Gaytri Devi Sharma Vs ITO (ITAT Jaipur)
Conclusion: Notice issued by a non-jurisdictional AO was invalid rendering the addition under Section 69A void ab initio. It directly impacted the validity of the assessment under Section 69A, leading to the complete annulment of the additions.
Held: Assessee was a small-time trader of spices operating under the proprietorship of M/s Mahesh Trading Company in Jaipur, was subjected to an assessment for Assessment Year 2017-18. AO had made an addition of ₹5,25,000, treating cash and cheque deposits as unexplained money under Section 69A. CIT(A) upheld the additions, prompting Sharma to approach the Tribunal. Assessee argued that the initiation of proceedings was invalid as the notice under Section 142(1) dated 15.02.2018 was issued by the Income Tax Officer, Ward-7(1), Jaipur, who had no jurisdiction over the assessee’s case; the impugned bank account (A/c No. 21225500000599) belonged to her husband’s firm and was wrongly attributed; scrutiny selection was contrary to CBDT Instruction No. 3 of 2017 as the assessee’s cash deposits in specified bank notes were below ₹2.5 lakh, the exemption threshold. It was also contended that the deposits represented business receipts from spice trading, duly supported by sales records, bank transactions, and Udyog Aadhaar documents. Revenue contended that assessee had failed to provide conclusive evidence of the source of deposits. He maintained that both cash and cheque deposits remained unexplained and were rightly added under Section 69A. It was held that notice issued by non-jurisdictional AO without section 127 transfer order rendered assessment invalid. Tribunal specifically relied upon the jurisdiction chart and bank confirmation documents produced during the hearing, which established that the correct jurisdiction vested with Ward-7(3). This evidence directly impacted the validity of the assessment under Section 69A, leading to the complete annulment of the additions. Consequently, the assessment framed based on such notice was declared void ab initio.
