MAHAVIR PUKHRAJ JAIN,MUMBAI vs. THE DCIT, CIRCLE 42(1)(1), MUMBAI, MUMBAI

We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records, we noticed that as per the facts of the present case, ITO recorded reasons for reopening u/s 147 of the Act and issued notice u/s 148 of the Act on 30.03.2016. However, the jurisdiction in the assessee’s case, as per CBDT instruction No. 01/2011, lay with the Assistant/Deputy Commissioner of Income Tax since the income declared was above Rs. 20 Lakhs. Since the assessee had filed the return of income for Rs. 29,57,760/- on 28.09.2013. The CBDT Instruction No. 01/2011, which are reproduced as under:

Regarding this circular the jurisdiction of the non corporate assessee whose income exceeds 20 lakhs lies with ACIT / DCIT and not with the ITO. Admittedly in the present case assessee had filed his return of income of Rs. 29,57,760/-, hence the jurisdiction in accordance with the CBDT was with ACIT / DCIT, Circle 32(2), as even the original assessment order in the present case was also passed u/s 143(3) of the Act by DCIT, Circle 32(2) on 26.02.2016.

Thereafter, just after 32 days of the original assessment order passed by the DCIT, Circle 32(2), the ITO 32(2)(3) issued noticed u/s 148 of the Act on 30.03.2016. Further the order against the objections and the assessment order was ultimately passed by ACIT/DCIT without issuing a fresh notice u/s 148 of the Act. Hence in our view the ACIT / DCIT had not acquired jurisdiction to reassess the income of the assessee. In this regard reliance is being placed upon the decision in the case of Y. Narayana Chetty Vs. ITO 35 ITR 388, 392 (SC), CIT Vs. Maharaja Pratap Singh Bahadur 41 ITR 421(SC) & CIT Vs. Robert 48 ITR 177 (SC).

Even the Coordinate Bench of ITAT Delhi, in the case of Income-tax officer, Ward 11(4), Delhi Vs. M/s Indus Valley Investment & Finance Pvt. Ltd. [ITA No. 4239/Del/2011] after considering the above ruling of apex court, decided the matter on identical issue and made the following observations:

Reliance is further being placed upon the decision in the case of Ashok Devichand Vs. Union of India (452 ITR 43) (Bom), wherein it was held as under:

The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.

Although Ld. DR had relied upon Sec. 124(3) of the Act to support his arguments, but in our view the provisions of Sec. 124(3) of the Act refers to Sec. 120 of the Act. Thus applies only on territorial jurisdiction and not to other jurisdiction i.e pecuniary jurisdiction as in the present case the assessee has raised the issue of pecuniary jurisdiction, other than territorial jurisdiction. Thus, in this regard reliance is being placed by us on the decision of Jurisdictional Hon’ble Bombay High Court in the case of Mr. Peter Vax Vs CIT in Tax Appeal No. 19, 21 to 25 of 2017, wherein it was held as under:

After having gone through the entire facts and circumstances and legal prepositions as discussed by us above, we are of the view that the issue of validity jurisdiction is a condition precedent to the validity of any assessment u/s 147 of the Act. Therefore in our view the ITO, who issued the notice u/s 148 of the Act had no jurisdiction to issue such notice, thus the same is bad in law. The notice u/s 148 is jurisdictional notice and therefore any inherent defect, therein is not curable. Therefore, the assessment made in pursuant to such notice is bad in law as has been held by the Coordinate Bench of ITAT Delhi in the case of Indus Valley Investment and Finance Pvt Ld., (supra). Therefore taking into consideration the entire facts and circumstances of the present case since the initial notice issued u/s 148 of the Act was by a non jurisdictional ITO and the reassessment has been made by ACIT, who has never issued notice u/s 148 of the Act, thus does not acquire jurisdiction.

Therefore considering the entire facts and circumstances as discussed by us above, we have no hesitation to quash the reassessment proceedings. Since there was no valid notice pursuant to which the reassessment proceeding was made in the present case. Accordingly, this ground raised by the assessee stands allowed.

Since we have allowed ground No. 2 and quashed the proceedings therefore there is no need to adjudicate other grounds raised by the assessee and the same are kept open.

In the result the appeal filed by the assessee stands allowed.