his PAN data wise and the same was also communicated to the assessee by the Income Tax PAN Services Unit vide its letter dated 26.03.2014 for change of address at New Delhi. Assessee has filed proves of the same before the Assessing Officer. In spite of the same, the Assessing Officer completed the assessment which is contrary to the law and facts on file and deserves to be quashed. Learned First Appellate Authority has rightly quashed the assessment made by the Assessing Officer under section 147 and by allowing the appeal filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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