Reassessment based on satisfaction of AO not having Jurisdiction over Assessee is invalid

Anant Concrete Products Pvt. Ltd. Vs ITO (ITAT Delhi)

ITAT held that Considering the facts of the case in the light of decision in the case of Shri S.N. Bhargava (supra), it is clear that ITO at Ghaziabad was not having jurisdiction over the assessee. Therefore, he should not have recorded the reasons for reopening of the assessment and further he did not examine any information supplied by Investigation Wing and that he was having no reasons to believe that income chargeable to tax has escaped assessment in his jurisdiction and such facts are also not mentioned in the reasons recorded for reopening of assessment. The ITO, Ward-1(1), Meerut, did not do anything in the matter and merely followed the reasons recorded by ITO at Ghaziabad and that he has initiated the proceedings under section 148 against the assessee on borrowed satisfaction of ITO, Ghaziabad. He has also not examined any record of the case or information received from Investigation Wing. The A.O, Meerut did not record any reason for reopening of the assessment under section 148 of the I.T. Act. The reasons which are not in accordance with law, have been recorded at Ghaziabad by the ITO who was not authorized to do so and was having no jurisdiction over the assessee and the ITO having jurisdiction over the assessee at Meerut did not do so and merely acted on the above borrowed satisfaction of ITO, Ghaziabad. In my view, the initiation of re­assessment proceedings under section 147 of the I.T. Act is clearly bad in law and against the provisions of Law. The ITO at Meerut has, therefore, not validly assume the jurisdiction to initiate the re­assessment proceedings because he has merely followed the reasons recorded by ITO at Ghaziabad who was not having jurisdiction over the assessee. The issue is therefore, covered in favour of the assessee by order of Division Bench of ITAT, Agra Bench in the case of S.N. Bhargava (supra). I, accordingly, set aside the orders of the authorities below and quash the re-assessment  proceedings under section 147 of the I.T. Act, 1961. In the result, all the additions would stand deleted.

Full Text of the ITAT Order is as follows:-

This appeal by assessee has been directed against the order of the Ld. CIT(A), Aligarh, dated 11^th January, 2017 for A.Y. 2009-2010.

2. Briefly the facts of the case are that assessee filed its original return of income on 16^th September, 2009 at Rs.1,66,990 at Meerut. Later on, information was received from DIT (Inv.), New Delhi that search under section 132 of the Act had been conducted by the Investigation Wing, New Delhi, in the case of Shri S.K. Jain group of cases, who have provided accommodation entry at Rs.9 lakhs to the assessee company. On the basis of this information, action under section 147 was taken. Notice under section 148 of the I.T. Act was issued on 3^rd July, 2013 by Income Tax officer, Ward-1(1), Ghaziabad. The case of the assessee-company was transferred to ITO, Ward-1(1), Meerut being jurisdiction lies with this Ward. The A.O. after completing the re-assessment proceedings on merit, made addition of Rs. 9 lakhs under section 68 of the I.T. Act vide re­assessment order under section 147/143(3) of the I.T. Act, dated 31st March, 2015. The assessment was completed by ITO, Ward-1(1), Meerut.

Please become a Premium member. If you are already a Premium member, login here to access the full content.