AI Structured Summary
Not yet generated for this judgment
Judgment
PER MANISH AGARWAL, A.M.:
The present appeal is filed by the assessee against the order dated 16.06.2025 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”] in Appeal No. CIT (A), Delhi-8/10719/2019-20 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 22.12.2019 passed u/s 143(3) r.w.s.147 of the Act pertaining to Assessment Year 2012-13.
Brief facts of the case are that the assessee company filed its return of income on 30.03.2013, declaring total income at NIL and same was processed u/s 143(1) of the Act on 12.05.2013. Information was received from the DDIT (Inv.), Unit-5(4), New Delhi that the assessee was maintaining a current account with ICICI Bank, Sadar Bazar Branch, New Delhi where a sum of INR 12.00 crores was credited during the period from 27.03.2012 to 23.07.2012 mainly from M/s Venkateshwar Planation Pvt. Ltd. and transferred to M/s Sadhna Media Pvt. Ltd. on same day. As the assessment was not completed under scrutiny u/s 143(3) of the Act, the complete details regarding the investment of INR 11,96,26,000/- made by the assessee company during the year under appeal in the equity shares of M/s. Sadhna Media Pvt. Ltd. and source of the said investment could not be examined/investigated. In the absence of proper supporting documents/explanation, source of investment of INR 11,96,26,000/-in the equity shares of M/s. Sadhna Media Pvt. Ltd, thus, remained unexplained. Therefore the proceedings for reopening of assessment u/s 147 were initiated. The ACIT, Circle 22(2) Delhi notice u/s 148 on 28.03.2019 after recording the reasons and obtaining the approval from the competent authority. Thereafter, statutory notice u/s 143(2) was issued on 22.05.2019 by the same AO i.e ACIT, Circle 22(2), Delhi. In terms of the order passed u/s 127 of the Act on 11.10.2019, the jurisdiction over the assessee was transferred to ACIT, Circle 22(2), New Delhi by the order of PCIT, Delhi-8. The AO then passed the assessment order u/s 143(3)/147 of the Act dated 22.12.2019 at the total income of INR 11,96,26,000/-.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) who vide impugned order dated 16.06.2025 has partly allowed the appeal of the assessee wherein the addition made were confirmed however, the set off of the brought forward business loss was allowed..
Aggrieved by the said order, assessee preferred the present appeal before the Tribunal by taking various grounds of appeal as per the appeal memo. During the course of hearing, vide application filed under Rule 11 of Income Tax Rules, 1962 dt. 20.03.2026, the assessee has filed additional grounds of appeal which reads as under:
1.“That on the facts and in the circumstances of the case and in law, the notice issued under section 148 of the Income Tax Act, 1961 ('the Act) dated 28.03.2019 by the Assistant Commissioner of Income Tax, Circle-22(2), Delhi ("The Assessing Officer") is in direct contravention of CBDT Instruction No. 1 of 2011 dated 31.01.2011 and is therefore invalid in law. Consequently, the assessment proceedings initiated and completed pursuant thereto are illegal, bad in law, and liable to be quashed as void ab initio.
2.Without prejudice to the above, on the facts and in the circumstances of the case and in law, the notice issued under section 143(2) of the Act dated 24.11.2019 by the Assessing Officer is barred by limitation and is therefore invalid in law.
3.The appellant craves leave to add, alter, amend or withdraw any ground or grounds of appeal at any time before or during the course of hearing of the appeal.
Ld. AR for the assessee further stated that the additional grounds of appeal raised are purely legal ground wherein the assessee has challenged the jurisdiction and limitation of issue of notice u/s 143(2) of the Act thus they deserves to be admitted. For this reliance is placed on the judgment of the Hon’ble Supreme Court in the case of NTPC reported in 229 ITR 383 (SC) and PCIT-3, Pune Vs Sinhgad Technical Education Society reported in (2017) 397 ITR 344 (SC).
On the other hand, the Ld. CIT-DR strongly opposed the additional grounds of appeal and submits that in the instant case, the additional ground of appeal requires verification on the part of the AO and, therefore, the said grounds of appeal cannot be admitted for adjudication at this stage.
Heard both the parties and perused the materials available on record. Since, the additional ground of appeal taken by the assessee before us under Rule 11 of the ITAT Rules is with respect to the assuming the jurisdiction by the Assessing Officer without having jurisdiction in terms of CBDT Instruction 01/2011 dated 31.01.2011 and further challenged the order passed by the ACIT, circle 22(2) Delhi on the basis of notice issue du/s 143(2) on 24.11.2019 which is barred by limitations. Accordingly, the issues raised in both the additional grounds of appeal go to the root of the matter, therefore they are hereby admitted for adjudication. It is further observed that no verification is required in this case and all the documents pertaining to these grounds of appeal are available in the Paper Book (PB) filed by the assessee. Since, the additional grounds of appeal are legal in nature, therefore, the same are taken first for consideration.
Heard both the parties and perused the materials available on record. From the perusal of the records, it is observed that the assessee has filed the return of income on 30.03.2013 declaring NIL income and the reassessment proceedings u/s 147 were initiated by the ACIT, Circle -22(2), Delhi. In terms of the CBDT Instruction No.01/2011, jurisdiction in case of corporate returns filed under Metro Cities lies with ITO if the returned income is less than Rs. 30.00 lacs. Thus as per this notification, reassessment proceedings u/s 147 should be initiated by the ITO and the notice u/s 148 in the instant case has to be issued by the ITO as the jurisdiction lies with him. However, as observed above, it was issued by the ACIT, Circle 22(2), Delhi. It is also a matter of fact that the notice us/s 143(2) was issued on 20.05.2019 by the ACIT, Circle 22(2), Delhi and thereafter the jurisdiction was transferred by the PCIT, Delhi-8 in terms of the order passed u/s 127 of the Act dt. 11.10.2019. The AO than again issued notice u/s 143(2) on 24.11.2019 though the return of income in response to notice u/s 148 was filed on 30.03.2019 thus the said notice was barred by limitation being issued after 30.09.2019.
The Hon’ble Jurisdictional High Court in the case of PCIT Vs. Vimal Gupta reported in 2017 (10) TMI 1670 (Delhi) held the assessment order as invalid where the notice u/s 148 was issued by the authority having no jurisdiction over the assessee. The relevant observations of the hon’ble court are reproduced as under:
1.“This is an appeal filed by the Revenue against an order dated 23rd December 2015 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 1211/Del/2010 for the Assessment Year (‘AY’) 2006-07.
2.Although other grounds have been pressed by the Revenue regarding the validity of the impugned order of the ITAT holding the assessment order passed under Section 148 of the Income Tax Act, 1961 (‘Act’) to be invalid, a threshold ground urged is that the ITAT erred in holding in the impugned order that the assessment made by the Additional Commissioner of Income Tax (‘ACIT’) Circle 34 (1) was without jurisdiction. It has been noticed that the matter was transferred to the said ACIT by the Income Tax Officer (‘ITO’) Ward 34 (4), New Delhi without an appropriate order having been issued under Section 127 of the Act. Further that the ACIT did not himself issue the notice under Section 148 of the Act.
3.The ITAT has in para 13 of the impugned order specifically adverted to the above aspect and correctly held that “The ACIT, Circle 34(1), New Delhi has admittedly not recorded that he had reasons to believe that income chargeable to tax of the Assessee has escaped assessment. He continued reassessment proceedings initiated by the ITO, Ward 34(4) of the Act without independently recording reasons for reopening or issuing a fresh notice u/s 148 of the Act.” Further the ITAT noted that “There is no order u/s 127 of the Act transferring the jurisdiction of the case from ITO, Ward 34(4) to ACIT, Ward 34(1). Thus this order of reassessment passed by the ACIT u/s 34(1) of the Act is without jurisdiction and hence is bad in law.”
4.In the present memorandum of appeal no attempt has been made by the Revenue to aver whether in fact there was an order under Section 127 of the Act transferring the case to the ACIT, Circle 34(1). That being the position, the impugned order of the ITAT cannot be faulted. In view of the above conclusion, there is no occasion to examine the other questions urged by the Revenue in this appeal.
5.No substantial question of law arises. The appeal is dismissed.”
The coordinate bench of Delhi Tribunal in the case of Sapna Rastogi Vs. ITO reported in 2024 (8) TMI 1517 (ITAT, Delhi) has held the reassessment order as invalid as the notice u/s 148 was issued by the AO having no jurisdiction over the assessee. The relevant observations are reproduced as under:
5.We have given thoughtful consideration to the matter on record and the submissions. The assessee had filed a return of income on 07.07.2013 declaring the total income at Rs. 18,85,550/-. The assessee is an individual and, taking into consideration Instruction No. 01/2011 available at page 245 of the paper book, for non-corporate returns in case of non-metro cities (mofussil areas), the returns above Rs. 15 lakhs have to be assessed by the officers of the rank of Assistant Commissioners/Deputy Commissioners. The report which is filed by the AO dated 26.06.2024 and reproduced above categorically mentions the fact that it is only on 15.05.2024, the PAN of the assessee has been transferred to ACIT, Circle 1(1)(1), Meerut, from ITO, Ward 1(2)(5), Meerut, as per CBDT Instruction No. 05/2011 dated 31.01.2011 vide which jurisdiction of noncorporate returns above Rs. 15 lakhs lies with ACIT/DCIT and upto Rs. 15 lakhs lies with ITO.
5.1Now, admittedly, the notice u/s 148 dated 30.03.2021, copy of which is placed at page 7 of the paper book, is issued by ITO, Ward-1(2)(5), Meerut. Thus, certainly, this Revenue Officer did not have the pecuniary jurisdiction as vested by the Board vide CBDT Instructions No. 01/2011 dated 31.03.2011.
5.2In this context, the coordinate Bench order in the case of J. Mitra & Brothers vs. ACIT, ITA No. 3643/Del/2023 decided on 10.04.2024 has been relied by the ld. AR wherein the coordinate Bench, relying another decision in the case of Kelvin International vs. DCIT, ITA No. 5363/Del/2017, order dated 22.12.2023, has held that the exercise of jurisdiction of Revenue Officer who did not have the jurisdiction given by the CBDT Instructions cannot be sustained and the assessment order is vitiated. The Hon’ble Allahabad High Court in the case of PCIT-II, Lucknow vs. Mohd. Rizwan, Proprietor M/s M.R. Garments, in ITA No. 1000/2015, order dated 30.03.2017 has examined this aspect on the basis of numerous judicial pronouncements and while considering the question, if the notice u/s 148 of the Act, issued by an authority not having jurisdiction, would be valid by referring to section 292BB of the Act, has held that jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, some which he lack inherently. The Hon’ble Allahabad High Court has decided this issue against the Revenue holding that notice u/s 148 is not a procedural subject, but, a jurisdictional one as it is a condition precedent for initiation of proceedings. This judicial pronouncement squarely covers the issue in favour of the assessee.
5.3The judgments which the ld. DR has relied when taken into consideration, are not applicable to the facts and circumstances as the judgements in the cases of Home Finders Housing Ltd. (supra) and Sagar Developers (supra) are in the context of the non-disposal of the objections and the judgement in the cases of Abhishek Jain (supra) and S.S. Ahluwalia (supra) are primarily concerned with territorial jurisdiction in regard to which there may be instance of concurrent jurisdiction of the two assessing officers. However, the case before us concerns the pecuniary jurisdiction vested by the Board and if that is not complied, the invoking of jurisdiction is vitiated and, consequently, the assessment order is vitiated. The ground No. 1 with sub-grounds in regard to this issue are sustained.
6.In the result, the appeal of the assessee is allowed and the assessment order is quashed.
In view of the above, and by respectfully following the judgement of hon’ble jurisdictional high court and of the coordinate bench, we are of the considered view that in the instant case, notice issued u/s 148 by the Assessing Officer having no jurisdiction over the assessee is bad in law and consequent reassessment order passed by the Assessing Officer is hereby quashed. Accordingly, the additional Ground of appeal No. 1 of the assessee is allowed.
Since, we have already allowed the additional Ground of appeal No.1 of the assessee, therefore, the other Grounds of appeal including other additional Ground of appeal become academic in nature hence, not adjudicated.
In the result, appeal of the assessee is allowed.