GURJARI CO-OP HOUSING SOCIETY LTD.,AHMEDABAD vs. THE ITO, WARD-3(3)(2) NOW WARD-3(3)(1), AHMEDABAD

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ITA 119/AHD/2026Status: DisposedITAT Ahmedabad19 May 2026AY 2012-138 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment was framed by an AO without valid jurisdiction, rendering it void. Following the jurisdictional High Court's decision, the reassessment notice issued by an incompetent authority was quashed.

What were the facts?

The assessee, a co-operative housing society, was subject to reassessment proceedings initiated due to information about a property sale. The Assessing Officer (AO) made an addition of Rs. 5 Lakhs, which was upheld by the CIT(A). The assessee appealed, raising several grounds, including lack of jurisdiction.

What were the issues?

Whether an assessment framed by an Assessing Officer lacking jurisdiction is valid, and if participation in proceedings cures such a jurisdictional defect.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 250,Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA

For Appellant: Shri Jyotish M Shah, AR, Shri Girish Prihar, Sr. DR
For Respondent: Shri Girish Prihar, Sr. DR
Pronounced: 19/05/2026

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-1, Bengaluru, (hereinafter referred to as “CIT(A)”) dated 19.12.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2012-13.

2.

The grounds of appeals raised by the assessee are as under:

“1. Ground No. 1-Lack of Jurisdiction 1.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not appreciating that the Assessing

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Officer did not have jurisdiction over the appellant and the jurisdiction lay with another Assessing Officer 2. Ground No. 2-Issues Regarding Notice and Order 2.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not considering the appellant's objection that: i. The notice under section 148 was issued in the name of an individual, whereas the assessment order was passed in the status of an Association of Persons (AOP), and ii. The notice was issued for one type of income, whereas the order was passed under another category of income. 3. Ground No. 3- No Virtual Hearing Despite Request 3.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not granting a virtual hearing to the appellant despite specific request made in response to notices under section 250, thereby violating principles of natural justice. 4. Ground No. 4-Proof of Approval Under Section 151 Not Provided 4.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not considering the appellant's objection that the Assessing Officer failed to furnish proof of approval obtained under section 151 for reopening the assessment, despite the appellant's specific request. 5. Ground No. 5-Failure to Dispose of Preliminary Objections as per GKN Driveshafts Directions 5.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in upholding the reopening without appreciating that the Assessing Officer passed the reassessment order without first passing a speaking order disposing the preliminary objections filed by the appellant, as mandated by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. 6. Ground No. 6-Society Not Owner of Land and No Sale Transaction

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6.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not considering the appellant's objection that it neither owns the land nor has carried out any sale transaction, yet the Assessing Officer made additions on presumptions. 7. Ground No. 7-Confirming ₹5,00,000 as Taxable Income of the Society 7.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming ₹5,00,000 as taxable income of the Society. 8. Ground No. 8-Interest Under Sections 234B & 234C 8.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming charging interest under sections 234B and 234C of the Income Tax Act, 1961. 8.2. The appellant respectfully submits that there was no fault or delay attributable to the appellant in the disposal of the appeal, as the appeal was filed on 01-11-2019. The delay in disposing of the appeal has caused an unjustified interest burden on the appellant, which is neither fair nor in accordance with law. 9. Ground No. 9-Initiation of Penalty Under Section 271(1)(c) 9.1. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not considering that initiation of penalty under section 271(1)(c) was unwarranted, as there was neither concealment of income nor furnishing of inaccurate particulars by the appellant.”

3.

Briefly stated, the assessee is a co-operative housing society. In this case, information was received from the Income Tax Officer (I&CI), Ahmedabad that the assessee had sold immovable property registered with SRO, Paldi for a consideration of Rs.85 Lakhs during the impugned year on 21.09.2011. On verification of the information, it was noticed that the jantri value was higher than the sale consideration. Thus, the AO noted that the transaction attracted the provisions of

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Section 50C of the Act. Since, the assessee had not filed the return of income, the case was reopened u/s.147 of the Act for the reason of the failure of the assessee to disclose fully and truly all material facts in the regular books of accounts, return of income and for not having offered the income for taxation. Accordingly, notice u/s.148 of the Act was issued to the assessee on 27.03.2019. In response to which, the assessee filed income declaring total income of Nil. Thereafter, during assessment proceedings, copy of the sale deed of the property was submitted. On verification of the sale deed, the AO noted that out of total sale consideration of Rs.90Lakhs the assessee society had received Rs.5Lakhs as confirming party. During assessment, the assessee was asked to explain the taxability of this amount of Rs.5Lakhs received. The assessee contended that it was a co- operative housing society having no profit motive and running on principles of mutuality and thus not liable for tax on receipts. The AO, however, rejected the contention of the assessee and made addition of premium received of Rs.5 Lakhs to the income of the assessee.

4.

The assessment order was challenged by the assessee before the Ld. CIT(A) where the assessee raised several legal grounds challenging the validity of the assessment framed u/s.147 of the Act as well as challenging the merits of the addition made to its income. All the contentions raised by the assessee were rejected by the Ld. CIT(A) who, in turn, upheld the order of the AO and dismissed the assessee’s appeal.

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5.

Aggrieved by the same, the assessee has come up in appeal before me raising above grounds.

6.

During the course of hearing before me, the assessee challenged the validity of the assessment framed u/s.147 of the Act on several grounds. One of the ground raised by the Ld. Counsel for the assessee was that the assessment had been framed without valid jurisdiction. That while the jurisdiction of the assessee lay with ITO, Ward 1(1)(1), Ahmedabad, the order was passed by ITO, Ward 3(3)(2), Ahmedabad. My attention was drawn to the submissions made by the assessee to the AO in this regard vide letter dated 25.04.2019, which letter was submitted in response to notice u/s.148 of the Act. The said letter dated 25.04.2019 was enclosed at paper book page no.2. Ld. Counsel for the assessee further pointed out that this plea was raised before the Ld. CIT(A) also who summarily dismissed the assessee’s contention contending that the assessee having participated fully in the assessment proceedings jurisdictional objections could not nullify the assessment. He drew my attention to para 3.2 of the CIT(A)’s order holding so as under:

“3.2 Jurisdiction of Assessing Officer The appellant contended that jurisdiction lay with ITO Ward 1(1)(1), Ahmedabad and not Ward 3(3)(2). Upon perusal of records, it is observed that the appellant was aware of proceedings, filed replies, and attended hearings. While technical jurisdiction may be questioned, the appellant cannot claim invalidity where it has participated fully in the assessment proceedings. Jurisdictional objections raised at this stage, without prior objection, cannot nullify the assessment. This view is consistent with judicial precedents where mere technical defects do not invalidate proceedings (Kanwar Singh Saini v. High Court of Delhi, Civil

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Appeal No. 3578/2012). Hence, the objection on jurisdiction is rejected.”

7.

Ld. Counsel for the assessee contended that findings of the Ld. CIT(A) were contrary to law since the Ld. CIT(A) had not controverted the fact that the AO who had assumed jurisdiction to frame assessment u/s.147 of the Act had in fact no jurisdiction over the assessee and in the light of the same, the issue was squarely covered in favour of the assessee by the decision of the Jurisdictional High Court in the case of Shirishbhai Hargovandas Sanjanwala vs. ACIT, [2017] 88 taxmann.com 578 (Gujarat), wherein he pointed out that the Hon’ble High Court had categorically held that issuance of re-assessment notice by Assessing Officer who had no jurisdiction to assess assessee was bad in law that it was not a mere irregularity or a defect which could be cured. More particularly, he drew my attention to para 6 & 7 of the order as under:

“6. The stand of the department ignores the fact that the petitioner is regularly assessed year after year and originally was within the jurisdiction of income-tax circle-9. Now after restructuring, his assessment takes place before the Assistant Commissioner, circle 4(2), Ahmedabad. Therefore, the Assistant Commissioner, Circle 5(2) had no jurisdiction to assess the petitioner. She could not have issued notice for reassessment. This is not a mere irregularity or a defect which can be cured, but question of jurisdiction of the authority to reopen the assessment. In administrative or quasi judicial matters, where exercise of powers are well regulated and segregated through rules and regulations or administrative instructions, no authority or officer who is not vested with the jurisdiction of the particular nature can exercise such powers which would be purely a case of lack of authority failing which Where would be a total anarchy and any officer positioned at any place may choose to exercise jurisdiction over any assessee. 7. Reference to section 292BB of the Act by the counsel of the revenue would need summary rejection. The said provision guards

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against any objection to service of notice particularly when an assessee has despite any defective service of notice participated in the proceedings. Such is not the facts in the present case. The present case is where the issuance of notice itself is bad issued by the authority who was not competent. This is a case of defect in issuance of notice and not service of notice.”

8.

Ld. DR, however, relied on the findings of the Ld. CIT(A).

9.

Having heard both the parties, I find merit in the contention of the Ld. Counsel for the assessee that the assessment in the present case has been framed by the AO without valid jurisdiction and is, therefore, not sustainable in law and is void. The fact that the AO in the present case had no jurisdiction to frame assessment on the assessee has not been controverted before me nor has the fact been controverted by the Ld. CIT(A). Further as, rightly pointed out by the Ld. Counsel for the assessee the Hon’ble Jurisdictional High Court in the case of Shirishbhai Hargovandas Sanjanwala(supra) has categorically held that the Officer who had no jurisdiction to assess the assessee could not have issued notice for re-assessment; that it is not a mere irregularity or defect which could be cured, but, was a question of jurisdiction of the authority to reopen the assessment. That it is a case of defect of issuance of notice and not of service of notice which could be cured by Section 292BB of the Act. The Hon’ble High Court has directed to quash such notices. Since, the issue on facts and law is squarely covered by the decision of the Jurisdictional High Court, I have no hesitation in holding the assessment framed in the present case be bad in law. The assessment order passed, therefore, is directed to be quashed. Since, the assessee succeeds on this legal ground raised alone, I

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see no reason to deal with the other grounds raised by the assessee, since, they are mere academic in nature.

10.

In effect, the appeal filed by the assessee stands allowed in above terms.

This Order pronounced on 19/05/2026

Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 19/05/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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