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Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
Before: SHRI. A. D. JAIN
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT ITA No.646/LKW/2018 Assessment Year: 2011-12 Ramesh Mishra v. Dy. CIT 5/863, Viram Khand Range-6 Gomti Nagar Lucknow Lucknow TAN/PAN:AGJPM3967B (Appellant) (Respondent) Appellant by: Shri P. K. Kapoor, C.A Respondent by: Shri Ajay Kumar, D.R. Date of hearing: 11 09 2019 Date of pronouncement: 20 09 2019 O R D E R This is assessee’s appeal against the order of the ld. CIT(A)-2, Lucknow, dated 29/8/2018, confirming the Assessing Officer’s action in making the addition of Rs.3.45 lakhs, comprising of Rs.3.15 lakhs paid as stamp duty and Rs.30,000/- paid in cash, on purchase of a residential property. The following are the grounds raised: 1. BECAUSE the CIT(A) has erred in law and on facts in holding that the "Dy. Commissioner of Income-tax, Range-6, Lucknow (in short "Dy. CIT"), was validly vested with jurisdiction of Assessing Officer in the case of the "appellant" and on that basis in upholding the validity of re-assessment order dated 11.02.2015. 2. BECAUSE there being no valid transfer of jurisdiction from Income-tax Officer-1(3), Lucknow to "Dy. CIT", as per provisions of law, the reassessment order passed by the latter was without jurisdiction and consequently the re-assessment order deserved to be held as illegal. 3. BECAUSE even if it is held that the "Dy. CIT" was vested with the jurisdiction of Assessing Officer in the case of the "appellant",
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then also the re-assessment order passed by him is illegal, because he did not issue the mandatory notices under section 148 and section 143(2) of the "Act" within the statutory time limit. 4. BECAUSE the "CIT(A)" has failed to appreciate that the jurisdiction of the Assessing Officer cannot be conferred merely by the consent of the assessee and consequently, transfer of case from ITO-1(3), Lucknow to "Dy. CIT" on the request made by the assessee cannot validly vest the jurisdiction with the "Dy. CIT" and on a due consideration of such legal & factual matrix, the re- assessment order passed by "Dy. CIT” cannot be held to be valid in the eyes of law. 5. BECAUSE the "reasons recorded" for escapement of income were deficient in meeting the requirement of law and consequently "CIT(A)” ought to have held the reassessment order as null and void. 6. BECAUSE there was no live link or nexus between the material relied upon for formation of belief of escapement of income and the reasons recorded by the Assessing Officer as such the entire re-assessment proceedings became void ab initio and consequently the "CIT(A)” should have held the re-assessment order to be null and void. 7. BECAUSE "CIT(A)" was not justified in sustaining the addition of Rs.3,45,000/- by holding that the "appellant" failed to substantiate the sale of agricultural income earned by his mother and further availability of funds out of pension income received by his mother. 8. BECAUSE the "appellant" had submitted the cogent evidences before the authorities below in support of availability of funds with his mother which became available to the "appellant" for meeting the cost of stamp duty and registration expenses for purchase of immovable property and consequently, "CIT(A)" was not justified in rejecting the same so as to sustain the addition of Rs.3,45,000/- made by the Assessing Officer. 9. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice.
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Addressing ground No.3 first, the ld. counsel for the assessee has contended that the re-assessment order passed by the Dy. CIT, Range-6, Lucknow, cannot be held to be valid in the eye of law; that the ITO-1(3), Lucknow had initiated proceedings under section 147 of the I.T. Act by issuing notice under section 148 of the Act, dated 26/9/2013 (APB:8); and that during the course of assessment proceedings, the assessee had submitted to the ITO-1(3) that he was a Director in M/s Surat Construction Pvt. Ltd., which was assessed in Range-6 and that accordingly, the jurisdiction in the case of the assessee was with ITO- 6(3). A copy of the submission dated 22/8/2014, in this regard, is placed at page No.88 of the APB-I. Reference has been made to copy of A.O. Code list downloaded from NSDL Tax Information Network (TIN), showing particulars of jurisdiction of the Assessing Officers in Lucknow, APB:III pages 159 to 164, the relevant portion at APB-III, page 159, the third item, which is as under: “Income Tax PAN Service Unit NSDL Technology, Trust & Reach AO Code search for PAN
Select Ward/circle/range/C Description Area Assessing Range Assessing ommissioner Code Officer Code Officer Type Number
DCIT-6, i) All company cases starting LKN C 53 1 with ?S? to ?Z? letter of Lucknow-NEW English Alphabet, having return income/loss, exceeding Rs.15 lakhs & above and their Directors & Managing Directors in the Revenue District of Lucknow. ii) All non-company cases where return income/loss is more than Rs.10 lakhs falling under Areas falling under the following Postal Index Number (PIN) Codes of
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Lucknow District:-226003- Lucknow Chowk, 226005 – Alambagh, 226008-Industrial Area Sarojni Nagar, 226009- Amausi, 226011- Manak Nagar, 226012- LDA Colony, 227101- Banthara iii) All persons having principal source of income as "Salary"/ "Pension" exceeding Rs. Ten Läkhs, from Autonomous Bodies (Sanjay Gandhi Post Graduate Institute of Medical Science (SGPGI), Lucknow University, Chhatrapati Sahuji Maharaj Medical University, Schools, Colleges and Universities. 3. As per the ld. counsel for the assessee, since the DCIT, Range-6, Lucknow did not issue any mandatory statutory notice, either under section 148 of the Act, or under section 143(2) of the Act, the reassessment order passed by him is bad in law. For the proposition that the reassessment order is invalid for non-issuance of notice under section 148 of the Act, the ld. counsel for the assessee has placed reliance on ‘Principal CIT-II, Lucknow vs. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, Lucknow’, order (APB:II pages 101 to 113), dated 30/3/2017, passed by the Hon'ble jurisdictional Allahabad High Court, in Income-tax Appeal No.100 of 2015. On the question that the reassessment order is bad for non-issuance of notice under section 143(2) of the Act, the ld. counsel for the assessee has relied on ‘ACIT, Circle IV, Jalandhar vs. Shri Parvinder Vir Hans, Prop. M/s Zoloto Malleables, Jalandhar’, order dated 1/2/2016, passed by the Amritsar ITAT, in ITA No.88/Asr/2011, C.O No.4/Asr/2011, ITA No.247/Asr/2011 and C.O. No.13/Asr/2011, for assessment year 2007-08 (copy placed on record). 4. Per contra, the ld. D.R. has contended that as rightly held by the ld. CIT(A), the assessee had himself submitted before the Assessing
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Officer, that the jurisdiction of the assessee’s case vests with, DCIT, Range-6, Lucknow, since the company, M/s Surat Construction Pvt. Ltd., where he had been working as a Director, was assessed to tax with Range-6, Lucknow; that it was only on this basis, that the case was transferred by the ITO-1(3), Lucknow, to the DCIT, Range-6, Lucknow; that the DCIT, Range 6 continued the proceedings initiated by the ITO- 1(3); and that as such, the reassessment order passed by the DCIT, Range-6 does not suffer from any infirmity on this count. 5. Heard. The ITO-1(3) issued notice under section 148 of the Act. The ITO-1(3) undisputedly did not have jurisdiction over the matter. The matter was transferred, on the assessee’s request, to the DCIT, Range-6, who, admittedly, was the Assessing Officer having jurisdiction. The DCIT, Range-6 passed the reassessment order, without issuance of any notice, either under section 148, or under section 143(2) of the Act. Thus, the first question is whether the assessment made by the Assessing Officer after transfer of the case from the stage when another Officer had already issued notice under section 148, though he had no jurisdiction in the matter, and the transferee Assessing Officer, who was actually vested with jurisdiction over the matter, did not issue any fresh notice, can be said to be valid. 6. Section 148(1) of the Act reads as follows:
“(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer 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.”
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So, section 148(1) talks of the statutory mandate on the Assessing Officer to serve notice on the assessee to furnish the return of income, before making, inter alia, the reassessment under section 147 of the Act. Now, “Assessing Officer” is defined in section 2(7A), as follows: 2(7A) "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act.”
Thus, it is the Assessing Officer, who is “vested with the relevant jurisdiction”, who is the authority who is required to issue a notice under section 148 before ensconcing upon the framing of a reassessment order. In ‘Principal CIT-II, Lucknow vs. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, Lucknow’ (supra), the question formulated by the Hon'ble jurisdictional High Court was that if a notice under section 148 of the Act was issued by an incompetent officer, i.e., one who has no jurisdiction, and subsequently, on the objection of the assessee with regard to the jurisdiction, the matter is transferred to the Assessing Officer having jurisdiction, can a valid assessment be made by him without issuing a fresh notice under section 148 of the Act. 8. The observations of their Lordships (relevant paras) are as under: “17. The sole ground found favour with Tribunal is that notice under Section 148 of Act, 1961 was issued by ITO-IV(1),
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Lucknow who had no jurisdiction in the matter and after transfer of case, ITO. V(2) who had jurisdiction in the matter, proceeded to make assessment without issuing notice under Section 148 of Act, 1961 which was mandatory, being a jurisdictional step. Earlier notice issued by an authority having no jurisdiction would vitiate the entire proceedings as said notice issued by an incompetent Authority will not be a valid notice under section 148 of the Act. ……………………………………………………………………… …………………………………………………………………….. 33. Notice under Section 148 was not issued by A.O. having jurisdiction over Assessee and instead it was issued by Designated Officer authorized to collect AIR information and make inquiry in this regard No notice was issued under Section 148 admittedly by Jurisdictional A.O. 34. Section 148 clearly talks of issue of notice by A.O. Meaning thereby, A.O. having jurisdiction over Assessee. In fact, it is his satisfaction which is to be recorded for justifying reopening of assessment/reassessment proceedings as contemplated under Section 147 and recording of reasons for the same purpose is mandatory. The satisfaction of Assessing Officer could not have been hired or be delegated to any other authority. 35. In Commissioner of Income Tax, Kerala Vs. Thayaballi Mulla Jeevaji Kapasi 1967 (66) ITR 147 (SC), Court held that notice under Section 148 cannot be regarded as mere procedural requirement. It is a condition precedent for initiation of proceeding for assessment. 36. In Y. Narayana Chetty and another Vs. Income Tax Officer, Nellore and others 1959 (35) ITR 388 (SC), it was held, that, if notice issued is invalid or not properly served, any proceeding taken by A.O. to back assess, would be illegal and void. 37. A Constitution Bench, in Sardar Baldev Singh Vs. Commissioner of Income Tax, Delhi (1960) 40 ITR 605 (SC), a pari materia provision, i.e., Section 34 under old Indian Income Tax Act, 1922 (hereinafter referred to as "Act, 1922") was considered and it was held that A.O. having power to issue notice should be a particular A.O. having jurisdiction
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over Assessee at the time of issue of requisite notice. If notice issued by any other A.O. or notice is bad for any reason, than such back assessment would be illegal. 38. In Anirudhsinhji Jadeja and another Vs. State of Gujarat 1995 (5) SCC 302, Court held, if a statutory authority has been vested with jurisdiction he has to exercise it according to its own discretion. 39. In K.K. Loomba and Mrs. Uma Loomba Vs. Commissioner of Income Tax and others 2000 (241) ITR 152 (Delhi) it was held that A.O. having natural jurisdiction over the area would have jurisdiction to assess, issue notice under Section 148 as well and it cannot be done by anyone else. 40. Punjab and Haryana High Court in the case of Lt. Col. Paramjit Singh Vs. Commissioner of Income Tax and another 1996 (220) ITR 446 (Punjab) said "a notice for reassessment can be issued only by Assessing Officer who had concluded the proceedings." 41. We, however, do not go to that extent for the reason that there may be any subsequent change resulting in change of jurisdiction of A.O. Notice of reassessment can be issued by such an Officer but not by Officer who has no jurisdiction for assessment/reassessment. 42. In Commissioner of Income Tax Vs. Rajeev Sharma 2011 (336) ITR 678, Court observed "provisions contained in Section 148 of Act, 1961 with regard to escaped assessment must be construed strictly with regard to procedure prescribed for escaped assessment." 43. The reason for issuance of notice by Competent A.O. is quite obvious inasmuch as such notice could have been issued only when concerned A.O. has reason to believe that some income has escaped assessment and recomputation/reassessment is needed. Now such satisfaction can be of that A.O. only who has jurisdiction in the matter and not of any third party. 44. We, therefore, hold that in the present case, no valid notice under Section 148 was issued by Jurisdictional A.O. before making assessment/reassessment and, therefore, proceedings of reassessment pursuant to notice issued
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under Section 148 by an incompetent Officer are void and ab initio. 45. When a notice under Section 147/148 issued is a jurisdictional step, it cannot be treated to be mere irregularity curable under Section 292BB. In fact, Section 292BB has no application to a case where no valid notice has been issued by Competent A.O. This is clear from a bare reading of Section 292BB of Act, 1961 which reads as under: - "292BB. Where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the Provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 46. The curability permitted under Section 292BB is with regard to service of notice upon Assessee and not with regard to competence of authority who has issued notice. 47. A similar question was considered in Commissioner of Income Tax, Gujarat-II Vs. Kurban Hussain Ibrahimji Mithiborwala 1972 (4) SCC 394 and Court said "Income Tax Officer's jurisdiction to reopen an assessment under Section 34 depends upon issuance of a valid notice. If notice issued by him is invalid for any reason, entire proceedings taken by him would become void for want of jurisdiction." Court then held that notice was invalid as A.O. had no jurisdiction to revise assessment then it cannot be treated to be mere irregularity so as to validate proceedings of assessment if the Assessee had participated.
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Similar is the view taken by a Full Bench of this Court in Laxmi Narain Anand Prakash Vs. Commissioner of Sales Tax, Lucknow AIR 1980 ALL 198. 49. The contention of learned counsel for Revenue that participation of Assessee before Jurisdictional A.O. would operate as acquiescence or waiver and will not invalidate proceedings is thoroughly misconceived. 50. In Karnal Improvement Trust, Karnal Vs. Smt. Prakash Wanti and another (1995) 5 SCC 159, Court said that acquiescence does not confer Jurisdiction and erroneous interpretation should not be permitted to perpetuate and perpetrate defeating of legislative animation. 51. In Abdul Qayume Vs. Commissioner of Income Tax 1990 (184) ITR 404, Court said "an admission or an acquiescence cannot be a foundation for assessment where the income is returned under an erroneous impression or misconception of law." 52. It is well settled that a jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an Assessee cannot confer upon any jurisdictional authority, something which he lacked inherently. 53. Even if, it can be said that Assessee submitted to jurisdiction of A.O., law is that Assessee cannot confer jurisdiction on an authority who did not have the same and we find support from Commissioner of Income Tax Vs. Hari Raj Swarup and sons (1982) 138 ITR 462 (Alid.). 54. In Mir Iqbal Husain Vs. State of U.P. 1963 (50) ITR 40, it was held that requirement of valid notice cannot be waived. The mere fact that Assessee filed Return of Income pursuant to invalid notice would not render notice valid or validate subsequent proceedings which are vitiated in law for want of valid notice. 55. In Raza Textile Ltd. Vs. Income Tax Officer, Rampur (1973) 87 ITR 539 (SC), Court said that it is incomprehensible to think that a quasi-judicial authority like A.O. can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen.
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If an order is passed by a judicial or quasi-judicial authority having no jurisdiction, it is an obligation of Appellate Court to rectify the error and set aside order passed by authority or forum having no jurisdiction. This is what was held in State of Gujarat Vs. Rajesh Kumar Chimanlal Barot and another AIR 1996 SC 2664. 57. In view of above discussion, we have no manner of doubt to answer all the four questions against Revenue and in favour of assessee.” 9. ‘Principal CIT-II, Lucknow vs. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, Lucknow’ (supra), thus, in effect, holds, answering the question in favour of the assessee, that where a notice under section 148 of the Act was issued by an incompetent officer, i.e., one who has no jurisdiction, and subsequently, on the objection of the assessee with regard to the jurisdiction, the matter is transferred to the Assessing Officer having jurisdiction, a valid assessment cannot be made by him without issuing a fresh notice under section 148 of the Act. Therefore, since the Assessing Officer, having jurisdiction over the assessee, completed the reassessment without issuance of notice under section 148 of the Act, the reassessment order passed is invalid and cannot be sustained. It is, accordingly, set aside and cancelled. 10. In view of the above, the question of the reassessment order being bad in law for non-issuance of notice under section 143(2) of the Act becomes academic and, thus, otiose for our present purposes. Nothing further survives for adjudication, or was argued. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 20/09/2019. Sd/- [A. D. JAIN] VICE PRESIDENT DATED:20/09/2019 JJ:1209
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