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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD
आदेश /O R D E R
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Ghaziabad dated 06.12.2016 for the AY 2008-09. The assessee in his appeal raised the following grounds: -
1) “That having regard to the fact and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order as the assessment order was passed without complying with the mandatory conditions of section 147 to 151 of the Income Tax Act, 1961 and without recording valid reasons as per law and 1
I.T.A.No.1057/Del/2017 without obtaining valid approval as per law and in any case reopening of the assessment and framing of the reassessment order was contrary to law. 2) That in any view of the matter and in any case, action of Ld. CIT(A) in confirming the action of Ld. AO in reopening of the impugned assessment u/s 143(3)/147 is bad in law and against the facts and circumstances of the case. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in upholding the action of the Ld. AO in making an addition of Rs.37,00,000/- allegedly on account of bogus purchases and that too by recording incorrect facts and findings and by disregarding the evidences/submissions filed by the assessee and in violation of principles of natural justice. 4) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs.37,00,000/- is bad in law and against the facts and circumstances of the case. 5) That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. AO in passing the impugned order without giving adequate opportunity of being heard. 6) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making the impugned addition is bad in law and against the facts and circumstances of the case. 7) That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”
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The assessee in the grounds of appeal challenged the very jurisdiction of the AO in reopening the assessment u/s 147 of the Act apart from various other legal grounds as well as grounds on merits.
The Ld. Counsel for the assessee at the outset submits that the AO who assumed jurisdiction to reopen the present assessment was not the AO who was having jurisdiction over the assessee. The Ld. Counsel submits that as the assessee was always assessed to tax by ITO, Ghaziabad as assessee has all along being filing his Income tax return at Ghaziabad which is evident from the copy of acknowledgement of return filed by the assessee for the assessment years 2008-09 and also 2006-07 as appearing at pages 1 & 85 of the Paper Book respectively. The Ld. Counsel for the assessee submits that in the instant case jurisdiction was assumed by the Ld. AO at New Delhi which is evident from the notice issued u/s 148 dated 30.03.2015 which is placed at page 3 of the Paper Book. Therefore, the Ld. Counsel submits that reopening by a Non-Jurisdictional Officer is bad in law. Ld. Counsel placed reliance on the following decisions: • M.I. Builders (P) Ltd. vs. ITO, 115 ITD 419 (Lucknow); • Anil Kohsla (Delhi High Court), ITA 838/2008, Date of order 01.09.2008;
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• Ranjeet Singh vs. ACIT, (2009) 120 TTJ 0517 (Del.); • Chetna Kukreja vs. ACIT in ITA 2141/Del/2009, ITAT, Delhi.
On the other hand, Ld. DR supported the orders of the authorities below.
In this case the assessee resident of B-10, Balram Nagar, Lohni, Ghaziabad, Uttar Pradesh filed return of income in Range-1, Ghaziabad on 17.12.2008 declaring income of Rs.1,11,090/-.
Subsequently, notice u/s 148 of the Act dated 30.03.2015 was issued for the assessment year under consideration by the Income Tax Officer, Ward 70(3), New Delhi stating that income chargeable to tax for AY 2008-09 has escaped assessment within the meaning of section 147 of the Act. In response to the said notice the assessee filed letter dated 16.04.2015 stating that the return filed on 17.12.2008 may be treated as return filed in response to the said notice. Assessee also requested for reasons for reopening of assessment by initiating proceedings u/s 148. The ITO, Ward 70(3), New Delhi by letter dated 02.06.2015 communicated the reasons for reopening of assessment. The assessee by letter dated 21.12.2015 objected to reopening of assessment stating it as bad in law. It was contended that the reasons recorded are vague and there is no material evidence for forming the belief that income has escaped
I.T.A.No.1057/Del/2017 assessment. However, the reassessment was completed on 28.12.2015 u/s 147 read with section 143(3) of the Act determining the income of the assessee at Rs.38,11,090/- by the Income Tax Officer, Ward 1(3), Ghaziabad. Assessee contends that the notice u/s 148 was issued by the ITO, Ward 70(3), New Delhi, whereas the jurisdictional AO was ITO, Ghaziabad and, therefore, since the notice for reopening of assessment was issued by non-jurisdictional authority the reassessment proceedings are invalid and, the assessment order passed in pursuance to such notice is a nullity.
5.1 On perusal of the notice issued u/s 148 it is observed that ITO, Ward 70(3), New Delhi has issued notice u/s 148 for reopening the assessment of the assessee who is a resident of Ghaziabad and filing returns in Range-1, Ghaziabad. The assessee filed returns for the assessment years 2006-07 and 2008-09 in Range-1, Ghaziabad as is evident from pages 1 & 85 of the Paper Book. Therefore, it is amply clear that the jurisdictional AO for making assessments of the assessee is ITO, Ghaziabad and not ITO, Ward 70(3), New Delhi.
In the case of M.I. Builders Pvt. Ltd. vs. ITO [115 ITR 491 (Luck.)] similar issue came up for adjudication and the Tribunal held as under: -
I.T.A.No.1057/Del/2017 I.T.A.No.1057/Del/2017 I.T.A.No.1057/Del/2017
As could be seen from the above decision the Tribunal held that when the initiation of reassessment proceedings was made by the non-jurisdictional Assessing Officer the assessment made pursuant to such notice is invalid. This decision squarely applies to the facts of this case.
The second contention of the assessee was that the objections raised by the assessee for reopening of assessment which is placed at page 84 were not disposed off before completion of assessment by the AO. The Ld. Counsel submits that in spite of extracting the objections of the assessee on reopening of assessment by the AO in the assessment order, these objections were never disposed off in I.T.A.No.1057/Del/2017 terms of the decision of Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO [259 ITR 19].
Ld. Counsel further submits that this is also evident from the remand report which is placed at page 112 of the Paper Book submitted by the Ld. Assessing Officer who has stated that assessee never raised any objection on the proceedings u/s 147/148 of the Act. The Ld. Counsel referring to page 84 of the Paper Book which are the objections filed by the assessee submits that this is factually wrong. The Ld. Counsel submits that the assessee did file his objections on reopening of assessment which were never disposed off and, therefore, the assumption of jurisdiction u/s 147 is invalid. Reliance was placed on the decision of Hon’ble Delhi High Court in the case of PCIT Vs. Tupperware (India) Pvt. Ltd. [236 Taxman 494. Reliance was also placed on the following decisions of Delhi Benches of ITAT: • Suresh Chandra Vs. ITO (ITA 3061/Del/2012 dated 13.03.2015); • S Power Pvt. Ltd. Vs. ITO (ITA 454/Del/2014).
On hearing both the sides and perusing the order of the authorities below and the paper book filed before me it is noticed that the assessee by letter dated 21.12.2015 objected for reopening of assessment stating as under:
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Dated: 2112/2015 To, The Income Tax Officer, Ward 1(3), Ghaziabad.
Subject: Assessment/re-assessment proceedings u/s 147 r.w.s. 148 of the Income Tax Act, 1961 in the case of Sh. Kamlesh Kumar Agarwal for the AY 2008-09.
R/Madam, As required by your goodself, we are herewith submitting that- During the year in consideration, the assessee had incurred the losses and also closed down the business. Therefore, the assessee had not claimed losses incurred in the business as there was no remote chance to continue the business in near future. After the assessment year under consideration, assessee has also not carried out any business activity. Except this business loss of Rs.34,779/-, there was no difference between the original return filed and return filed under section 148. During the year in consideration, the assessee has made total purchases of Rs.38,30,153/- and sales of Rs.40,05,000/- against which how the purchases of Rs.37,00,000/- can be disallowed. Therefore, purchase of Rs.37,00,000/- can’t be added in income to the year under consideration against the only sales of Rs.40,05,000/-. It is respectfully submitted that the reopening of the present case and the subsequent proceedings thereto are bad in law and are not in accordance with law. The reason recorded is vague and there is no material evidence for forming the I.T.A.No.1057/Del/2017