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Income Tax Appellate Tribunal, DELHI BENCH “F” DELHI
Before: SHRI CHANDRA MOHAN GARG & SHRI PRADIP KUMAR KEDIA
The captioned appeal has been filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)-XXXIV, New Delhi [‘CIT(A)’ in short] dated 29.04.2019 arising from the assessment order dated 13.12.2017 passed by the Assessing Officer (AO) under Section 147/148 of the Income Tax Act, 1961 (the Act) concerning AY 2010-11.
2. The grounds of appeal raised by the assessee read as under:
“1. That the Ld AO initiated proceedings u/s 147 / 148 without reasons to believe that “income chargeable to tax had escaped assessment” and on the false reason that ‘the assessee had not filed his return of income’. The assessee having filed the return of income in time, proceedings u/s 147/148 are bad in law and without jurisdiction, liable to be quashed.
That approval u/s 151(1) was obtained on facts which were concealed and mis-stated, and was granted in a mechanical manner, without application of mind and without reference to the assessment records. Approval obtained and granted is bad in law.
That the Ld Commissioner of Income Tax (Appeals) has erred in law in sustaining addition of Rs 11,95,477 made to income by the AO , despite having recorded a finding in the appeal order, that the assessee had prepared the return on the “Cash system of Accounting”, and Rs 11,95,477 was not received by the Assessee and cannot form part of income of the assessee. Addition made to income and sustained is bad in law, liable to be deleted.
4. The Ld CIT(A) erred in travelling beyond the subject matter of the assessment and the appeal by directing that credit for TDS be allowed pro rata in the year the income is offered to be taxed This issue not being the subject matter of the assessment or appeal. The Ld CIT(A) exceeded her jurisdiction rendering the directions illegal and bad in law.
5. The Ld CIT(A) failed to consider that credit for TDS is income deemed to be received by the assessee, AND payment made to the credit of the Central Government is tax paid on behalf of the assessee, in the year tax is deducted and deposited.
6. That the assessee pleads that he be permitted to amend, alter, delete, modify, substitute all or any of the Grounds of Appeal
above, or to add any fresh ground, at any time before or during the appeal proceedings.”
3. As per its grounds of appeal, the assessee has challenged the assumption of jurisdiction under Section 147 of the Act by the Assessing Officer on the grounds that prerequisites for assumption of jurisdiction are not fulfilled in the instant case and therefore the consequential re-assessment order is bad in law. The assessee has also challenged the additions on merit.
Since the challenge to assumption of jurisdiction goes to the very root of the matter and affects existential vitality of the re- assessment order, we shall deal with the challenge to the jurisdiction to begin with.
The reasons recorded under Section 148(2) of the Act dated 17.04.2017 forming the basis for challenge to jurisdiction reads as under:
Shri Rajesh Gulati GH-14/908, Paschim Vihar, New Delhi-110087 Reasons for initation of proceedings u/s.147 of the IT Act, 1961 Assessment Year 2010-11 The Income Tax Department has received information relating to Financial Year 2009-10 in Form 26AS, in the case of above named assessee that he has received Rs. 1,33,94,5767- “on account of contracts and fee for professional/technical services. On verification of data base of the Department, it is observed that the assessee has not filed return of income for the A. Y.2010-11. In-view of the precise information, mentioned above I have reasons to believe that the assessee, Sh. Rajesh Gulati has not disclosed his income earned during the F.Y.2009-10 relevant to A.Y.20-10-11, so far as this amount is concerned i.e. Rs. 1,33,94,576/-, chargeable to tax has escaped assessment. Therefore, this case is fit for issuing notice u/s 148 of the Income tax Act, 1961. Keeping in view of the above facts, it is requested that necessary approval u/s 151(1) of Income Tax Act, 1961, may kindly be accorded for initiating proceedings u/s 148 of Act in order to assess the income which had escaped assessment. Asst. Commissioner of Income Tax Circle-41(1), New Delhi.
On a perusal of the reasons recorded, it can be noticed that the formation of believe towards escapement of chargeable income is based on the premise that the assessee has received certain professional fees as found in Annual Information Statement, i.e., Form 26AS but however the assessee has not filed the return of income at all. The Assessing Officer thus assumed that the assessee has not disclosed his income earned in the financial year 2009-10 relevant to Assessment Year 2010-11 and consequently the income earned in F.Y. 2009-10 relevant to Assessment Year 2010-11 has escaped assessment.
The assessee in the course of hearing, at the outset, submitted that the very premise of reopening the assessment is totally wrong and opposed to the tangible facts on record. The ld. counsel for the assessee adverted to the return e-filed for Assessment Year 2011-12 dated 28.09.2011 bearing acknowledgement no. 295737361280911 to rebut the allegation of non filing of return and proceedings to reopen the assessment on wholly unfounded basis. In this background, the ld. counsel for the assessee contends that the very premise of reopening the assessment is on wrong assumption of facts. Thus, the action of the Assessing Officer is not sustainable in law.
In the light of the tangible facts available on record, we are in total agreement with the plea of the assessee alleging assumption of jurisdiction without any foundation. The identically placed issue has been decided in favour of the assessee in Sunrise Education Trust vs. ITO (E) (Special Civil) Application No.16726 of 2017 judgment dated 19th February, 2018; Mumtaz Haji Mohmad Memon vs. ITO, 408 ITR 268 (Guj.); Sagar Enterprises, 257 ITR 335 (Guj.); Khem Chand Sankhla vs. Union of India, 181 CTR 380 (Raj.). Clearly, the assumption of jurisdiction on the basis of non existent premise is without authority of law and thus cannot be sustained. The re-assessment notice issued on the basis of wrong assumption of jurisdiction is a complete non-starter and thus stands quashed. As a sequel thereto, the reassessment order framed on the basis of an illegal notice is bad in law and thus quashed. This being so, we do not consider it necessary to delve on merits of the additions/disallowance in question.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 22/09/2022.