TMI Blog2023 (5) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 69A - as stated by the assessee that there were cash withdrawals and deposits. Before Ld.CIT(A), it was stated that the cash was withdrawn and deposited in the bank account. Assessee has pointed out that a sum was available out of withdrawals on the bank account for making the deposits. CIT(A) has not given any findings. Therefore, facts or findings of the Lower Authorities are based on conjectures and surmises and ignored the facts placed on record. AO was not justified in making the addition. The grounds raised by the assessee are allowed on merit. Appeal of the assessee is allowed. - ITA No. 799 And 800/Del/2020 - - - Dated:- 15-5-2023 - Shri Kul Bharat, Judicial Member For the Appellant : Shri N.K.Ishwar And Shri Anjani Kumar Singh, Adv. For the Respondent : Shri Om Parkash, Sr. DR ORDER PER KUL BHARAT, JM : These two appeals filed by the assessee for the assessment years 200809 and 2009-10 are directed against the different orders of Ld. CIT(A), Delhi, both dated 06.12.2019. Since identical grounds have been raised, both appeals were taken up together for hearing and are being disposed off by way of consolidated order for the sake of bre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pholding the addition of Rs. 15,31,500/- u/s 69A of the Act without appreciating the facts that Rs. 14,80,750/- has been withdrawn during the concerned period. 7. That in any case, the impugned assessment has been framed in violation of the principles of natural justice without granting to the assessee a fair, proper and reasonable opportunity to the instant case. 3. Apart from these grounds, Ld. Counsel for the assessee raised two additional grounds which read as under:- 1. That on the facts and circumstances of the case, the notice u/s 148 dated 29/03/2016 issued by Ld. AO, Ward 65(5), New Delhi is invalid and without jurisdiction as the said notice was issued by non-jurisdictional assessing officer. The Ld. AO, Ward 65(5), New Delhi did not have jurisdiction over the assessee as per provisions of the law and the related Notification No. 70/2014 dated 13/11/2014 (applicable from 15/11/2014) and thus, the assessment order framed u/s 144/147 of the Act pursuant to such invalid notice is bad in law and void-ab-initio and liable to be quashed. 2. That on the facts and circumstances of the case, the Ld.AO has erred in law while issuing notice u/s 143(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved on the assessee for the first time and when the notice was pursued through Authorised Representative (AR) as regards limitation on issue of notice beyond six years, letter from the AR has not been put on record by assessing officer and asked to file Return of Income for the AY 2008-09. 3. Assessee collected all the relevant documents from several places and filed his return of income on 07/12/2015 declaring income of Rs. 2,69,166/- which includes income from Salary, Business and income from other sources e.g. interest. After filing of Return of Income with Income Tax Officer, Ward 65(1), New Delhi, the Assessing Officer (Income Tax Officer) transferred the Return of Income along with other document such as notices issued till date, proceeding sheet etc. (assessment folder) to Income Tax Officer, Ward 65(5), New Delhi on the date not mentioned in transfer memo citing the reason for such transfer under remark column as The assessee is retired employee of Delhi Police, therefore, the jurisdiction of the case lies with Ward 65(5) . 4. Reasons recoded for opening of case was sought from AO Ward 65(5) and received on 04/01/2016 and objection was filed vide letter dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to disposal by Ld. CIT(A)-XXXV) in our presence, who turned each and every page of the assessment file, one by one, but did not find the copy of notice u/s 143(2). GROUNDS: This appeal contains as many as 7 (seven) grounds including legal grounds on the matter of jurisdiction (Ground-1), reasons to believe (ground- 2) and non- issue of notice u/s 143(2) of the Act (Ground- 3). A brief facts of all the legal grounds is mentioned hereunder for your perusal, and our detailed submission will follow on each and every grounds of appeal. Ground -1 (Related to jurisdiction of AO) 1.1 Notice u/s 148 of the Act is issued by AO, ward 65(1), New Delhi. Upon filing of the Return of Income with AO, ward 65(1), New Delhi on 07/12/2015, case is transferred to AO, Ward 65(5), New Delhi with mention on transfer memo (paper book page no. 10) citing the reason under remark column as The assessee is retired employee of Delhi Police, therefore, the jurisdiction of the case lies with Ward 65(5) . When objected on the matter of jurisdiction during assessment, the Ld. AO replied that she has assumed jurisdiction on the basis of PAN jurisdiction. There is no such concept of PAN ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.02.2015 and 12.03.2015 respectively the assessee was asked to furnish necessary details/documents so that the source of cash deposit may be examined but the assessee neither attended nor furnished the details as asked for. Moreover, the assessee has not filed his ITR for the year under consideration. In view of the above, I have reason to believe that the amount of cash deposit of Rs. 15,31,500/- have escaped assessment within the meaning of section 147 of the IT Act, 1961. Moreover, it is quite possible that any other income may also have escaped assessment and hence issue of notice u/s 148 becomes inevitable to bring the income that has escaped assessment under the ambit of assessment. 2.2 Facts of the present case is similar to one decided by this Hon ble Tribunal in Bir Bahadur Singh Sijwali Vs. Income Tax Officer Ward (1), Haldwani (ITAT Delhi) I.T.A. No.: 3814/Del/11 dated 20.01.2015 (paper book page no. 103-108) and later on followed in number of cases including Harmeet Singh Vs. Income Tax Officer, [order dated 10.02.2017, ITA No. 1939/Del/2016, (paper book page no. 109-121)] and Shri Mahavir Prasad Vs Income Tax Officer [ITA 924/DEL/2015, order dated 09/10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, without giving proper attention to assessment file). If the date mentioned by the Ld. CIT(A) is believed to be true, how can it be possible, whereas assessment order was passed by Ld. AO on 29/03/2016 i.e. much prior to the date of issue of notice u/s 143(2). A RTI application has been filed in this respect and copy of the notice issued u/s 143(2) is requested to be furnished but, reply is still awaited which can be produced once received from the authority. 3.2 The Hon ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon, [(321 ITR 362) (paper book page no. 159-165)], has held that the requirement to issue notice under Section 143(2) was mandatory. It was not a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. 3.3 In the present case, the notice u/s 143(2) has not been issued by Ld. AO (emphasis supplied) as no such notice was seen by the counsel of the assessee who inspected the assessment file after completion of assessment and later on re-confirmed by the CIT(A)- XXI in our presence. Hence, following the decision of the Supreme Court in ACIT Vs. Hotel Blue Moon (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Delhi. 1.2 Section 148 mandates issue of notice before assessment, reassessment or computation of income u/s 147. As per section 148, it is mandatory that the Assessing Officer shall serve on the assessee a notice required him to furnish a return. The expression Assessing Officer used in the section 148 means the Assessing Officer vested with the jurisdiction over the assessee as stipulated in the definition u/s 2(7A), by virtue of the directions / orders passed u/s 120, sub-section (1) (2) . Thus, the notice u/s 148 is required to be issued by the Assessing Officer who is vested with the jurisdiction over the assessee on the basis of the criteria of territorial area, a person or classes of persons, income or classes of incomes and cases or classes of cases as enumerated in sub-section 3 of section 120 of Income Tax Act. 1.3 As a matter of fact, PAN address of the assessee was of Delhi and the said notice issued by Assessing Officer, Ward 65(1), New Delhi. In this case, jurisdiction is vested with the Assessing Officer, Ward 65(5), New Delhi based on the class of person (Employed/retired with Delhi Police) and if territorial jurisdiction is ascertained as the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. Pr. Commissioner/ Commissioner of Income Tax, Delhi-22 Range 65/ Ward 65(5) All Employees/ Pensioners of following Ministries/Departments: 1. Delhi Police, DDA, NDMC 1.5. From the above table, as the assessee is an individual and employed with/pensioner of Delhi Police and hence jurisdiction fall under the Pr. Commissioner/ Commissioner of Income Tax, Delhi- 22, Range 65, Ward 65(5), New Delhi which have jurisdiction over the assessee considering salary as principal source of income. Hence by virtue of B(ii)22 in table given above, jurisdiction of the assessee is vested with Assessing Officer, Ward 65(5) New Delhi and not falling under the jurisdiction of Ward 33(3), New Delhi. After considering business income, jurisdiction will fall with Income Tax Officer, Ward 33(3), New Delhi. 1.6 Hence, the impugned notice u/s 148 under the Act which was issued by Ld. Assessing Officer Ward 65(1), New Delhi was without jurisdiction over the assessee which was further accepted and authenticated by department itself by way of transfer of the case from Ward 65(1) to Ward 65(5) with mention in remark column of TRANSFER M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi who was having valid jurisdiction and assessment order was passed by AO ward 26(3), New Delhi. The Hon ble ITAT has quashed the assessment proceeding since there was no valid notice pursuant to which assessment was made. The issue of valid jurisdiction is a condition precedent to the validity of any assessment under Section 147 of the Act, therefore, the assessment made pursuant to such notice is bad in law. We also rely on the decision of the hon ble courts in following cases: 1. CIT Vs. M/s MT Builders Pvt. Ltd., (2012) 349 ITR 271 (All.) It was held by the Hon ble Allahabad High Court that the notice issued by an Officer who had no valid jurisdiction for the assessee is invalid. 2. (i) Smt. SmritiKedia Vs. Union of India and Others, [2011] 339 ITR 37 (Cal.) (ii) Indorama Software Solution Ltd. Vs. Income Tax Officer, [2013] 29 taxmann.com 78 (Mumbai) In both cases, the hon ble courts have held that When it is apparent that the notice u/s 148 was issued by the AO who was not vested with the jurisdiction over the assessee then, the same is illegal and void. Consequently, the reassessment proceedings and order in pursuant to the illegal notice u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 148 nor the reasons recorded by the Ld. AO were provided voluntarily by the AO. Authorised Representative (AR) of the assessee has requested Ld. AO for the same vide letter dated 04/01/2016 (Paper book page no. 14-16) citing the guidelines laid down by the Jurisdictional High Court of Delhi in the case of CIT Vs. Chetan Gupta, order dated 15.09.2015 and the decision of the Apex Court in case of GKN Driveshafts India Limited (259 ITR 19) and thereafter notice u/s 148 and the reasons recorded have been provided on 04/01/2016. Reasons recorded by the Ld. AO is reproduced hereunder: This office is in receipt of AIR information for the F.Y. 2007-08 in the case of Assessee. It is observed that the assessee has deposited cash amounting to Rs. 15,31,500/- in his saving bank account during the period. Vide letter dated 26.02.2015 and 12.03.2015 respectively the assessee was asked to furnish necessary details/documents so that the source of cash deposit may be examined but the assessee neither attended nor furnished the details as asked for. Moreover, the assessee has not filed his ITR for the year under consideration. In view of the above, I have reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of cash deposit (Para 2 of reason recorded) into the bank account of the assessee. This facts got confirmed when the AR of the assessee inspected the assessment file after conclusion of assessment and found that notice u/s 148 dated 30/03/2015 was issued merely on the basis of AIR information. Except AIR information, Ld. AO had nothing in his possession to make a belief as to escapement of income. Even bank statement of the assessee was obtained by issuing letters u/s 133(6) dated 21/12/2015 to the concerned banks. Bank statement has been printed on 28/12/2015 (by OBC Axis Bank) and on 02/01/2016 (by SBI) and later on furnished to the Ld. AO. Obviously, there was no tangible materials in the possession of Ld. AO, as on the date of issue of notice u/s 148, on the basis of which he makes a belief as to escapement of income. Had the ld. AO having bank statement on the date of issue of notice or recording of reason to believe, the amount would have been 15,69,500/- instead of Rs. 15,31,500/- as recoded by Ld. AO. Unfortunately, the Ld. CIT(A), in spite of having all the details before him for perusal, failed to appreciate the facts and erred in confirming the order of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has escaped assessment. It is also important to bear in mind the subtle but important distinction between factors which indicate an income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. While dealing with this aspect of the matter, it is useful to bear in mind the following observations made by Hon ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [(1976) 103 ITR 437], the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded. It is for the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons. Their Lordships added that The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence.... . Therefore, the reasons are to be examined only on the basis of the reasons as recorded. The next important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment all that is necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the assessee from assessment. Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs 10,24,100 have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The Assessing Officer has opined that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o place our reliance on the decisions of the various hon ble courts in the cases of a) Joti Prasad vs. State of Haryana 1993 AIR 1167 (SC) b) Ashok Kumar Sen V/s CIT 132 ITR 707 (Del. HC) c) United Electrical Co. Pvt. Ltd. vs. CIT (2002) 258 ITR 317 (Del HC) d) CIT v. Kelvinator India (256 ITR 1, SC) e) Sarthak Securities Co. P. Ltd. vs. ITO - (2010) 329 ITR 110 (Delhi) f) Indian Oil Corporation V/s ITO 159 ITR 956 (SC) g) Dass Friends Builders P. Ltd. vs. DCIT (2006) 280 ITR 77(A11) h) Madanlal Jindal vs. ITO (1973) 92 ITR 546 (Cal) i) Signature Hotels Pvt. Ltd., 338 ITR 51 (Delhi High Court) 2.11 While disposing of objection on the matter raised during assessment, the Ld. AO has justified his action as to reason to believe on the basis of AIR information and quoted the decision of the Supreme Court in the case of Raymond Woolen Mills Ltd. Vs. ITO (1999, 236 ITR 34), which in our humble opinion, is distinguishable as there was no prima-facie tangible material available on the record or was in the possession of the Ld. AO on the date of making his believe as to escapement of income. This is the case of complete absence of tangible, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion of assessment appears to be ridiculous, and otherwise, if it is presumed that there is typographical error occurred as regards to date of issue of notice u/s 143(2) of the Act, the date of issue of notice with all imagination may be 08/11/2015 or 11/08/2015, and both the dates (as imagined) fall prior to the date of filing of the Return of Income i.e. 07/12/2015, which in itself render the notice invalid in view of the decision of the Jurisdictional High Court in case of Pr. CIT-8 vs. Shri Jai Shiv Shankar Pvt. Ltd (383 ITR 448, ITA 59/2015). (Paper book page no. 179-187). 3.3 A RTI application has been filed in this respect and copy of the notice issued u/s 143(2) is requested to be provided to us, but reply of the RTI application is still awaited and the same can be produced once received from the authority. 3.4 We are of the firm belief that the notice u/s 143(2) has not been issued at all as the fact is justified by the counsel of the assessee as well as CIT(A)-XXI. With this belief, we submit as under: Scrutiny notice issued u/s 143(2) of the Income Tax Act, 1961 is the starting point of assessment proceedings whereby AO1 seeks documents/evidences from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinized by the AO. 4. The Hon ble Delhi High Court in the case of Alpine Electronics Asia Pvt. Ltd. Vs. DCIT, 341 ITR 247 (Del.) and in R. Education Trust in appeal No. 510 of 2011 has again held that service of notice u/s. 143(2) is a mandatory requirement even in the proceedings u/s. 148 of the Act. 5. The Hon ble Delhi High court in recent case of Indus Tower Limited vs. CIT vide its judgment dated 29.05.2017 has also considered similar issue by following the judgment of Hotel Blue Moon, 321 ITR 366 (SC) and CIT vs. Jai Shree Shiv Shankar and has again decided the issue in favour of the assessee by holding as under : 13. In response to the above submissions, Mr. Dileep Shivpuri, learned Senior Standing Counsel for the Department, submitted that as far as second submission is concerned, the facts speak for themselves. He had nothing further to add because there was no explanation for the failure to issue notice under Section 143(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat High court), 6. CIT vs. K M Ravji in Tax Appeal No. 771 of 2010 order dated 18.07.2011 (Gujarat High Court) 7. CIT vs Rajeev Sharma 336 ITR 678, (High court of Allahabad) 8. M/s Sapthagiri Finance and Investments vs. ITO: TC(A). No. 159 of 2006 dated 17.07.2012 (Mad HC) [(2013) 90 DTR (Mad) 289] 9. CIT Vs. C. Pakniappan 284 ITR 257 (Hon'ble Madras High Court) 10. CIT Chennai Vs. Alstom T D India Ltd. in Tax Case (Appeals) No. 1183 and 1186 of 2006 dtd. 3.9.2012 (Hon'ble Madras High Court) 11. ACIT Cir.2(l), Panaji Vs. JenoPharmaceutieals Ltd. in Tax Appeals No.75 to 78 of 2012 dtd. 14.2.2013 (Hon'ble Bombay High court) 12. CIT Vs. Deep Baruah (2010) 329 ITR 362, (Hon'ble Guhawati High Court) 12. CIT Vs. Salman Khan in Income-tax Appeal(L) No.2362 of 2009 dtd. 1.12.2009 (Hon'ble Bombay High court) 13. Raj Kumar Chawla Others VS. ITO -(2005) 94 ITD 1 (Del)(SB) 14. CIT vs. Abacus Distribution Systems (India) Pvt. Ltd, order dated 07.02.2017 (Bombay High Court) 15. Pr. CIT vs. Shri Jai Shiv Shankar Traders Pvt. Ltd, order dated 14.10.2015 (Delhi High Court) 16. ITO v. Naseman Farms Pvt. Ltd. Ors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not save the complete absence of notice. Hence, according to fact and circumstances of the case, section 292BB is not applicable. 3.10 Ld. CIT(A) has given reference to judicial pronouncement, with due regards to all those judicial pronouncement, we are of the opinion that the subject matter covered under those cases are not the subject matter in the present case. Case of CIT vs. OCM India Ltd. deals with limitation period regarding issue of notice u/s 143(2) which is not the subject matter of the present appeal. Decision in the case of Josh Builders Developers (P) Ltd. Vs. PCIT deals with the objection during assessment and that has been objected during assessment from our side since beginning of the assessment and, hence distinguishable. The issue in the present case is the complete absence of the notice u/s 143(2) and hence, case laws citied by the Ld. CIT (A) is not applicable. Ground No.-4 5 Ground -4 That the learned CIT(A) has erred both on facts and law by upholding the impugned addition u/s 69A of the Act, failing to appreciate that provisions of section 44AF of the Act is presumptive and assessee is not required to maintain books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he started to collect evidence such as bank statement, copy of invoice etc. and filed his return of income. Further, assessee is also shifted himself from Delhi to Gurgaon, Haryana and the documents/evidence, which was old and not in use, was not preserved. Only copy of bills (a few) were found and furnished to the Ld. AO during assessment. Ld. AO sent letter u/s 133(6) of the Act to verify the purchases and those were returned back after some time i.e. one letter got returned on 10/03/2016 and the other was not responded. We would like to draw your attention that those letters were sent after a period of seven and half years from the year of transaction. Obviously, it is long period and considering the time that has passed since the year of purchase, merely non-service of letter u/s 133(6) to parties does not lead to conclusion that purchases are not genuine. There may be a number of reasons for non-service of letter, one of them may be that the person has changed their business address. However, the assessee in his reply letter to Ld. AO also mentioned the name of person who was employed by assessee in order to carry on the business, but Ld. AO did not choose to verify the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and particularly, cash withdrawn from one bank account and deposited in another bank account, this fact is totally ignored. We hereby furnish the details hereunder of total cash deposited and cash withdrawn from the bank (bank-wise) during the year FY 2007-08. Name of Bank and account number Cash Withdrawn (figures in Rs.) Cash Deposited (figures in Rs.) State Bank of India (A/c No. - 10141951643) (paper book page no. 51-55) 10,50,000/- NIL Oriental Bank of Commerce (A/c No.52252151004328) (paper book page no. 56-57) NIL 1,000/- Oriental Bank of Commerce (A/c No.52252010007930) (paper book page no. 59-60) 2,55,750/- 15,31,500/- Axis Bank Limited (A/c No.- 120010100435536) (paper book page no. 61-64) 1,75,000/- 37,000/- TOTAL 14,80,750/- 15,69,500/- 5.2 From the table given above, it is clear that cash dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1643) with opening balance of Rs. 20,37,515/- and deposited Rs. 5,00,000/- which was refund of application money from HUDA and Rs. 47,000/- from business receipts prior to payment for construction of house (advance payment) of Rs. 15,00,000/- on 15/06/2007 and leaving a balance of Rs. 10,84,515/- which was available for withdrawal. Further, business receipts are continuously being received during the year. 5.5. The cash deposit summary which is self-explanatory, make it very clear that the cash is deposited out of cash withdrawal from the bank. We would like to co-relate the cash in hand (without considering business receipt) with the dates of cash deposited into the bank account as mentioned in her order. Date of cash deposit (As per AO order) Amount (Rs.) Cash balance available for deposit. (as per cash withdrawal and deposit summary) 30/07/2007 45000/- 181036/- 31/07/2007 30000/- 136036/- 14/11/2007 45000/- 991036/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which fall short of cash withdrawn, has been met out of business receipts. During the assessment, assessee has well explained to Ld. AO that the payment by cheque was given against construction of residential house which is totally ignored and labelled a charge that assessee has deliberately desisted from giving narration of the entries of bank account is totally unjustified. 5.7 Non-consideration of the documents and evidence, which was available on record as on that of order and explanation offered to him during assessment, shows a biased intention of the Ld. AO and hence assessment order so framed by making an addition of Rs. 15,31,500/- on account of cash deposit remained unexplained is not justified on facts. 5.8 Ld. AO has tried to justify that certain investment was made after cash deposit, but completely failed to find the facts that the cash has also been withdrawn from the bank account. Between cash withdrawal and cash deposit, there may be some delay, but the Ld. AO has failed to bring evidence on record that the withdrawn cash has been invested anywhere else before it was deposited into bank account. The Ld. AO failed to bring any evidence or documents on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gap between withdrawal and deposits. 5. Anupama Chaudhary Vs. Income Tax Officer: ITA No. 4155(Del)/2009, decision dated 27/12/2010 (paper book page no. 197-203) Relying on the decision of Ld. ITAT in case of ACIT Vs. Baldev Raj Charla others (2009) 121 TTJ 366, the Ld. Court held that simply because there was a time gap, the explanation of the assessee cannot be rejected and hence the addition confirmed by the learned CIT(A) is not correct. We, therefore, delete the same. This ground of the assessee is allowed. 6. Sh. Baljit Singh Vs. ITO (ITA No 986/CHD/2018) (paper book page no. 204-208) No evidence has been made available by the Revenue to support the possibly unarticulated suspicion that the funds have been utilised elsewhere. Accordingly, considering the peculiar facts and circumstances of the present case ground No. 2 raised by the assessee is allowed. The addition sustained is directed to be deleted. 7. Dy. CIT Vs. Smt. Veena Awasthi (ITA No 215/LKW/2016) (Paper book page no. 209-219) We find that addition has been made by the Assessing Officer, as is evident from his order, on the ground that he has come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eem fit and proper. 9. Ld. Counsel for the assessee reiterated the submissions as made in the written submission as raised in respect of the additional grounds. The relevant contents of the written submission are reproduced as under:- SUBMISSION OF THE ASSESSEE (On additional grounds) The applicant has filed an application dated 11/03/2022 under Rule 11 of the ITAT Rules wherein two additional grounds have been raised which are legal in nature and goes to the root of the matter. One of them relates to the matter of jurisdiction (Additional Ground-I), and another relates to issue of notice u/s 143(2) of the Act on the date of filing of return of income without following the scheme section 143(2) (Additional Ground- 2). Considering the generosity and the precedents of the Learned Tribunal, we believe that additional ground raised by applicant be admitted and hence, we are making our submission accordingly. 1. Additional Ground -1 (Related to jurisdiction of AO) That on the facts and circumstances of the case, the notice u/s 148 dated 29/03/2016 issued by Ld. AO, Ward 65(5), New Delhi is invalid and without jurisdiction as the said notice was issued by no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice issued at the address 8-23 , Masoodpur , New Delhi 8-23 , Masoodpur , New Delhi Subsequent notice u/s 142( 1) issued b y the Ld . AO H.No.- 415 , Sector-22 , Gurgaon- 122016 H.No.- 415 , Sector-22 Gurgaon- 122016 (not all but majority of them) Address mentioned by Ld. AO on assessment order H.No.- 415, Sector-22, Gurgaon- 122016 H.No.- 415, Sector-22, Gurgaon- 122016 Date of passing of the Assessment Order 29103/2016 14112/2016 Date on which notice u/s 148 was issued 30103/2015 9103/2016 1.2.2. The Ld. AO while recording reasons for the purpose of issue of notice u/s 148, has used the address which is not of assessee and the correct address was well known to Ld. AO on the date of issue of notice u/s 148, as the same AO has completed the assessment for the A Y 2008-09 mentioning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, if the place at which he carries on his business or profession is situated within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situated within the area, and (b) in respect of any other person residing within the area. 1.5 Section 120 of the Income Tax Act, 1961 is mentioned hereunder: Section 120 (1):- Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for exercise of the powers and performance of the functions by all or any of those authorities. Section 120 (2):- The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it. Section 120 (3):- In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n defined as (a) All cases of persons referred to in corresponding entries in item (a) and (b) above other than: (i) Persons whose principal source of income is from salary. (ii) Persons falling under jurisdiction of Principal Commissioner I Commissioner of Income Tax, Delhi-21 III Jurisdiction over residual cases in respect of the entire NCT of Delhi including corporate and non- corporate cases lies with Pr. CITI CIT -3, New Delhi S. No. Charge Rangel Assessment Unit Jurisdiction (Alphabetical) 11 Pr. Commissioner/ Commissioner of Income Tax, Delhi-II Range 33/ Ward 33(3) Falling under ward name of Vasant Kunj under MCD and number is 171. 22 Pr. Commissioner/ Commissioner of Income Tax, Delhi-22 Range 65/Ward 65(5) All Employees/Pensioners of following Ministries/Departments: 1. Delhi Police, DDA, NDMC 1.8. Assessee has filed his Income Tax Return in respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a Assessing Officer though who has no jurisdiction as per the CBDT's notification, such mistake cannot confer the jurisdiction on such an Assessing Officer. Jurisdiction can be conferred only by notification u/s 120(1) and 120(2) of the Act only. 1.9. Hence, the impugned notice u/s 148 under the Act which was issued by Ld. Assessing Officer Ward 65(5), New Delhi was without jurisdiction and hence it is an invalid notice in the eye of law and thus, assessment order passed by Ld. Assessing Officer, Ward 65(5), New Delhi pursuant to such notice is void-ab-initio. 1.10.1. In CIT Vs. M/s MT Builders Pvt. Ltd., (2012) 349 ITR 271 (All.) It was held by the Hon'ble Allahabad High Court that the notice issued by an Officer who had no valid jurisdiction for the assessee is invalid. 1.10.2. In Smt. Smriti Kedia Vs. Union of India and Others, [2011] 339 ITR 37 (Cal.) and in Indorama Software Solution Ltd. Vs. Income Tax Officer, [2013] 29 taxmann.com 78 (Mumbai), In both cases, the hon'ble courts have held that When it is apparent that the notice u/s 148 was issued by the AO who was not vested with the jurisdiction over the assessee then, the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of this proposition we also rely upon the cases of Hon'ble Apex Court and other Hon'ble Courts in the cases of: a) Y. Narayana Chetty Vs. ITO, 35 ITR 388, 392 (SC); b) CIT Vs. Maharaja Pratap Singh Bahadur, 41 ITR 421 (SC); c) CIT Vs. Robert, 48 ITR 177 (SC). d) CIT v. Thayaballi Mulla Jeevaji Kapasi (1967) 66 ITR 147 (SC) e) CIT v. Kurban Hussain Ibrahimji Mithiborwala (1971) 82 ITR 821 (SC) f) DR. (MRS.) K.B. Kumar vs. Income Tax Officer (2010) 131 TTJ (Del) 511 2. Additional Ground -2 [Related to issue of notice u/s 143(2) of the Income Tax Act on the date of filing of Return) That on the facts and circumstances of the case, the Ld.AO has erred in law while issuing notice u/s 143(2) of the Act, (on 08/11/2016, that is the day of filing of ITR in response to notice u/s 148 and notice u/s 143(2) handed over to AR of the assessee), which is issued in gross violation of the scheme of section 143(2) and thus the assessment order passed by the Ld. AO liable to be quashed in view of the decision of Hon'ble Jurisdictional High Court (Delhi) in the case of Director of Income Tax vs. Society for Worldwide Interbank Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolation of the scheme of the section 143(2) which vitiate the entire proceeding and hence, the order passed by the Ld. AO is liable to be quashed. 2.4 The Hon'ble Delhi High Court in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del.) (page no. 55-57) has held as under: Both the CIT(A) and the Tribunal have returned a concurrent and clear finding of fact that the notice under s. 143(2) was issued on 23rd March, 2000 and since the return was filed on 27th March, 2000, the notice was not a valid one and, therefore, the assessment completed on the basis of the notice was also invalid and was consequently set aside. It is for the first time that the counsel for the appellant contends that the notice, in fact, was issued on 27th March, 2000 and not on 23rd March, 2000, the date which is recorded on the notice itself. No such contention was raised before the lower appellate authorities. Consequently, the said contention cannot be raised before the Court for the first time. The appellant has stated that the return was filed by the assessee on 27th March, 2000 and the notice under s. 143(2) was served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the LT. Act to pass the assessment order against the assessee. He has submitted that the issue is covered in favour of the assessee by the judgment of the Hon'ble Delhi High Court in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del.) in which it was held as under: Both the CIT(A) and the Tribunal have returned a concurrent and clear finding of fact that the notice under s. 143(2) was issued on 23rd March, 2000 and since the return was filed on 27th March, 2000, the notice was not a valid one and, therefore, the assessment completed on the basis of the notice was also invalid and was consequently set aside. It is for the first time that the counsel for the appellant contends that the notice, in fact, was issued on 27th March, 2000 and not on 23rd March, 2000, the date which is recorded on the notice itself. No such contention was raised before the lower appellate authorities. Consequently, the said contention cannot be raised before the Court for the first time. The appellant has stated that the return was filed by the assessee on 27th March, 2000 and the notice under s. 143(2) was served upon the Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(2) of the Act in so far as it uses the phrase if considers it necessary or expedient presupposes application of mind on part of Ld. AO before notice u/s 143(2) of the Act is issued which words have been explained by Hon'ble Apex court in case of Bhikubhai Patel vs. State of Gujarat (4 SCC 144) relevant extract of which is reproduced above where it is observed by Hon'ble Apex court that ... The expression: so considered necessary is again of crucial importance. The term consider means to think over, it connotes that there should be active application of the mind. In other words the term consider postulates consideration of all the relevant aspects of the matter. A plain reading of the relevant provision suggests that the State Government may publish the modifications only after consideration that such modifications have become necessary. The word necessary means indispensable, requisite, indispensably requisite, useful, incidental or conducive, essential, unavoidable, impossible to be otherwise, not to be avoided, inevitable. The word necessary must be construed in the connection in which it is used. (See-Advanced Law Lexicon, 3rd Edition, 2005; P. Ramanatha Aiyar) .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue. 12. I have heard Ld. Authorized Representatives of the parties and perused the material available on record. The assessee has raised question of jurisdiction of proceedings which goes to the root of any proceedings. It is well settled that initiation of proceedings by an Authority which has no jurisdiction would vitiate the order passed in consequence to such proceedings. The assessee has relied on various case laws on the validity of the proceedings. The reliance was placed by the Ld. Counsel for the assessee on the decision of the Tribunal rendered in the case of Mukesh Kumar vs ITO in ITA No.2358/Del/2012 order dated 12.06.2015. It is contended that the decision of the Tribunal squarely applies on the facts of the present case. Ld. Counsel for the assessee submitted that in the light of the binding precedents where it has been categorically held that the notice issued u/s 148 of the Act by the Assessing Authority who was not vested with the requisite jurisdiction and in that event, issuance of such notice is ab-initio void hence, nullity in the eyes of law. Therefore, he submitted that the impugned assessment order deserves to be quashed on this ground. 13. During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby, quashed. 15. Other grounds are related to addition on merits. Before the Lower Authorities, it was stated by the assessee that there were cash withdrawals and deposits. Before Ld.CIT(A), it was stated that the cash was withdrawn and deposited in the bank account. Ld. Counsel for the assessee has pointed out that a sum of Rs.14,85,750/- was available out of withdrawals on the bank account for making the deposits. I find that Ld.CIT(A) has not given any findings. Therefore, looking to the totality of the facts or findings of the Lower Authorities are based on conjectures and surmises and ignored the facts placed on record. Therefore, in my considered view, the AO was not justified in making the addition. The grounds raised by the assessee are allowed on merit. 16. In the result, the appeal filed by the assessee is allowed. ITA No.800/Del/2020 [Assessment Year : 2009-10] 17. Now, I take up ITA No. 800/Del/2020 filed by the assessee pertaining to Assessment Year : 2009-10. The assessee has raised following grounds of appeal:- 1. That the notice U/S 148 of the IT Act dated 29103/2016 is bad in law and without jurisdiction in as much as there was no cogen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed in view of the decision of Hon'ble Jurisdictional High Court (Delhi) in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249. 19. I have heard Ld. Authorized Representatives of the parties and perused the material available on record. I find that the facts and issues are similar and identical to the ITA No.799/Del/2020 [AY 2008-09]. Ld. Representatives of the parties have adopted the same arguments in respect of grounds of appeal alongwith additional grounds. Since the facts are identical and no change into the facts and circumstances has been pointed by the Revenue in the year under appeal, the grounds raised in this appeal filed by the assessee are allowed. My decision in ITA No.799/Del/2020 [AY 2008-09] in para 14 and 15 of this order would apply Mutatis Mutandi in this appeal filed by the assessee as well. 20. In the result, the appeal of the assessee is allowed. 21. In the final result, both appeals filed by the assessee in ITA Nos. 799 800/Del/2020 [Assessment Years 2008-09 to 2009-10] are allowed. Order pronounced in the open Court on 15th May, 2023. - - TaxTMI - TMITax - I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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