Sanand Sankardas Vs ITO (ITAT Mumbai)
Assessee , a Non-Resident Indian (NRI) residing & working in Dubai, was assessed for AY 2015–16. His case was reopened u/s 147 & notice u/s 148 was issued by the AO of Ward 34(3)(5), Mumbai, who proceeded to make an addition of ₹36.12 lakhs u/s 69 for unexplained investment in a property purchased in Kerala.
Assessee argued that he was non-resident during the year & jurisdiction rested with the International Taxation Officer, not the AO who issued the notice, the property investment was made from funds remitted from abroad & that the reopening & assessment proceedings were without jurisdiction & hence void.
Dispute Resolution Panel (DRP) had earlier partly accepted the assessee’s objections by deleting the addition of ₹30.36 lakhs related to time deposits (explained from matured FDs)& Sustaining the ₹36.12 lakhs addition for the Kerala property purchase due to insufficient documentation.
Before the ITAT, the assessee challenged the jurisdiction of the AO citing Bombay High Court’s ruling in Nimir Kishore Mehta (2024) 161 taxmann.com 553 (Bom.) order dated 28.03.2024., which held that a non-jurisdictional AO cannot issue a notice u/s 148.
Tribunal agreed with the assessee & held AO had no jurisdiction over the assessee (an NRI) & hence notices u/s 148A & 148 & entire assessment proceedings are invalid. Sec 292BB does not cure the defect of lack of jurisdiction, especially when jurisdiction was challenged based on non-residency, not merely on service of notice. Assessment quashed on jurisdictional ground while the other grounds on limitation & merits were rendered academic.
