ITO, WARD- 2(2), NEW DELHI vs. ALMAK FINANCE PVT. LTD., NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘A’ NEW DELHI [THROUGH VIDEO CONFERENCING]

BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. No. 4504/Del/2017 Assessment Year: 2008-09

Income Tax Officer, M/s Almak Finance Pvt. Ltd, K-132, SFS Flats, 3rd Floor, Ward-2(2), New Delhi vs. (ASSESSEE) Sarita Vihar, New Delhi PAN-AABCA3408L (RESPONDENT) Revenue by: Sh. Vipul Kashyap, Sr. DR Assessee by: Mrs. Rano Jain, Adv

ORDER PER H.S. SIDHU, JM

This appeal is filed by the Revenue against the Order dated 12.04.2017 passed by the Ld. CIT(A)-I, New Delhi relating to Assessment Year 2008-09 on the following grounds:-

139(1) (hereinafter referred to as the I.T. Act, 1961) for the assessment year 2008-09 declaring NIL income. Assessment under section 147 read with section 143 of the Act made on 15.03.2016 determining total income of Rs. 2,84,32,500/-. In the assessment order, Assessing Officer treated the share capital / premium of Rs. 4,08,75,000/- during the year as unexplained cash credit by reducing addition of Rs. 1,30,00,000/- made in the assessment year 2007-08. The AO also added Rs. 5,57,500/- being 2% commission paid by the appellant for obtaining accommodation entries.

synopsis, and she relied upon the same and requested that learned First Appellate Authority has passed well-reasoned order and may be upheld by dismissing the appeal filed by the Revenue.

“1. Notice under section 148, issued by the A.O. Jaipur was without jurisdiction: Mrs. Uma Loomba vs CIT (2000) 241 ITR 152 (Del)

“9. Sec. 120 provides for jurisdiction conferred on the IT authorities to exercise the powers and perform the functions conferred by the Act. The jurisdiction between different authorities can be divided by reference to (i) territorial area, (ii) person or persons, (iii) income and classes of income, and (iv) cases or classes of cases. Sec. 124(1) has relevance to territorial jurisdiction. If area wise jurisdiction has been conferred on the AO then a person carrying on business or profession must find out the

AO having jurisdiction over the place within which business or profession is being carried on. If the assessee be a person not carrying on a business or profession then he is subject to the jurisdiction of the AO vested with jurisdiction over the area where he is residing. Sec. 127 does not speak of power to transfer jurisdiction-, it speaks of transfer of " case", as defined in the Explanation enacted to s. 127.

That being the position of law, we are very clear in our mind that the petitioners having shifted their business/profession and residence-both in July, 1984, from Amritsar to Delhi, the return could have been filed only before an AO having jurisdiction over the area where the business/profession of the petitioners was situated. If there was any doubt, the petitioners could have moved under s. 124(2) for determining the question of jurisdiction which the petitioners have not done. The proceedings finalised at Amritsar after the petitioners had ceased to have their business/profession at Amritsar would be without jurisdiction. 14. Once it has been found that the two petitioners had their business/ profession situated at Delhi, the assessing authority having natural jurisdiction over the area would have jurisdiction to assess them, issue notices under s. 148 as well, though referable to the period when they were assessed or were assessable at Amritsar by virtue of ss. 124(1) and 124(5) r/w s. 120(1). No order under s. 127 or even s. 124(2) was called for. Such an interpretation and the view of the law satisfies the twin test of (i) the convenience of the assessee, and (ii) the exigencies of tax collection.”

CIT Vs. Lalit Kumar bardia, ITA 127/2006, dt. 11.07.2017 (Bombay- HC) “21. Transfer of proceedings u/s.127 of the Act cannot be retrospective so as to confer jurisdiction on a person who does not have it. Section 127 of the Act does not empower the Authorities under the Act to confer jurisdiction on a person who does not have jurisdiction with retrospective effect. In fact, the explanation under Section 127 of the Act clearly provides that all the proceedings under the Act which are pending on the date of such order of transfer and all the proceedings which may be commenced after date of such order of transfer would stand transferred to the Assessing Officer to whom the case is transferred by Section 127(1) of the Act. This provision makes it clear that though transfer would come into effect from the date the order of Commissioner passed under Section 127(1) of the Act, the proceedings

already commenced would not abate and continue with new Assessing Officer, who assumes charge consequent to transfer subject of course to the pending notices being within jurisdiction of the Officer issuing the notices. It is not a provision which validates without jurisdiction notice issued by an Income Tax Officer. If the submission of the Revenue on the above account is to be accepted, then an order which is without jurisdiction could be bestowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if they are transferred to a new Officer by an Order under Section 127 of the Act.” Sh. Subhash Chand Ajmera vs. ITO, ITA No. 61/Jp/2017, dt. 31.01.2020 Notice u/s 148 was issued to the legal heir on behalf of the deceased assessee by ITO, Ward-1(4), Jaipur after seeking approval of JCIT, Range-1, Jaipur whereas the jurisdiction over the deceased assessee was with ITO, Ward 2(1), Jaipur under JCIT Range-2, Jaipur - HELD THAT:- ITO Ward 1(4), Jaipur herself has stated that the jurisdiction over the case does not lie with her but with ITO Ward 2(1), Jaipur. The aforesaid communication has been written to the Pr. CIT very next month of issuance of notice on 26.03.2015. Apparently, there was no further communication from the office of ld Pr. CIT and PAN of the deceased assessee was not transferred to ITO Ward 2(1) and continues with ITO Ward 1(4) and having issued the notice u/s 148, she continued with the proceedings and passed the assessment order u/s 147 read with 143(3) of the Act. Therefore, even though notice has been issued by ITO, Ward 1(4), Jaipur but once she is clear that the jurisdiction over the matter lies with ITO, Ward 2(1), Jaipur, merely because the permission has not been received from the ld. Pr. CIT for transfer of PAN, she cannot proceed and pass the assessment order in absence of requisite jurisdiction at first place which is governed by last known residence address of the deceased assessee as mandated by section 124(1)(b) of the Act. Therefore, where there is no dispute that the jurisdiction over the deceased assessee lies with ITO Ward 2(1), Jaipur, the assessment order passed by ITO Ward 1(4) cannot be sustained and set-aside for want of requisite jurisdiction. Where there is no dispute that the jurisdiction over the deceased assessee lies with ITO Ward 2(1), Jaipur, the assessment order passed by ITO Ward 1(4) cannot be sustained and set-aside for want of requisite jurisdiction.

“7. In the reasons so recorded by the ITO, Ward 1(4), Jaipur, the name and of address of the assessee has been stated as Sh. Tarachand Ajmera, 3659, Bhoot Ke Kuye Ki Gali, M.S.B Ka Rasta, Johari Bazar, Jaipur. Therefore, it appears that at the time of recording of the reasons by ITO, Ward 1(4), Jaipur, the PAN AATPA4923B of the assessee was lying with the ITO, Ward 1(4), Jaipur though there is nothing on record in terms of current and past tax filings by the deceased assessee as stated by ITO, Ward 1(4). Thereafter, the notice u/s 148 dated 26.03.2015 was issued by ITO, Ward 1(4), Jaipur to Sh. Subhash Ajmera as legal heir of Late Sh. Tarachand Ajmera. Therefore, at the time of issuance of notice u/s 148 of the Act, ITO Ward 1(4) was aware that the assessee had expired and as a result, the notice u/s 148 was issued to Sh. Subhash Ajmera as legal heir of deceased assessee. The ITO Ward 1(4) was equally aware of the residence address of the deceased assessee where he last stayed before his death i.e, 3659, Bhoot Ke Kuye Ki Gali, M.S.B Ka Rasta, Johari Bazar, Jaipur which also happens to be the residential address of the legal Heir, Sh. Subhash Ajmera. Therefore, the question for consideration is who has the jurisdiction over the area where the deceased assessee was last residing i.e, 3659, Bhoot Ke Kuye Ki Gali, M.S.B Ka Rasta, Johari Bazar, Jaipur in terms of section 124(1)(b) of the Act which reads as under: ………… ……….. 8. The answer to the said question is not hard to find and the same has been given by ITO Ward 1(4) where she has admitted that she doesn’t have the jurisdiction over the matter and jurisdiction lies with ITO Ward 2(1), Jaipur as clear from the letter No. ITO/W-1(4)/JPR/15-16 dated 21.03.2015 written by ITO, Ward 1(4), Jaipur to the Pr. CIT-1, Jaipur and the contents thereof reads as under:- ……. ………. ………. 9. In light of above, it is clear that ITO Ward 1(4), Jaipur herself has stated that the jurisdiction over the case does not lie with her but with ITO Ward 2(1), Jaipur. The aforesaid communication has been written to the Pr. CIT very next month of issuance of notice on 26.03.2015. Apparently, there was no further communication from the office of ld Pr. CIT and PAN of the deceased assessee was not transferred to ITO Ward 2(1) and continues with ITO Ward 1(4) and having issued the notice u/s 148, she continued with the proceedings and passed the assessment order u/s 147 read with 143(3) of the Act. Therefore, even

though notice has been issued by ITO, Ward 1(4), Jaipur but once she is clear that the jurisdiction over the matter lies with ITO, Ward 2(1), Jaipur, merely because the permission has not been received from the ld. Pr. CIT for transfer of PAN, she cannot proceed and pass the assessment order in absence of requisite jurisdiction at first place which is governed by last known residence address of the deceased assessee as mandated by section 124(1)(b) of the Act. The fact that jurisdiction over last known residence address of the deceased assessee lies with ITO Ward 2(1), Jaipur is also corroborated by the assessment order passed for same assessment year 2008-09 in case of the legal Heir, Shri Subhash Chand Ajmera who happens to share the same residential address as that of the deceased assessee and which is passed by ITO Ward 2(1), Jaipur. Therefore, where there is no dispute that the jurisdiction over the deceased assessee lies with ITO Ward 2(1), Jaipur, the assessment order passed by ITO Ward 1(4) cannot be sustained and set-aside for want of requisite jurisdiction.” CIT vs. Anjali Dua, (2008) 219 CIT 183 (Del)

“4. It is in this background that the Tribunal noted that the request of the assessee to transfer the jurisdiction was noted in the letter dated 25-3-1998 whereby the no objection of Commissioner of Income-tax, New Delhi was conveyed to the Commissioner of Income-tax, Ludhiana. It is also noted that thereafter the assessee submitted returns for the assessment years 1997-98 onwards at New Delhi. It is in these facts and circumstances that the Tribunal came to the conclusion that insofar as, the assessee was concerned, after the said transfer, it is only the revenue authorities at New Delhi who had jurisdiction over the assessee’s cases and who were competent to issue a notice in terms of section 148 of the said Act. It may also be pointed that, pursuant to the issuance of impugned notice under section 148 of the said Act on 28-3-2003, when the notice under section 142(1) was issued to the assessee in December 2003, the assessee by her reply dated 21-1-2004 indicated that her Assessing Officer was not located in Ludhiana, but was the Income-tax Officer at New Delhi.” CIT Vs. S.S. Ahluwalia, 255/2002, dt. 14.03.2014 (Del-HC) 44. In Commissioner of Income Tax versus Anjali Dua, (2008) 219 CTR (Delhi) 183 the High Court refused to interfere in view of the factual finding recorded by the tribunal that the assessee had shifted her residence from Ludhiana to Delhi and there was correspondence, which showed change in jurisdiction and place of assessment to Delhi, which was accepted and there was of transfer of records, i.e., a transfer under

Section 127 of the Act. It was accordingly held that upon transfer the Revenue authorities at Delhi had necessary power and were competent to issue notice under Section 148 of the Act.’’

In Sardar Baldev Singh vs. CIT (1960) 40 ITR 605 (SC) 736 the assessee was a resident of Lahore in the year 1944. On 14th Oct., 1944, he was assessed at Lahore for the asst. yr. 1944-45. After partition in 1947, the assessee shifted to Delhi. The ITO, Delhi, on 10th April, 1948, issued a notice under s. 34 of the Indian IT Act, 1922, to the assessee then residing in Delhi requiring him to file revised return for the year 1944-45 as a part of his income for that year had escaped assessment. The assessee filed the return under protest. The question of jurisdiction arose. Their Lordships opined that the contention of the assessee was without foundation:

"Now the place where an assessment is to be made pursuant to a notice under s. 22(2) has to be determined under s.64. Indeed that is the only provision in the Act for deciding the proper place for any assessment. There is nothing which makes s. 64 inapplicable to an assessment made under s. 34. Therefore, it seems to us clear, that the place where an assessment under s. 34 can be made has to be decided under s. 64. Now the appellant was not carrying on any business, profession or vocation. He was working as the Defence Minister of the Government of India and residing in Delhi. He could be properly assessed by the Income-tax Officer, Delhi, under s. 64(2) if the assessment was the original assessment. This is not in dispute. It follows that no objection can legitimately be taken by the appellant to his assessment under s. 34 by the ITO, Delhi." Sections: 34- s.147, 64- s.120, 22(2)-143(2) K.A. WIRES LTD. VERSUS INCOME TAX OFFICER, ITA 1149/Kol/2019, dt. 22.01.2020

“Under the scheme of “e” filing of return, the assessee has to fill PAN on the return. It has to also fill its address and some of the details are picked-up by the assesse. If the Department's system fails to correctly transfer the return to the jurisdictional Assessing Officer and transfer the same to a Assessing Officer though who has no jurisdiction as per the CBDT's notification, such mistake cannot confer the jurisdiction on such an Assessing Officer. Jurisdiction can be conferred only by notification u/ s 120(1) and 120(2) of the Act only.

The Ld. DR submitted that there was transfer order of the assessee’s case for the assessment year in question, from ITO Ward 33(1) to ITO Ward 8(3). There can be a valid transfer order from ITO Ward 33(1) only if he was vested with the jurisdiction over the assessee. As he was never vested with the jurisdiction either by the notification of the CBDT or by any order of the Commissioner of Income tax earlier to the issue of notice u/ s 143(2) of the Act, he could not have validly transferred the case to ITO, Ward-8(3), Kolkata. The file/case was restored to its jurisdictional area. When the said ITO Ward 33(1) was not having valid jurisdiction at the time of issue of notice u/ s 143(2) of the Act, then the notice is bad in law. The transfer of the folder from ITO Ward 33(1) to ITO Ward 8(3) in fact establishes that the revenue realised that the ITO Ward 33(1) had no jurisdiction. The Ld DR also raised the issue that u/s 120(4) and 124(5) of the Act, there can be concurrent jurisdiction. There is no dispute over that. However there is no direction or order or notification u/ s 120(1) or 120(2) of the Act, conferring concurrent jurisdiction to the ITO Ward 33(1) along with ITO Ward 8(3) u/ s 120(1) or u/ s 120(2) of the Act, which is the condition mentioned in section 120(4) and 120(5) of the Act.

The Ld DR argued that the assessee did not dispute the jurisdiction u/ s 124(3) of the Act and hence by not disputing the same, the right to challenge the jurisdiction is lost forever. This would have been so, had the ITO, Ward-33(1), Kolkata, had original jurisdiction over the assessee. This is not the case. When an authority does not have jurisdiction, then the act done by such authority is bad in law and is void ab-initio. In view of the above discussion, as the Assessing Officer who had jurisdiction over the assessee i.e., ITO Ward – 8(3), Kolkata had not issued the notice to the assessee u/s 143(2) of the Act as mandatorily required under the Act, the assessment framed u/s 143(3) of the Act, is bad in law as held by the Hon’ble Supreme Court in the case of ACIT & Anr. Vs. Hotel Blue Moon: 321 ITR 362 (SC).” In M. Ramasamy Asari vs. ITO (1964) 51 ITR 57 (Mad), the Division Bench has held

“In regard to the business income of an assessee it is only the ITO having jurisdiction over the place where his business activities are concentrated who would have jurisdiction to assess; where the assessee

has no business it is the place of residence that determines jurisdiction. No other officer except the officer having territorial jurisdiction, either over the place where the assessee is carrying on business or over the place where he is residing, if there is no business, would have jurisdiction, and any assessment passed by any other officer would be illegal." In Pannalal Binjraj vs. Union of India AIR (1956) 31 ITR 565 (SC) their Lordships have vide para. 20 analysed the scheme of the provisions in the IT Act relating to jurisdiction and transfer of cases. Their Lordships have held that an assessee is entitled to be assessed by the ITO of the particular area where he resides and carries on his business. If a question may arise as to the place of assessment it is to be determined by the CIT. The principles underlying determination of jurisdiction on which the provisions are based are: (i) convenience of the assessee, and (ii) efficiency of the Department (i.e. the exigencies of tax collection). Both the ends would be achieved by conferring jurisdiction on the AO of an area where the assessee to have his assessment at a place but determines the ITO who is to have power to assess him.

“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 under Section 148 by an incompetent Officer are void and ab initio.” ACIT vs. Resham Petrotech Ltd., ITA 2777/Ahd/2011, dt. 10.02.2012 “Under that circumstance how one can say that the jurisdictional AO has acquired jurisdiction to re-assess the income under section 147 of the Act Under the circumstances how it can be said the reasons recorded by other

AO was satisfaction to jurisdictional AO. The reasons for reopening must be recorded by jurisdictional AO because he is keeping all relevant and primary record. The basic requirement of section 147 of the Act is that the AO has reason to believe that any income chargeable to tax has escaped assessment. Such belief must be the belief of jurisdictional AO and not any other AO or authority of the department. Therefore, it is well settled that the AO's jurisdiction to reopen an assessment u/s. 147 depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction.”

ITO vs. Indus Valley Investment and Finance Limited, ITA 4239/Del/2011, dt. 06.07.2012 “5. We have heard both the parties and gone through the facts of the case. The issue before us is as to whether the reassessment framed by the AO i.e ITO Ward- 11(4), New Delhi, in pursuance to a notice dated 31.03.2008 u/s 148 of the Act, issued by Income-tax Officer, Ward-2, Gurgaon, who did not have jurisdiction over the case of the assessee, is valid one. A mere glance at the relevant provisions reveals that section 147 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 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 recomputation 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.)In the instant case, indisputably ITO Ward-11(4), New Delhi had jurisdiction over the assessee company and the assessee is filing return in that ward regularly. The ITO Ward-2, Gurgaon, who did not have jurisdiction over the assessee, issued a notice u/s 148 of the Act on the basis of information from DIT(Investigation) that the assessee was in receipt of accommodation entries. As soon as the assessee informed him that jurisdiction over his case was vested with ITO Ward-11(4), New Delhi, records were transferred to New Delhi. Thereafter, the said ITO 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. As mentioned by the AO in his remand report, the ITO Ward 11(4),New Delhi never issued any notice u/s 148 of the Act .Thus ,he did not assume jurisdiction to reassess the income of the assessee even when original return declaring income of Rs.37,440/- was filed on 22.10.2002 by the assessee in his ward. Apparently, the ITO Ward 11(4), New Delhi committed an irregularity by not issuing notice u/s. 148 of the Act again and instead continued the proceedings u/s. 148 of the Act, initiated on 31.3.2008 by the ITO Ward- 2, Gurgaon. This was objected to by the assessee vide letter dated 3-12-2008. Apparently, the jurisdictional AO i.e. ITO, Ward-11(4),New Delhi never acquired jurisdiction to re- assess the income of the assessee under section 147 of the Act nor ever recorded the reasons in writing as stipulated in the said section reasons for reopening of any assessment have to be recorded by jurisdictional AO alone because he maintains the relevant and primary records. The basic requirement u/s 147 of the Act is that the AO has reason to believe that any income chargeable to tax has escaped assessment. Such belief can be of jurisdictional AO alone and not of any other AO or authority. Reassessment proceedings initiated on the directions given by the CIT were held to be invalid in CIT v. T. R. Rajkumari [1973] 96 ITR 78 (Mad.) & Sheo Narain Jaswal & Ors. v. ITO & Ors. [1989] 176 ITR 352 (Pat.). Hon'ble Apex Court in CIT v. A. Raman & Co., [1968] 67 ITR 1 (SC) observed that whether on the information in his possession he should commence a proceeding for assessment or reassessment must be decided by the Income-tax Officer and not by the High Court. The Income-tax Officer alone is entrusted with the power to administer the Act; if he has information from which it may be said, prima facie, that he had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under article 226 of the Constitution, to set aside or vacate the notice for reassessment on a reappraisal of the evidence. The ITO referred to herein is, ITO having jurisdiction over the assessee and not any other ITO. It is

well-settled 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, we have no hesitation in upholding the findings of the ld. CIT(A), quashing the reassessment order. Consequently, ground no1 in the appeal is dismissed.” ITO vs. Krishan Kumar Gupta, ITA 286/Del/2004, dt. 17.10.2008 “The ITO, Ward 33(2) who passed the present assessment order without issuing any fresh notice under s. 148 of the Act cannot be said to have a valid jurisdiction over the assessee unless and until the case has been transferred to him from ITO, Ward 25(4), by an order passed under s. 127 of the Act by any competent authority. In the present case, the ITO, Ward 33(2) had exercised the jurisdiction merely on the basis of intimation given by the ITO, Ward 25(4), and merely on file being transferred by the ITO, Ward 25(4) of his own to the ITO, Ward 33(2). The Hon’ble Delhi High Court in the case of CIT vs. Smt. Anjali Dua (supra) has held that the notice issued under s. 148 on 28th March, 2003 by the then ITO, Ludhiana was without jurisdiction inasmuch as the assessee had shifted from Ludhiana to New Delhi in July, 1997 and had been filing his return of income for asst. yr. 1997-98 onwards at New Delhi. In the case of Ranjeet Singh vs. Asstt. CIT (supra), the Tribunal has held that the notice issued by the ITO, Ward 2(2), Ghaziabad, was not in substance and effect in conformity with the provisions of s. 120 r/w s. 147 of the Act as the notice was issued without jurisdiction . In that case, it was found by the Tribunal that having received the notice under s. 148, the assessee raised the objection immediately by saying that he was assessed to tax by Dy. CIT, Circle 21(2), New Delhi, and notice issued by the ITO, Ghaziabad, was invalid.” Dr. Mrs. K.B. Kumar vs. ITO, ITA 4436/Del/2009, “5. The learned Authorised Representative for the assessee contended before us that the reassessment order passed by the ITO, Ward-34, New Delhi was without jurisdiction and liable to be quashed because he has simply framed the reassessment by issuing a notice under section 143(2) on 16-12-2008 without recording any reasons and without issuing a fresh notice under section 148 of the Act. He further submitted that now the issue, i.e., whether in the absence of any valid recording of reasons

by the Assessing Officer having jurisdiction and without issuing notice under section 148 the order passed by the Assessing Officer was without jurisdiction and liable to be quashed, stands covered in favour of assessee and against the revenue. In support of his contentions, the learned Authorised Representative for the assessee relied on the following decisions: ITO v. Krishan Kumar Gupta [2008] 16 DTR 1 (Delhi - Trib.) wherein the Tribunal, Delhi Bench 'E' held reassessment completed by an ITO on the basis of notice under section 148 issued by another ITO who had no jurisdiction over the assessee is not valid. Reassessment was also held to be invalid for the reason that the jurisdiction over assessee's case was not transferred by any order passed under section 127 by any competent authority to the ITO who passed the impugned assessment order. (i) Ranjeet Singh v. Asstt. CIT [2009] 120 TTJ (Delhi) 517 wherein the Tribunal held that notice under section 148 issued by the ITO at Ghaziabad to the assessee who was assessed to tax in Delhi was without jurisdiction and, therefore, assessment framed on the basis of said notice is bad in law; impugned notice was not in substance and effect in conformity with the provisions of section 120 read with section 147 and thus, the provisions of section 292B are not applicable. (ii) CIT v. Smt. Anjali Dua [2008] 174 Taxman 72 (Delhi) wherein their Lordships of Delhi High Court dismissing the appeal of the Revenue held as under : The Tribunal noted that the request of the assessee to transfer the jurisdiction was noted in the letter dated 25-3-1998, whereby the no- objection of CIT, New Delhi, was conveyed to the CIT, Ludhiana. It is also noted that thereafter the assessee submitted returns for the assessment years 1997-98 onwards at New Delhi. It is in these facts and circumstances that the Tribunal came to the conclusion that insofar as the assessee was concerned, after the said transfer, it is only Revenue authorities at New Delhi who had jurisdiction over the assessee's cases and who were competent to issue a notice in terms of section 148. It may also be pointed that pursuant to the issuance of impugned notice under section 148 on 28-3-2003, when the notice under section 142(1) was issued to the assessee in December, 2003, the assessee by her reply dated 21-1-2004 indicated that her Assessing Officer was not located in Ludhiana, but was at New Delhi. The Tribunal has come to the conclusion on the basis of the facts available on the record and, no substantial question of law arises in the present case. No interference with the impugned order is called for. The appeal is dismissed.”

Indorama Software Solution Ltd. Vs. ITO, ITA No. NOs. 5211 & 5290 (MUM.) OF 2011, dt. 07.09.2012 “10. We are conscious that the issue of the question of jurisdiction of Assessing Officer cannot be raised first time before us after completion of the assessment but, since the assessee has raised this objection right from the beginning and the Assessing Officer as well as CIT (A) has given a finding, therefore, this issue does not question the jurisdiction of the AO who has completed the re-assessment but questions the validity of Notice u/s 148 and emanates from the impugned orders of the authorities below. The definition of the Assessing Officer as provided u/s 2(7A) of the Income Tax Act means "the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or ITO who has 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 provisions of this Act" 11. Section 148 mandates issue of notice before assessment, reassessment or computation u/s 147. As per section 148, it is mandatory that the Assessing Officer shall serve on the assessee a notice required him to furnish a return. The expression "Assessing Officer" used in the section 148 means 'the Assessing Officer vested with the jurisdiction over the assessee as stipulated in the definition u/s 2(7A) by virtue of the directions / orders passed u/s 120, sub-section (1) & (2)'. Thus, the notice u/s 148 is required to be issued by the Assessing Officer who is vested with the jurisdiction over the assessee on the basis of the criteria of territorial area, a person or classes of persons, income or classes of incomes and cases or classes of cases as enumerated in sub-section 3 of section 120 of Income Tax Act. It is not the case of the Revenue that the Assessing Officer who has issued the notice u/s 148 was vested with the jurisdiction by virtue of any direction or orders issued under sub-section (1) or (2) of section 120 of the Income Tax Act. Thus, there is no dispute about the jurisdiction vested with the Assessing Officer - ITO, Ward-9(2)-1 over the assessee when the notice u/s 148 was issued by the ITO, Ward-10(3)-4. When it is apparent that the notice u/s 148 was issued by the AO who was not vested with the jurisdiction over the assessee then, the same is patently illegal and void. Consequently, the reassessment proceedings and order in pursuant to the illegal notice u/s 148 are also void ab initio and liable to be set aside. Hence, we hold that the reassessment on the basis of an illegal notice u/s 148 is not sustainable and accordingly the same is set aside.”

M/S UDS Offsets Pvt. Ltd. Vs. ITO, I.T.A. No. 3771/DEL/2016, dt. 20.03.2017

“7. I have heard both the parties and perused the relevant records especially the order passed by the Revenue Authorities. I find considerable cogency in the assessee's counsel submissions that the reassessment order dated 28.2.2014 passed by the AO is without jurisdiction and is liable to be quashed because the jurisdictional AO has not issued and served any notice u/s. 148 of the Act. Therefore, the assessment proceedings initiated are illegal, unsustainable and untenable under the law. From the records, I note that assessee had its registered office in New Delhi since the date of its incorporation; filing its ITR at New Delhi right since the date of its incorporation and ITR for AY under appeal was filed on 30.11.2006 and PAN details since its incorporation also lies with the Delhi income tax authorities. And based on information received from the ADIT, Faridabad, the AO, Ward 1(1), Faridabad who did not had any jurisdiction over the assessee issued notice u/s. 148 of the Act and also issued notice u/s. 142(1). The Assessee informed the AO about its jurisdiction to be assessed at Delhi and requested for transfer of records at Delhi and accordingly, the case was transferred. Accordingly, the notice u/s. 142(1) and 143(2) was issued by the Jurisdictional AO Ward 18(2), New Delhi for the first time on 15.10.2013 and no notice u/s. 148 was ever issued by the jurisdictional AO. Hence, the Ld. CIT(A)'s action of confirming the validity of assessment made by the ITO, Ward 28(2), New Delhi without service of valid notice under section 148 is not sustainable in the eyes of law and needs to be quashed.”

Ramesh Mishra vs. DCIT 646/Luc/2018, dt. 20.09.2019 “9. Principal CIT-II, Lucknow v. 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”.

Appellate Authority at page 13 to 18. For the sake of convenience, the same is reproduced as under:-

“I have considered the submission of the appellant and observation of the Assessing officer in the assessment order. It is seen that in this case assessment u/s 147 of the I.T. Act was reopened and notice u/s 148 was issued on 10.04.2014 by ITO, Ward 2(2), Jaipur by recording his own reasons to believe that certain income has escaped assessment for the A.Y. 2008-09. It is contended by the appellant that it has shifted its registered office from Bhiwadi Rajasthan to the NOT of Delhi which was approved by the Company Law Board vide order dated 22.09.2010 and thereafter, the appellant had got correction in its PAN data base in respect of change in address of registered office from Jaipur to NCR Delhi. The Income Tax Department had issued new PAN with the correction of new registered office address in Delhi vide letter dated 26.03.2014. The appellant contended that the ITO, Ward - 2(2), Jaipur has issued a letter dated 04.03.2014 to Sh. Deepak Tyagi, Director of the appellant company at its registered office address i.e. K 132, SFS Flats, Sarita Nagar, New Delhi wherein the ITO, Ward 2(2), Jaipur himself has mentioned that he had a telephonic talk with the Director of the appellant company and he has informed him that M/s Almak Finance Pvt. Ltd. is being assessed at New Delhi but the PAN of the company was lying with ITO, Ward 2(2). The appellant also contended that vide letter dated 20.05.2014, the ITO, Ward - 2(2), Jaipur himself requested the CIT-I, Jaipur to transfer the cases of appellant company to ITO, Ward - 1(3), New Delhi. The appellant contented that it has filed its audited balance sheets for the FYs 2010-11, 2011-12 & 2012-13 before the Registrar of Companies, New Delhi. The appellant also contended that after receipt of notice u/s 148 of the I.T. Act for the AY under consideration, appellant vide letter dated 15.11.2014 submitted before the ITO, Ward 2(2) Jaipur stating that it has shifted its registered office from Jaipur to Delhi and address has also been changed in PAN database and therefore, the appellant requested the ITO, Jaipur to transfer the case of the appellant from Jaipur to Delhi.

In view of the above facts, the appellant has challenged the assumption of jurisdiction by the Assessing Officer ITO, Ward 2(2) u/s 147 of the I.T. Act and has stated that assessment is void ab initio and liable to be quashed as the Assessing Officer cannot assume jurisdiction

without issue of notice u/s 147 of the I.T. Act. It is contended by the appellant that ITO, Ward - 2(2), Jaipur at the time of issuing notice u/s 148 of the I.T. Act, 1961 did not have any jurisdiction over the appellant’s case, hence, the appellant submitted that notice issued u/s 148 by the ITO, Ward - 2(2), Jaipur in the case of appellant, was invalid. The appellant submitted that ITO, Ward - 2(2), New Delhi was the only competent authority to issue notice u/s 148 of the I.T. Act, 1961. Since, the ITO, Ward 2(2) has not issued any notice u/s 148 and has completed the proceedings on the basis of the notice issued by ITO, Ward 2(2), Jaipur, therefore, the assessment framed by the ITO, Ward 2(2), Delhi was ab initio and needs to be quashed. The appellant in this regard has relied upon the judgment rendered by Hon’ble High Court of Delhi in case of Commissioner of Income-tax v. -6 v. Smt. Anjali Dua [2008] 174 TAXMAN 72 “4. It is in this background that the Tribunal noted that the request of the assessee to transfer the jurisdiction was noted in the letter dated 25-3-1998 whereby the no objection of Commissioner of Income-tax, New Delhi was conveyed to the Commissioner of Income-tax, Ludhiana. It is also noted that thereafter the assessee submitted returns for the assessment years 1997-98 onwards at New Delhi. It is in these facts and circumstances that the Tribunal came to the conclusion that insofar as, the assessee was concerned, after the said transfer, it is only the revenue authorities- at New Delhi who had jurisdiction over the assessee’s cases and who were competent to issue a notice in terms of section 148 of the said Act. It may also be pointed that, pursuant to the issuance of notice under section 148 of the said Act on 28-3-2003, when the notice under section 142(1) was issued to the assessee in December 2003, the assessee by her reply dated 21-1-2004 indicated that her Assessing Officer was not located in Ludhiana, but was the Income-tax Officer at impugned New Delhi. 5. In view of the foregoing, we are of the view that the Tribunal has come to the conclusion on the basis of the facts available on the record and, we do not find any substantial question of law arising in the present case. No interference with the impugned order is called for. This appeal is dismissed. ” The appellant further contended that issue of notice u/s 148 of the Act by the jurisdictional AO is a pre-condition for validly assumption of jurisdiction u/s 147 of the I.T. Act, 1961. The issue of notice u/s 148 is not merely a procedural requirement, but for assuming jurisdiction under that section for re-assessment issue of notice by the Jurisdictional Assessing Officer is pre-requisite condition. The appellant has also relied on the judgment of Hon’ble Supreme Court in the case of Y. Narayana Chetty v. Income-tax Officer [1959] 35 ITR 388.

Held that

Service of requisite notice is a condition precedent for validity of re- assessment made under section 34 of 1922 Act, and a notice prescribed by section 34 of 1922 Act cannot be regarded as a mere procedural requirement; it is only if said notice is served on assessee as required then ITO would be justified in taking proceedings against him."

The appellant also contended that the jurisdictional AO, ITO, Ward - 2(2), New Delhi continued with the proceedings initiated u/s 147 by the assessing officer, ITO, Ward - 2(2), Jaipur who had issued notice without jurisdiction, therefore, notice issued by him was invalid. The proceedings continued with that invalid notice, will automatically be invalid, since no fresh notice u/s 148 of the I.T. Act, 1961 has been issued by the jurisdictional assessing officer, ITO, Ward - 2(2), New Delhi and thereby no satisfaction in the form of reason has been recorded by the jurisdictional AO which is sine qua non for assumption of jurisdiction u/s 147 of the I.T. Act, 1961. The appellant contended that it is settled law that jurisdiction of the assessing officer to reopen an assessment u/s 147 of the I.T. Act, 1961 depends upon the issuance of a valid notice u/s 148 after recording his own “reason to believe” that certain income has escaped assessment and if the notice issued u/s 148 is invalid for any reason the entire proceedings would become void for want of jurisdiction. In support of its contention, the appellant has relied upon the following judicial pronouncements: a. Income-tax Officer, v M/s Indus Valley Investment & Finance P. Ltd.[July 2012] (assessment year 2002-03) ITA no.4239 /Del/2011 (ITAT - Delhi) “FACTS The assessee filed its return declaring income of 37,440/-, was processed u/s 143(1) of the I.T. Act. Based upon information received from DIT (Inv.), New Delhi, ITO Ward- 2, Gurgaon, after recording reasons in writing, issued a notice u/s 148 of the Act on 28/31.03.2008. The assessee replied vide letter dated 18.9.2008 that the jurisdiction over their case vested with ITO, Ward-1T(4)',New Delhi and that return for the AY 2002-03 was filed in that jurisdiction. Accordingly, the ITO, Ward-2, Gurgaon transferred

the records to ITO, Ward-11(4), New Delhi on 03.11.2008.

The CIT(A) took a view that notice u/s 148 dated 31.3.08 issued by the ITO, Ward 2, Gurgaon is beyond jurisdiction and void-ab-initio. The notice is thus held to be invalid. The resultant assessment order u/s 147/143(3) dated 10.12.2008 which has been framed on the basis of the invalid notice u/s 148 is accordingly annulled.

On revenue’s appeal:

HELD

■ A mere glance at the relevant provisions reveals that

Section 147 authorizes and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that any income for assessment year has 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. 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.

In the instant case, indisputably ITO Ward-11(4), New Delhi had jurisdiction over the assessee company and the assessee is filing return in that ward regularly. The ITO Ward-2, Gurgaon, who did not have jurisdiction over the assessee, issued a notice u/s 148 of the Act as soon as the assessee informed him that jurisdiction over his case was vested with ITO Ward- 11 (4), New Delhi, records were transferred to New Delhi. Thereafter, the said ITO 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.

Apparently, the ITO Ward 11(4), New Delhi committed an irregularity by not issuing notice u/s. 148 of the Act again and instead continued the proceedings u/s. 148 of the Act, initiated on 31.3.2008 by the ITO Ward- 2, Gurgaon. It is well- settled 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, we have no hesitation in upholding the findings of the Id. CIT(A), quashing the reassessment order. Consequently, ground no1 in the appeal is dismissed. ”

b. The appellant has also relied upon the judgement of Hon’ble ITAT in the case of Dr. Mrs. K.B. Kumar v. ITO [2011] 12 taxmann.com 318 (ITAT - Delhi) “Section 148, read with section 143 of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for – Assessment year 2001-02 – Whether where Assessing Officer on basis of notice under section 148 issued by another Income-tax Officer, framed reassessment under section 143(2) without recording any reasons and without issuing a fresh notice under section 148, reassessment so framed was invalid in law and, thus, it was liable to be quashed – Held, yes” FACTS ITO, Ward-21(3), Ghaziabad, based on information received by him from Addl. CIT, Range-1, Ghaziabad, regarding receipt of Rs. 5 lakhs on 19-2-2000 from Sanjay Mohan Aggarwal recorded reasons of income escaping assessment on 25-3-2008 and issued notice under section 148 on 27-3-2008. The assessee vide her letter dated 20-11- 2008 submitted to ITO. Ghaziabad that she had filed her IT return for assessment year 2001-02 on 3-9-2001 declaring income of Rs. 4,61,330 with ITO, Range 48, New Delhi and hence this notice issued by ITO, Ghaziabad was without jurisdiction. Further, it appears that the ITO, Ghaziabad transferred the case to office of Assessing Officer. Ward-34(2), New Delhi who issued a notice dated 16-12-2008 to the assessee under section 143(2) for appearance before him on 23-12- 2008. However, the assessee received a letter dated 23-12-2008 from the ITO, New Delhi, assessing income of the assessee at a sum of Rs. 9,61,380 by adding the gifted amount of Rs.5 lakhs and on appeal the same was confirmed by the learned CIT(A). On assessee's appeal: HELD It is held that notice under section 148 issued by ITO, Ghaziabad was without jurisdiction and consequent upon the same reassessment framed by the Assessing Officer. Delhi is invalid and the same is accordingly quashed. Consequently, the order of the learned CIT(A) is set aside on the legal issue raised by the assessee in her appeal. Ground No. 2 raising the legal issue is decided in favour of the assessee. ”

I have considered the submission of the appellant and various case laws relied upon by the appellant in this regard. It is seen that notice u/s 148 was issued by ITO, Ward 2(2), Jaipur on 10.04.2014 after recording reasons. However, on the date of issue of notice, the ITO, Ward'2(2), Jaipur was not having jurisdiction over the case of the appellant as the Director of the appellant had informed the ITO, Ward 2(2) through telephone which is recorded by the ITO, Ward 2(2) in his letter dated 04.03.2014 written to the Director of the appellant company. In the said letter, the Director informed the AO that he is filing his return at Delhi and has already shifted his office to New Delhi. It is also seen that appellant has got its address changed in PAN database and the same was communicated to the appellant by Income Tax PAN Services Unit vide its letter dated 26.03.2014 for change of address at New Delhi. It is also seen that after issue of notice, the ITO, Ward 2(2) vide his letter dated 20.05.2014 has written to CIT-I, Jaipur has mentioned that he has contacted Sh. Deepak Tyagi, Director of the appellant company wherein he has informed that appellant company has shifted its office to New Delhi and regularly filing its return of income at Delhi, therefore, ITO requested the CIT to transfer the case to ITO, Ward 2(2), New Delhi immediately. It is also seen that appellant company changed its registered office from Bhiwadi to New Delhi vide its Company Law Board order dated 22.09.2010. The copy of the said order is placed before me and the appellant has filed its balance sheet for F.Y. 2010-11, 2011-12, 2012-13 and 2013-14 before Registrar of Companies, NCR Delhi. All these facts established that ITQ, Ward 2(2), Jaipur had issued notice to the appellant company without having jurisdiction over the appellant’s case and the ITO, Ward 2(2), New Delhi has continued with the said proceedings and completed the assessment u/s 143(3) read with Section 147 of the I.T. Act which is invalid in the eyes of law. The ITO, Ward 2(2) has assumed jurisdiction without recording his own satisfaction and without issue of notice u/s 148 of the I.T. Act. From the factual as well as legal position discussed above, it is seen that facts of the appellant’s case are identical with the various decisions relied upon by the appellant, therefore the ratio of said judgments is squarely applicable in the case of appellant. Since the jurisdictional AO has merely proceeded with notice u/s 148 issued by ITO Ward 2(2), Jaipur, which is invalid and completed assessment u/s 147 without issuing fresh notice u/s 148 and without recording his own reasons to believe, which is sine qua non for assumption of jurisdiction u/s 147, therefore, the AO has committed irregularity in the process which is not curable u/s 292BB of the Act. In view of the above, the assessment made u/s 147 of the I.T. Act is not sustainable in law and same is quashed. Since, the reopening of the assessment has been quashed, therefore, other grounds of appeal taken by the appellant are not being adjudicated here as the same remains of academic in nature. 6. In the result, appeal is allowed.”

Order pronounced on 14/10/2020.

Sd/- Sd/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 14/10/2020 SH