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Facts
The assessee filed an income return, which was later reopened under Section 148. The assessee challenged the jurisdiction of the AO for issuing the notice. The AO proceeded with the assessment without disposing of the objections, and the CIT(A) upheld the order.
Held
The Tribunal held that the notice issued under Section 148 was by a non-jurisdictional officer and thus void ab initio. The assessment order passed pursuant to such a notice is bad in law. The AO also failed to dispose of the assessee's objections regarding jurisdiction.
Key Issues
Whether the assessment order is void ab initio due to the issuance of a notice under Section 148 by a non-jurisdictional Assessing Officer, and whether the AO's failure to decide objections vitiates the proceedings.
Sections Cited
147, 148, 143(3), 250, 124, 255(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI. VIKRAM SINGH YADAV & SHRI. ANIKESH BANERJEE
Per: Shri Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for assessment year 2010-11, date of order 31/07/2024. The impugned order was emanated from the order Ld. Income Tax Officer ward 17(2)(1), Mumbai order passed u/s. 143(3) r.w.s. 147 of the Act, date of order 30/12/2017.
Smt. Indubala Jayant Jain 2. The brief facts of the case are that the assessee had filed the return of income on 28.07.2010 declaring its total income of Rs. 14,15,680/- and the return was proceed u/s 143(1) by the Jurisdictional Ld.AO, ITO ward 15(2)(4), Mumbai. The copy of the return and the intimation u/s 143(1) is annexed in ABP page 12 and 13. After receiving the information from AST system of the Income Tax Department. The assessee’s case was reopened u/s 148 by a notice dated 30.03.2017. The assessee primarily filed the letter and requested to accept the 139 return as return u/s 148 of the Act and also the assessee challenged the jurisdiction of the Ld.AO related to issuance of notice u/s 148 of the Act. The copy of the notices u/s 148 dated 30.03.2017 is reproduced as below:
Smt. Indubala Jayant Jain 3. The letter submitted by the assessee on dated 11.04.2017 by challenging the jurisdiction of Ld.AO was duly filed before the department on 03.05.2017 is reproduced as under:-
But Ld.AO completed the assessment after addition in different heads total amounting to Rs. 1,01,50,838/-. Aggrieved assessee, filed an appeal before the Ld. CIT(A). But Ld. CIT(A) upheld the impugned order and rejected the appeal of the assessee. Being aggrieved the assessee filed an appeal before us.
The Ld.AR filed a paper book containing page 1 – 44 which is kept in record. The Ld.AR further submitted that the assessee u/s 255(5) in Income Tax Appellate Rule and Regulation, 1963 filed the additional ground related to challenging the jurisdictional of the Ld.AO for assessment and for issuance of notice u/s 148 of the Act. The relevant additional grounds are reproduce as below: “01. The notice issued u/s 148 of the I. T. Act, 1961 is ab-initio void, inasmuch as, said notice was not issued by the Officer having territorial jurisdiction over appellant's case. Consequently, assessment order passed in furtherance of said notice is also ab-initio void, inasmuch as, there is an inherent defect in assumption of jurisdiction.
The learned Assessing Officer has grossly erred in not disposing off appellant's objection to jurisdiction in contradiction with the statutory provisions.”
The Ld.AR further argued that the assessee filed the return though in recorded reasons the Ld.AO treated the assessee as non-filer. So there is a basic wrong assumption by Ld.AO in recorded reasons. He further invited our attention in APB page 12 and 13 that the assessee’s case was in jurisdictional of income tax officer ward 15(2)(4), Mumbai. Whereas the notice was duly issued by the ITO ward 17(2)(1), Mumbai. After the objection was duly filed before the Ld.AO within one month that is on 11.04.2017, without disposing the same assessment was
The Ld. DR argued and relied on the orders of the revenue authorities.
We have heard the rival submissions and perused the documents available on record. We note that the notice under section 148 of the Act was issued by ITO, Ward 17(2)(1), Mumbai on 30.03.2017. The assessee filed objections on 11.04.2017, which were received by the Ld. AO on 03.05.2017. However, without disposing of the assessee’s objections, the Ld. AO proceeded to pass the impugned assessment order. The assessee has raised an additional ground before this Bench, which is purely a legal ground. Reliance has been placed on the judgment of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358 (SC). In light of the said judgment, the assessee is entitled to raise the legal ground at this stage, and therefore, we proceed to adjudicate the same first. Upon careful consideration, we find merit in the contention that the Ld. AO lacked territorial jurisdiction over the assessee at the time of issuing the notice under section 148. Any assessment order passed in contravention of section 124 of the Act is void ab initio. Our view is fortified by the decision of the Hon’ble Bombay High Court in Ashok Devichand Jain v. Union of India [2023] 151 taxmann.com 70 (Bom.), wherein it was held that a notice issued under section 148 by a non-jurisdictional officer has no validity in the eyes of law and is liable to be set aside.
Smt. Indubala Jayant Jain The Ld. DR has not refuted the submissions of the Ld. AR. Further, the Ld. AO failed to dispose of the objections raised by the assessee regarding the lack of jurisdiction, which also vitiates the assessment proceedings. Respectfully following the binding precedent of the Hon’ble Bombay High Court, we hold that the notice issued under section 148 by a non-jurisdictional Assessing Officer is invalid, and consequently, the assessment order passed pursuant thereto is bad in law. The demand raised, amounting to Rs.1,01,50,838/-, is accordingly quashed.
As we have allowed the appeal of the assessee on the basis of the additional legal ground, the remaining grounds are rendered academic in nature and are left open.