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Income Tax Appellate Tribunal, DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC-1’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) (Assessment Year : 2009-10) Seema Singhal, Hapur Vs. ITO C/o. Pradeep & Co., Ward – 3(5) 7, Navyug Market, Hapur Ghaziabad, Uttar Pradesh – 201 001 PAN : AWPPS 0757 B (APPELLANT) (RESPONDENT) Assessee by Shri Satyajeet Goel, C.A. Revenue by Ms. Sangeeta Yadav, Sr. D.R. Date of hearing: 28.10.2021 Date of Pronouncement: 25.11.2021 ORDER PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 26.12.2018 of the Commissioner of Income Tax (Appeals), Muzaffar Nagar relating to Assessment Year 2009-10.
The relevant facts as culled from the material on records are as under :
2 3. Assessee is an individual. AO has noted that on the basis of AIR/NMS Information, it was noticed that assessee has deposited cash of Rs.28,50,000/- in her bank account. Accordingly, notice u/s 148 of the Act was issued on 31.03.2016 and in response to which assessee submitted that return of income filed by her on 23.07.2009 declaring total income of Rs.1,54,732/- be considered as return of income in response to notice u/s 148 of the Act. Thereafter case was taken up for scrutiny and consequently assessment was framed u/s 143(3) r.w.s 147 of the Act vide order dated 31.08.2016 and the total income was determined at Rs.21,35,392/- and agricultural income of Rs.55,200/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 26.12.2018 in Appeal No.621218571140217 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: “(1) On the facts and circumstances of the case the order of Ld. CIT(A)is bad in both in the eyes of law and oh facts. (2) That on facts and circumstances of the case the Ld. CIT(A) has erred in law in upholding the order of Ld. AO making an addition of Rs. 19,80,660/- by treating amount realized from sale of agricultural Land as sale of residential property and taxing the same as short term capital gain. (3) That on the facts and circumstances of the case the Ld. CIT(A) erred in law in treating agricultural land as residential plot even when there was no conversion of the land use made by the appellant. (4) That on facts and circumstances of the case the Ld. CIT(A) has erred in law as she has omitted to adjudicate the crucial additional evidences submitted in accordance with provisions of Rule 46A of the Income Tax Rules. (5) That on the facts and circumstances of the case the Ld. CIT(A) has erred in law in upholding the findings stated by of the Ld. AO in the remand report wherein Ld. AO had only placed his reliance on the sale deed for determining the status of the land to be a residential property however it is in disregard to a fact presented through additional evidence filed in accordance with rule 46A which was a crucial evidence for determining the status of the land to be an agricultural land. (6) That the appellant craves leave to add / alter all or any of the grounds of appeal before or at the time of hearing of the appeal.”
4. Thereafter assessee has raised the additional grounds which reads as under: 1(i) That on facts and circumstances of the case, the ITO, Ward 2(4), Ghaziabad was not justified in assuming jurisdiction u/s 148 and recording reasons without having valid jurisdiction over the case of the appellant (ii) That return of income for assessment year under consideration was filed in Hapur and the case of the appellant being regularly assessed in Hapur, the notice u/s 148 issued by ITO, Ward 2(4), Ghaziabad is illegal, without jurisdiction and void-ab-initio. (iii) That the reasons recorded by ITO, Ward 2(4), Ghaziabad are without jurisdiction and non-est. (iv) That notice u/s 148 having been issued by non jurisdictional assessing officer ITO, Ward 2(4), Ghaziabad, the approval u/s 151 to the said notice is mechanical and without verification of basic jurisdictional fact. 2. That the reasons to believe u/s 148 were recorded by ITO, Ward 2(4), Ghaziabad and the assessment order having been passed by ITO Ward 3(5), Hapur, the assessment order
4 is illegal in absence of proper transfer of case or recording of fresh reasons or issue of notice u/s148 by ITO Ward 3(5), Hapur. 3(i). That on fact and circumstances of the case, the assessing Officer was not justified in assuming jurisdiction u/s 147 without recording proper reasons in terms of provisions of section 147 of the Act. (ii) That the reasons recorded are solely on the basis of AIR information which cannot be considered as tangible material, the reasons recorded u/s 147 are based on borrowed satisfaction and are illegal and not sustainable under the law. (iii) That assessing officer having failed to verify or even acknowledge the original return of income filed and in absence of any independent enquiry, the reasons recorded are arbitrary and without proper applicable of mind. (iv). That the approval u/s 151 has been granted on mechanical basis and without applicable of mind, the notice u/s 148 is illegal due to want of proper approval u/s 151 of the Act.”
With respect to the additional ground raised, it is the submission of the assessee that the additional ground raised is purely legal in nature and requires no fresh verification of facts are needed and he placed reliance on the judgment of the Hon’ble Apex Court in the case of National Thermal Power Co. Ltd vs. CIT reported in (1998) 229 ITR 383 (SC). It was therefore submitted that the additional ground of appeal be admitted and appropriate order be passed in the interest of rendering substantial justice.
5 6. On the issue of admissibility of additional ground, the Learned DR strongly objected to the plea for admission of additional ground.
Having heard the rival submissions on the admission of additional ground after considering the submissions made by the Learned AR and following the decision of Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. (supra), I am of the view that the additional ground raised in the present appeal being a legal ground which goes to the root of the matter needs to be admitted. I therefore admit the additional ground.
On the issue of additional ground, whereby assessee is challenging the validity of reassessment proceedings. Before me Ld AR pointing to page 3 of the paper book which is the “Form for recording the reasons for initiating the proceedings u/s 147 and for obtaining the approval” submitted that the reasons for reopening have been recorded by ITO, Ward-2(4), Ghaziabad and the approval has been obtained from the Addl. Commissioner of Income tax, Range-2, Ghaziabad whereas the assessee is assessed with ITO, Ward-2 Hapur and in support of the aforesaid contention, he pointed to the copy of the acknowledgement of the return of income filed for A.Y. 2008-09, 2009-10, 2010-11 and 2011-12 placed in the paper book. He thereafter pointed to page 8 of the paper book which is the letter dated 25.07.2016 addressed by ITO, Ward-2, Ghaziabad to ITO, Ward-2, Hapur transferring the case records to ITO, Ward-2, Hapur as the jurisdiction of the 6 assessee lies with him. The Ld AR therefore submitted that the ITO, Ward-2(4), Ghaziabad who has recorded reasons for reopening of the assessment was not having jurisdiction over the case of assessee and that the jurisdictional assessing officer being ITO, Ward-2, Hapur who had issued notice u/s 143(2) and 142(1) of the Act and framed the reassessment order did not record reasons for the reopening of the assessment. He therefore submitted that the initiations of reassessment proceedings are illegal, bad in law and liable to be quashed and in support of the aforesaid contention he relied on the order of ITAT Agra Bench in the case of S.N. Bhargawa vs. ITO 147 ITD 306 and other decisions.
Ld DR on the other hand did not controvert the submissions made by Ld AR but however supported the order of lower authorities.
I have heard the rival submissions and perused the material on record. The issue in the present ground is as to whether the reassessment framed by the AO i.e ITO, Hapur in pursuance to a notice dated 31.03.2016 u/s 148 of the Act, issued by Income-tax Officer, Ghaziabad who did not have jurisdiction over the case of the assessee, is valid one.
Section 147 of the Income Tax Act authorizes and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that income for assessment year has escaped
7 assessment. The word “reason” in the phrase “reason to believe” would mean cause or justification. If the AO has cause or justification to know or suppose that income has escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The reason to believe must be that of the concerned AO, having jurisdiction over the case, who has relevant returns and other material in his possession. Section 148(1) of the Act envisages that before making the assessment, reassessment or re-computation u/s 147, the AO shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. Sub section (2) provides that the AO shall, before issuing any notice under this section, record his reasons for doing so. It is the assessing officer, who has jurisdiction over the assessee and records reasons, who can issue notice u/s 148 of the Act. It is well settled that consent cannot confer jurisdiction upon the AO nor waiver by the assessee [CIT v. Ramsukh Motilal [1955] 27 ITR 54 (Bom.)
8 12. In the present case, it is an undisputed fact that Assessee is filing the return of income before ITO, Hapur and the ITO, Hapur had jurisdiction over the assessee. The ITO, Ghaziabad who did not have jurisdiction over the assessee, issued a notice u/s 148 of the Act on the basis of AIR/NMS information about cash deposits by the Assessee. Subsequently, ITO Ghaziabad vide letter dated 25.07.2016 transferred the records to ITO, Hapur as the jurisdiction over the assessee was with ITO, Hapur. Thereafter, ITO, Hapur proceeded to complete the assessment without even recording reasons to believe stipulated in section 147 or issuing any notice u/s 148 of the Act and continued the proceedings u/s 148 of the Act and passed order u/s 143(3) r.w.s 147 vide order dated 31.08.2016 on the basis of reasons recorded by ITO, Ghaziabad. Hon’ble Gujarat High Court in the case of Hynoup Food & Oil Industries Ltd. vs. ACIT (2008) 307 ITR 115 has observed that AO recorded reasons for reassessment and AO issued a notice u/s 148 of the Act must be the same person. Successor AO cannot issue notice u/s 148 on the basis of reasons recorded by predecessor AO. In view of the foregoing and relying on the aforesaid decision rendered by Hon’ble Gujarat High Court and in view of the well-settled principle that if a notice under section 148 of the Act has been issued without the jurisdictional foundation u/s 147 of the Act being available to the AO, the notice and the subsequent proceedings will be without jurisdiction and thus, liable to be struck down. In view of the foregoing, I hereby quash the reassessment order. Consequently, ground no.1 in the appeal is allowed.
Since I have quashed the reassessment proceedings, the other grounds raised on merits require no adjudication.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 25.11.2021