MANISH GUTPA,DELHI vs. DCIT CIRCLE-18(1), DELHI

Brief facts of the case are that assessee is an individual and field return of income on 30.07.2017 declaring total income of INR 40,18,380/-. The case of the assessee was selected for scrutiny by issue of notice u/s 143(2) of the Act dt. 14.08.2018 by ITO, Ward- 36(4), Delhi. Thereafter, another notice u/s 143(2) was issued by

In first appeal, as the assessee has failed to file any submissions, Ld. CIT(A) has set aside the assessment order and refer the case back to the file of AO to make a fresh assessment since the assessment order was passed u/s 144 of the Act.

Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various grounds of appeal. Since in Ground of appeal No.1, the assessee has challenged the validity of assessment order passed by the ACIT Circle 18(1), Delhi without assuming valid jurisdiction as the notices u/s 143(2) of the Act were issued by the different Assessing Officers. Since, this ground of appeal is legal in nature and goes to the root of the matter, therefore, the same is taken for consideration even though the both the orders of lower authorities are passed ex-parte.

Before us, Ld.AR submits that first notice for scrutiny u/s 143(2) was issued by ITO, Ward-36(4), Delhi on 14.08.2018 as could be seen form pages 61-64 of appeal set where this notice is placed. Ld. AR further submits that another notice u/s 143(2) of the Act was issued by the ACIT Circle36(1), Delhi which is placed at Page | 2

On the other hand, Ld. Sr. DR supports the order of lower authorities and submits that assessee has not challenged the jurisdiction within one month from the service of notice u/s 143(2) of the Act and therefore, in terms of provision of section 124(3) of the Act, notice issued by ITO, Ward-36(4), New Delhi and further by the ACIT circle 36(1) Delhi cannot be challenged now after the expiry of one months period. She prayed accordingly.

Heard the contentions of both the parties and perused the material available on record. The sole issue raised in this ground of

It could be seen that in the present case, jurisdiction over the assessee was transferred between three AOs, First, ITO, Ward- 36(4), Delhi who issued notice u/s 143(2) of the Act on 14.08.2018 (it is not clear whether ITO, Ward-36(4), New Delhi was having any jurisdiction over the assessee or not); Second ACIT Circle 36(1),

Section 124(3) of the Act referred by Ld. Sr. DR, relates to the case where territorial jurisdiction is challenged however, it not for the cases where the very subject matter of jurisdiction is challenged as has been done in the present case. Thus, the provisions as contained in section 124(3) of the Act are not applicable to the facts of the present case, and as such assessee can challenge the very subject matter of the jurisdiction at any stage. Hon’ble Delhi High Court in the case of Abhishek Jain vs ITO reported in [2018] 94 taxmann.com 355 (Delhi) in para 22 has observed that “…… As far as territorial jurisdiction or pecuniary jurisdiction are concerned, objection should be taken at the earliest possible opportunity and / or before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stand at a different footing.” Therefore, territorial jurisdiction cannot be equated with lack of subject matter of jurisdiction.

Further it is evident from the facts that AO who had completed the assessment i.e. ACIT, Circle-18(1), Delhi assumed the jurisdiction without issue of notice u/s 143(2) of the Act. In the instant case, as observed above, notices were issued u/s 143(2) by the ITO, Ward-36(4), Delhi and later by the ACIT Circle 36(1)Delhi, and the case is finally completed by the ACIT Circle 18(1) Delhi without there any order passed u/s 127 of the Act thus it is a

In case where the jurisdiction is transferred from AO who has issued to the notice u/s 143(2) of the Act to the AO who completed the assessment could only be done through an order for transfer of jurisdiction u/s 127(2) of the Act which admittedly has not been done in the instant case. Transfer order is statutorily required to be passed by the prescribed authority u/s127 of the Act, and an A.O cannot on his own transfer an income tax file to another officer. The Co-ordinate Bench in the case of Gaurav Singhal in ITA No.5786/Del/2018 held that “without a valid assumption of jurisdiction u/s 127, the assessment order would be rendered illegal and invalid”.

In view of these facts, we find that assessee’s case is covered by the judgement of Hon’ble Supreme Cout in the case of ACIT Vs. SK Industries (supra) wherein Hon’ble Apex Court held that notice issued u/s 143(2) by the AO who at that relevant point, had no jurisdiction over the assessee, thus, the notice issued u/s 143(2) of the Act had no jurisdiction. Accordingly, in our considered opinion, notice issued u/s 143(2) by ITO, Ward- 36(4), and by the ACIT, Circle 36(1), Delhi and consequent assessment order passed by ACIT Circle 18(1), Delhi without having any valid jurisdiction is hereby, quashed.

Since we have already allowed the legal Ground of Appeal No.1 taken by the assessee, the other grounds of appeal become academic hence, not adjudicated.

In the result, appeal of the assessee is allowed.