1. The appellant is an individual who filed his income tax return for the Assessment Year 2004-05.
2. A notice u/s 148 of the Income Tax Act, 1961 was issued to the assessee in March 2009 on the basis of information received from the Investigation Wing, New Delhi that the appellant had received an entry of Rs.4 lac from one Shri Trilok Chand Bansal on 3rd September 2003 and Rs.4 lac from Shri Subhash Gupta on 4th September 2003.
3. The notice u/s 148 was issued by ITO Ward-26(4) New Delhi. After receipt of notice the appellant had responded through its authorized Representative and submitted the copy of the return filed under provisions of section 139. After noticing that the jurisdiction over the appellant is vested with ITO Ward-26(3), the file was transferred by ITO Ward-26(4) to ITO Ward – 26(3). The ITO Ward-26(3), New Delhi had proceeded with the framing assessment without issuing fresh notice u/s 148.
4. The appellant didn’t comply with the notices u/s 143(2) and 142(1) of the Act issued by the ITO Ward – 26(3), therefore, the AO completed the assessment ex-parte by bringing to tax the said amount of Rs.8 lac.
The Revenue contended that, as the assessee has not complied with the notices, the above stated enteries can’t be verified and thus the additions under assessment are justified.
The assessee didn’t appear before Tribunal during the hearing. However the Assessee contended before CIT (A), that the notice issue u/s 148 was invalid, since the ITO who issued notice u/s 148 initially, had no valid jurisdiction over the assessee. Thus the notice was bad in law and the assessment should be nullified.
Held by ITAT
1. The ITO Ward-26(3), New Delhi had proceeded with the framing assessment without issuing fresh notice u/s 148. It means that ITO Ward-26(4), New Delhi had no valid jurisdiction over the appellant, at the time of issuing notice u/s 148 of the Act.
2. The reliance has been placed on the decision of Hon’ble Allahabad High Court in the case of CIT Vs. M/s MT Builders Pvt. Ltd., (2012) 349 R 271 (All.) that the notice issued by an Officer who had no valid jurisdiction over the assessee is invalid. Accordingly, The notice under Section 148 of the Act issued by the Income Tax Officer, Ward-26(4) is non-est in the eyes of law since he had no valid jurisdiction over the appellant either territorial as notified under Section 124 of the Act or by transferring the case under the provisions of Section 127 of the Act.
3. 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.
4. The following decisions have been relied upon in support of the aforementioned proposition:-
a) Hon’ble Apex Court in the cases of Y. NarayanaChetty Vs. ITO, 35 ITR 388, 392 (SC);
b) CIT Vs. Maharaja PratapsinghBahadur, 41 ITR 421 (SC); and
c) CIT Vs. Robert, 48 ITR 177 (SC).
5. In the light of the above settled principle of law, the reassessment proceedings have been quashed since there was no valid notice pursuant to which the reassessment proceeding was made in the present case. The other matters have not been found necessary to be adjudicated, since the proceedings have been quashed.
Comment- Thus an important principal has been laid down in this judgment. In case of transfer of assessment proceedings by an officer not having jurisdiction over the assessee, to another officer with valid jurisdiction, new notice u/s 148 should be issued by later and failure to do so will result in Assessment without Jurisdiction.
Analysed by our Team Member CA Amit Handa