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Judgment
PER S.RIFAUR RAHMAN,AM:
This appeal has been filed by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘ld. CIT (A)) dated 17.10.2024 for the assessment year 2017-18.
Ld. DR of the Revenue brought to our notice findings of Ld. CIT (A) and in this regard, he submitted that the issue of jurisdiction was not raised by the assessee at the time of section 148A proceedings. He further submitted that ld. CIT (A) has not appreciated factual matrix of the case.
At the time of hearing, Ld. AR of the assessee submitted that the issue is squarely covered and gave his submissions on the issue of validity of reassessment proceedings. He submitted that the assessee has taken the issue relating to validity of reassessment proceedings before the ld. CIT (A) who has held as under :-
“The above grounds are on validity of reassessment proceedings. The appellant has raised various legal issues in support of the contention that the reassessment proceedings were not validly initiated. The first legal objection is that the reassessment proceeding have been initiated by non-jurisdictional authority. In support of above contention, the copies of the order u/s 148A(d)/ notice u/s 148 of the Income tax Act, 1961 has been placed on record which has been issued by ITO, Ward 22(1), Delhi whereas the jurisdiction over the appellant was with Circle under the charge of Range-22, Delhi. In support of the appellant’s contention that the such initiation of proceedings by an authority not having jurisdiction over the assessee is not valid in law. I have considered the decisions cited by the appellant and more particularly in the decision of Jurisdictional High Court in the case of Dushyant Kumar Jain vs DCIT 66 Taxmann.com 126 (Del), Jindal Photo Films vs DCIT 234 ITR 170 (Del) and also the binding CBDT Instruction dated 03/01/2011 on the jurisdiction over the authorities in Delhi Charge. The reassessment proceedings are therefore not validly initiated by respectfully following the CBDT Instruction and the decision relied upon by the appellant and the reassessment proceedings and consequent order under appeal is quashed. As I have already quashed the reassessment proceedings, the other legal grounds are not adjudicated as the same are just of academic interest.”
Ld. AR submitted that in view of the aforesaid findings of the ld. CIT(A), it is clear that the reassessment proceeding have been initiated by non-jurisdictional authority. He submitted that this issue is squarely covered by various decisions of Hon’ble High Courts and the Benches of the Tribunal. In this regard, he relied on various decisions and some of the decisions are as follows :-
DN Singh vs. CIT 454 ITR 595 (SC).
Mr. Hersh Washesher Chadha vs. ACIT in ITA No123/Del/2021 dated 13.04.2023
Durga Fire Work vs. ITO in ITA No.383/Del/2024 dated 03.07.2024
Shri Vipul Mittal vs. DCIT in ITA No.2850/Del/2019 dated 15.01.2025
He heavily relied on the decision of Vipul Mittal (supra) [in which Accountant Member is the author] and submitted that this issue is now no longer res intra and accordingly the appeal of the Revenue be dismissed and the order of the ld. CIT (A) may be upheld.
Considered the rival submissions and material placed on record. We find that coordinate Bench in the case of Vipul Mittal (supra) has decided the issue in favour of the assessee and relied on the case of Ashok Devichand Jain v. Union of India (452 ITR 43) (Bom) wherein it was held as under: -
“Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitioner’s objection to reopening on various grounds.
2.The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.
3.Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice.
4.We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019.
5.The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law.
6.In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019.
7.Consequently the order dated 18th November, 2019 rejecting Petitioner’s objection is also quashed and set aside.”
Further, we observed that the reassessment proceedings in the present case are to be treated as being initiated by non-jurisdictional assessing officer and, therefore, the reassessment proceedings and consequent assessment order both needs be quashed. In this regard, we rely on the decisions of YKM Holdings Pvt. Ltd. v. ACIT Circle–4(1) ITA No. 1020/DEL/2019 dated 29.04.2024, M/s. Kelvin International vs. DCIT in ITA No.5363/Del/2017 dated 22.12.2013 and J Mitra and Bros. VS. ACIT in ITA No.3643/Del/2023 dated 10.04.2024.
After considering the factual matrix in this case, we observed that similar issue under consideration is considered by the coordinate Bench in the case of YKM Holdings Pvt. Ltd. vs. ACIT (supra) wherein it was held as under :-
“4.We have heard the rival submissions and perused the material available on record. At the outset, we find that the additional grounds raised by the assessee go to the root of the matter challenging the jurisdictional per se. All the facts relevant for its adjudication are placed on record. Hence, in the light of decision of Hon’ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383, we are inclined to admit the additional grounds and take up the same for its adjudication.
5.We find that assessee’s returned income for the A.Y. 2015- 16 was Rs. 37,78,510/- hence, the jurisdiction of the assessee should lie with ACIT/DCIT since the returned income had exceeded Rs. 30,00,000/-, in view of the CBDT Instruction No.1/2011 dated 31.01.2011. For the sake of convenience, the said Instruction No.1/2011 [F. No.187/12/2010-IT(A-I)] dated 31.01.2011 is hereby reproduced:-
“SECTION 119 OF THE INCOME-TAX ACT, 1961-INCOME-TAX AUTHORITIES-
INSTRUCTIONS TO SUBORDINATE AUTHORITIES
INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-1)), DATED 31- 1-2011
References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under:
Income Declared (Mofussil areas) Income Declared (Metro cities) ITOS ACS/DCS ITOS DCS/ACS Corporate returns Upto Rs. 20 lacs Above Rs. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune.
The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.”
6.In the instant case, the notice under section 143(2) of the Act stood issued to the assessee on 12.04.2016 by ITO Ward 27(4), Delhi. In July, 2016, the ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/-. Copy of the said transfer memo is enclosed in page 5 of the paper book. After the transfer of jurisdiction from ITO to DCIT, no fresh notice under section 143(2) of the Act was issued by ACIT, Circle 4(1), Gurgaon. The assessment was ultimately framed under section 143(3) of the Act for A.Y. 2015-16 on 14.12.2017 by ACIT, Circle – 4(1), Gurgaon. It is pertinent to note that assessment for the A.Y. 2014-15 of the assessee was completed under section 143(3) of the Act on 30.11.2016 by DCIT, Circle – 27(2), New Delhi. Hence, it was argued that the notice under section 143(2) of the Act dated 12.04.2016 issued by the ITO selecting the return of assessee for A.Y. 2015-16 for scrutiny is without jurisdiction and consequently, the assessment framed under section 143(3) of the Act dated 14.12.2017 required to be quashed as void ab initio. When this was confronted to learned DR, he pointed out to the provisions of section 124(3) of the Act wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice. In the instant case, nowhere up to learned CIT(A), the assessee has challenged the jurisdiction of the learned AO. In our considered opinion, this argument of the learned DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Further, the provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice under section 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued under section 143(2) of the Act on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Hon’ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom). In this case, very same issue was addressed in the light of CBDT Instruction No.1/2011[F. No.187/12/2010-IT(A-I)] Dated 31.01.2011. For the sake of convenience, the entire order is reproduced hereunder:
“1.Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitioner’s objection to reopening on various grounds.
2.The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.
3.Petitioner has filed return of income of about Rs. 64,34,663/-and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice.
4.We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019.
5.The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law.
6.In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019.
7.Consequently the order dated 18th November, 2019 rejecting Petitioner’s objection is also quashed and set aside.
8.Petition disposed.”
7.In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Consequently, assessment framed under section 143(3) of the Act is hereby quashed as void ab initio. The additional ground no.2 is hereby allowed.”
Similar view was expressed by the ITAT, Mumbai in the case of Monarch & Quershi Builders v. ACIT Circle – 33(2) ITA No. 2026/MUM/2023 and by the coordinate Bench in the case of Sapna Rastogi vs. ITO – ITA No. 617/DEL/2024.
Respectfully following the aforesaid decisions, we are inclined not to disturb the detailed findings of the ld. CIT (A) and accordingly, we uphold the same. Hence, grounds raised by the Revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed.