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Facts
The assessee filed a return for AY 2008-09 declaring a loss, accepted under Section 143(1). A subsequent survey led the AO to make additions of Rs. 80 lakhs for unexplained investments and Rs. 20 lakhs for undisclosed sources after the assessee failed to prove genuineness of transactions. The assessment order was passed under Section 147 read with Section 143(3) by the DCIT, which was upheld by the CIT(A).
Held
The Tribunal ruled that both the notice under Section 148, issued by the Additional Commissioner of Income Tax, and the assessment order, passed by the Deputy Commissioner of Income Tax, were without jurisdiction. This was based on CBDT Instruction No. 1/2011, which specified monetary limits for the ITO, and the absence of any Section 127 order transferring jurisdiction. The assessment order was quashed as void ab initio, and the appeal was allowed on jurisdictional grounds.
Key Issues
The key issue was whether the assessment order and the notice under Section 148 were issued by officers with proper jurisdiction, considering the monetary limits set by CBDT Instruction No. 1/2011 and the lack of a Section 127 order transferring jurisdiction.
Sections Cited
143(1), 147, 143(3), 143(2), 148, 127
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A”, DELHI
(A.Y. 2008-09) Aashiyana Infrastructure Development P. Ltd., 22/2B Tilak Nagar, New Delhi 110018 ...... अपीलाथ�/Appellant PAN: AAFCA-2236-A बनाम Vs. Deputy Commissioner of Income Tax, Circle 1(1), R.No 366, Dr. S.P Mukherjee, ..... �ितवादी/Respondent Civic Centre, Minto Road, New Delhi 110002 Assessee by : Shri Salil Kapoor, Ms. Ananya Kapoor, S/Shri Shivam Yadav & Tarun Chanana, Advocates Department by: Shri Ashish Tripathi, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 24/04/2025 घोषणा क� ितिथ/ Date of pronouncement : : 04/07/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-32, New Delhi (hereinafter referred to as 'the CIT(A)') dated 27.08.2019, for assessment year 2008-09.
Brief facts of the case as emanating from records are: The assessee filed his return of income for AY 2008-09 declaring loss of Rs.10,97,461/-. The return of income was accepted u/s. 143(1) of the Act. Thereafter, a survey operation was carried out in the case of Shreeji Group of cases, the assessee is one of the group companies. During (A.Y. 2008-09) the course of survey operation it was gathered that Shreeji Group of Companies have received huge share capital/share premium from various entities. During the course of assessment proceedings, the Assessing Officer (AO) had issued notices to various parties to verify identity, creditworthiness and genuineness of the transactions. The assessee allegedly failed to prove identity of the following parties: Name of the Entity Amount (in Rs.) Share Capital Metalcity Construction (Kovai) 20,00,000 P. Ltd. Haculese Builders 10,00,000 (Coimbatore) P. Ltd. Texcity Construction (Kovai) 20,00,000 Pvt. Ltd. Sushil Software Pvt. Ltd. 20,00,000 (MAPS Creation Pvt. Ltd.) Ang. Finvest Pvt. Ltd. 10,00,000 Total 80,00,000/- 3. The AO made addition of Rs.80,00,000/- on account of unexplained investments. Further, the AO made addition of Rs.20,00,000/- on account of investment made from undisclosed sources. Aggrieved by the assessment order dated 15.03.2016 passed u/s. 147 r.w.s. 143(3) of the Act, the assessee filed appeal before the CIT(A), but remained unsuccessful. Hence present appeal by the assessee.
Shri Salil Kapoor, appearing on behalf of the assessee at the outset submitted that the assessee has raised an additional ground of appeal
vide application dated 06.11.2024 challenging validity of assessment order as no notice u/s. 143(2) of the Act for AY 2008-09 was ever served upon the assessee. The ld. Counsel further submitted (A.Y. 2008-09) that the assessee is challenging validity of the assessment proceedings as the assessment order has been passed by the Assessing Officer without jurisdiction. The ld. Counsel placing reliance on the CBDT Instruction No.1/2011 dated 31.01.2011 submitted that as per aforesaid instructions, the monetary limit for assuming jurisdiction in respect of return of income filed up to Rs.30,00,000/- in the case of a corporate returns is with the Income Tax Officer (ITO). The assessee has filed return of income declaring loss of Rs.10,97,461/-. Therefore, the assessment order should have been passed by the ITO, whereas, in the case of the assessee, the assessment order has been passed by the Deputy Commissioner of Income Tax. Thus, the assessment order has been passed by an Officer who has no jurisdiction over the assessee. He further pointed that notice u/s. 148 of the Act was issued by Assistant Commissioner of Income Tax on 31.03.2015, whereas, as per the monetary limit specified as per the aforesaid instructions the notice should have been issued by the ITO having jurisdiction over the assessee. In support of his aforesaid arguments he placed reliance on the following decisions:- i. Ashok Devichand Jain, vs. UOI and Others in Writ Petition No. 3489 of 2019 decided on 08.03.2022 by Hon’ble Bombay High Court; & ii. Vipual Mittal v. DCIT in for AY 2014-15 decided on 15.01.2025(ITAT Delhi).
5. Per contra, Shri Ashish Tripathi representing the department vehemently defended the assessment order and prayed for dismissing the additional ground raised by the assessee challenging jurisdiction of the Assessing Officer. The ld. DR submitted that since it was a survey operation the assessments of entire group must have been clubbed together, hence, the assessment order was passed by the DCIT.
(A.Y. 2008-09) 6. Both sides heard, orders of the authorities below examined. The short issue for consideration before us at this stage is: Whether the Assessing Officer who passed the assessment order dated 15.03.2016 had jurisdiction to pass the assessment order in the case of assessee in light of Instruction No. 1/2011 (supra)? The CBDT vide aforesaid instructions has specified monetary limits for passing the assessment orders in the case of various assessees. The relevant extract of the said instructions is reproduced herein below:-
Income Declared (Mofussil areas) Income Declared (Metro Cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs.20 Upto Rs.30 lacs Above Rs.30 lacs lacs Non-corporate Upto Rs.15 lacs Above Rs.15 Upto Rs.20 lacs Above Rs.20 returns lacs lacs Metro charges for the purpose of above instructions shall be Ahemedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune.”
The case of the assessee is that since in the return of income the assessee has declared loss of Rs.10,97,461/-, the ITO had jurisdiction to pass the assessment order in the case of assessee, whereas the assessment order has been passed by the DCIT. When the ld. DR was confronted with the aforesaid instructions he sought time to ascertain the facts and also to place on record a copy of the order passed u/s. 127 of the Act, whereby the jurisdiction of the AO was changed from ITO to DCIT. As prayed for by the ld. DR time was granted to furnish copy of the order passed u/s.127 of the Act, if any. On the next date of hearing the ld. DR expressed his inability to furnish order u/s. 127 of the Act. In the absence of any order u/s. 127 of the Act transferring jurisdiciton from ITO to DCIT, we hold that the assessment order dated 15.03.2016 passed by the DCIT is without jurisdiction.
(A.Y. 2008-09) 8. We further observe that the notice u/s. 148 of the Act dated 31.03.2015 (at page 100 of the paper book) was issued by Additional Commissioner of Income Tax. In light of aforesaid CBDT Instructions even the Officer issuing said notice was not having jurisdiction over the assessee. The Hon'ble Bombay High Court in the case of Ashok Devichand Jain vs. UOI (supra) in similar facts after referring to CBDT Instruction No. 1/2011(supra) had held that the notice issued u/s. 148 of the Act was without jurisdiction. If, the notice u/s. 148 of the Act is without jurisdiction, any proceedings arising from defective notice are void ab initio.
Similar view has been taken by the Coordinate Bench of the Tribunal in the case of Vipul Mittal vs DCIT (supra). In light of facts of the case and documents on record, we have no hesitation in holding that the assessment order dated 15.03.2016 passed u/s. 147 r.w.s 143(3) of the Act is without jurisdiction, hence, liable to be quashed. We hold and direct accordingly.
Since, the appeal of assessee is allowed on jurisdictional issue, the grounds assailing additions on merits have become academic, hence, not deliberated at this stage.