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Facts
The Assessee filed an appeal against the order of the CIT(A) for AY 2009-10. The appeal was found to be time-barred by 140 days. The Assessee, a non-resident Indian, had deposited Rs. 28.50 lacs from the sale of agricultural land. Reassessment proceedings were initiated by a non-jurisdictional AO.
Held
The Tribunal held that the initiation of proceedings u/s 148 by a non-jurisdictional AO was bad in law. The subsequent assessment framed by the Assessing Officer, International Taxation, was also bad in law as it was based on a notice issued by an officer without jurisdiction. The assessment was quashed.
Key Issues
Whether reassessment proceedings initiated by a non-jurisdictional Assessing Officer are valid and whether the subsequent assessment is sustainable.
Sections Cited
147, 148, 144, 143(3)
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आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ �नधा�रण वष� / Assessment Year : 2009-10 Raman Pillai Sivasankara Vs. The DCIT, बनाम Pillai, #1590, Saini Vihar, International Taxation, Phase 3, Baltana, Chandigarh Punjab �थायी लेखा सं./PAN No: CJCPP4391J अपीलाथ�/ APPELLANT ��यथ�/ REPSONDENT ( Physical Hearing) �नधा�रती क� ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राज�व क� ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई क� तार�ख/Date of Hearing : 05.12.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 20 .01.2025 आदेश/Order Per Krinwant Sahay, A.M.:
Appeal in this case has been filed by the Assessee against the order dated 29.10.2018 passed by ld. Commissioner of Income Tax (Appeals)-43, New Delhi (herein referred to as ‘the CIT(A)’] for assessment year 2009-10. 2. At the very outset, it is found that the appeal filed by the Assessee is time barred by 140 days. The ld. Counsel for the Assessee has filed an Affidavit for condonation of delay, which is reproduced as 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 2 under:-
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 3
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 4
We have considered the reasons furnished by the Assessee in the affidavit for late filing of appeal by 140 days and after considering the same, we hereby condone the delay of 140 days. The ld. DR did not have any objection on this issue.
Grounds taken by the Assessee are as under:-
That the order under appeal is excessive, unjust, contrary to facts and is against law.
That the Learned Assessing Officer has wrongly passed the order under Section 144 of the Income Tax Act.
3. That the authorities below ought to have considered that the notice under Section 148 was wrongly issued by the Assessing Officer as the initial notice issued by Income Tax Officer was without jurisdiction. The said Assessing Officer did not have any jurisdiction to issue the notice and hence the proceedings are not maintainable in law.
4. That authorities below ought to have considered that the notice under Section 148 was never served to the appellant. The department has not adduced any evidence to prove the proper service of notice to the appellant and hence in the absence of proper service of notice, the proceedings cannot be sustained.
5. That authorities below have erred in making addition of Rs.25,51,210/- when the same are not sustainable as the amount deposited in the bank account pertained to the sale of rural agricultural land which is out of the 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 5
ambit of capital gain tax and hence not liable for any tax in the relevant Assessment Year and thus the order of the authorities is bad in law and merits to be set aside.
6. That the appellant craves leave to add, amend or alter any grounds of appeal before the appeal is finally heard off.
Brief facts are that the assessee had been non-resident from the year 2000 to 2013 as he was working in Afghanistan as a cook and he came back to India only in the year 2013, due to adverse circumstances in Afghanistan and during the year under consideration, the assessee had deposited Rs. 28.50 lacs in his bank account, maintained with Syndicate Bank, Sector-17, Chandigarh. It was argued that on account of such cash deposits, the Assessing Officer, Ward 4(4), Chandigarh vide notice, dated 09.03.2016, issued a letter for verification of deposits of Rs.28.50 and to which the assessee by way of letter dated 14.03.2016 replied that he had sold certain agricultural land in 'District Kollam', Kerala in FY 2008-09 and out of that amount, the sale proceeds were deposited in the saving bank account. It was further stated that he was out of India from 2000 to 2013 and he is a non-resident Indian. It was contended that the AO was made aware of the fact that the Assessee is an NRI. It was further
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 6 pointed out that the ITO, Ward-3(1), Chandigarh then issued a notice u/s 148 on 31.03.2016 after taking approval from the ld. PCIT and reasons for reopening have been reproduced in the assessment order. In the reasons, it has been mentioned, that since there was a deposit of Rs. 28.50 lacs in Syndicate Bank, Sector-17, Chandigarh, therefore, the proceedings u/s 147 had been initiated.
It was further argued that without there being any request by the assessee to transfer the case to the DCIT (International Taxation), Chandigarh, the case was transferred to the DCIT, (International Taxation), Chandigarh vide letter dated 10.08.2016 and the same is borne out from the order of the Assessing Officer Ward-3(1), Chandigarh wherein, he on his own transferred the case records, along with the notice u/s 148 to the DCIT, International Taxation, Chandigarh. The DCIT, International Taxation, without any fresh issue of notice u/s 148, framed the assessment in the status of non-resident and made an addition of Rs. 28.50 lacs in respect of the cash deposit in the bank account maintained with Syndicate Bank, Sector-17, Chandigarh.
It was contended before us that neither the ITO Ward-4(4), Chandigarh or the ITO Ward-3(1) had the jurisdiction, as the assessee
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 7 was NRI and the approving authority i.e. PCIT-1, Chandigarh, also did not have any jurisdiction to give sanction for notice u/s 148 and, thus, the proceedings as initiated u/s 148 are void on account of the fact that, initiation of the proceedings by the AO are without jurisdiction.
The ld. Counsel for the Assessee, thus, argued that though the assessee had intimated to Assessing Officer, Ward 4 (4), Chandigarh that he was an NRI as per the letter dated 14.03.2016 in the year under assessment, but the Assessing Officer Ward-3(1), Chandigarh went ahead to issue notice u/s 148.. The assessee never asked for transfer of the case to the DCIT, International Taxation, Chandigarh. Relying on various case laws, the ld. Counsel argued, on the basis of the Jurisdictional bench of ITAT and of the coordinate Bench of ITAT Delhi, Jaipur and Raipur Tribunal and of the Hon'ble Mumbai High Court, for which, the brief synopsis were filed sought the quashing of reassessment proceedings u/s 148 as framed by the Assessing Officer vide order dated 22.12.2016. The reliance is placed on the following judgements: - • The DCIT vs. Shri Manjeet Singh as reported in (ITAT Chd, 15.10.2024) • Shri Manjeet Singh vs. The DCIT as reported in (ITAT Chd. 17.12.2019)
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 8 • Sh. Tirlok Singh vs. The DCIT as reported in 3995/Del/2018 ITAT Delhi dated 08.12.2021 • Nimir Kishore Mehta v. Assistant Commissioner of Income-tax in [2024] 161 taxmann.com 553 (Bombay High Court) • Saroj Sangwan vs. Income-tax Officer [2024] 162 taxmann.com 704 (Delhi -Trib.)[17-05-2024] • Sunil Chablani vs. CIT ( International Taxation ) as reported in CTR in (2024) 38 NYPTTJ 1009 (ITAT Jaipur) • Mukesh Kumar Agarwal vs. Income-tax Officer [2022] 143 taxmann.com 139 (Jaipur - Trib.)[27-07-2022] • Adarsh Rice Mill vs. Income-tax Officer [2024] 167 taxmann.com 695 (Raipur -Trib.)[29-ll-2022] • Sh. Sunil Kumar in of Chandigarh Bench.
The Ld. Counsel of the assessee, also argued at length on the issue that there was no service of notice u/s 148, either by post or by way of affixture and service of the valid notice is a prerequisite and without their being any service of a notice u/s 148, the assumption of jurisdiction by the Assessing Officer was bad in law. He relied upon the judgment of ITAT Amritsar Bench in the case of ‘Mandeep vs. ACIT’ reported in [2024] 162 taxmann.com 637 (Asr. Trib.), dated 07.05.2024 and the judgment of Punjab & Haryana High Court in the case of ‘CIT vs. Harish Chandra’ reported in 323 ITR 49. On merits of 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 9 the case, the copy of sale deeds were filed before the ld. CIT(A) and even the copies of the purchase deeds of the agricultural land acquired in the year 2005 had been placed on record and the said agricultural land was sold in the year under consideration, for which, a certificate from the Tehsildar, certifying that the land as sold by the assessee are located beyond 12 km from the Municipal Limit and, thus, it was not liable to be taxed as capital gain. Thus, it was argued that on merits also, the addition is wholly unjustified.
It was further argued that before the ld. CIT(A) detailed submissions about the service of notice, and also on merits of the case had been made. The ITO-Ward-3(l), who have assumed the jurisdiction by issuing a notice u/s 148 did not have valid jurisdiction to issue the notice u/s 148. It was further argued that reliance had been placed by the ld. CIT(A) on the case of 'Abhishek Jain vs. ITO', is not applicable since, that was on different facts and that judgment is not applicable at all. Identical facts of the case are in the case of ‘Sh. Manjit Singh’ of Chandigarh Bench, particularly and other judgments as cited 'supra' and, as such, the confirmation of the order of the AO by the Ld. CIT(A) was highly unjustified.
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The ld. DR argued before us that the DCIT, International Taxation, Chandigarh had rightly framed the assessment on the basis of the issuance of notice by Ward-3(1) as it was found, later on, that the assessee was NRI and relied upon the order of the ld. CIT(A). The Assessee was also present at the time of hearing and he admitted that there was no fresh issue of a notice u/s 148 by the DCIT, International Taxation, Chandigarh and neither, there was a communication from the assessee regarding the transfer of case from the ITO, Ward-3(1) to the DCIT, International Taxation, Chandigarh. The ld. DR sought the confirmation of the order of the Ld. CIT(A).
We have considered the rival submissions and the order of the Assessing Officer and of the ld. CIT(A) and the paper book filed by the Counsel of assessee along with the copies of the various judgments. Facts under consideration are not disputed by both the sides in as much as, the assessee was a NRI from 2000 to 2013 and he had earlier been living in Afghanistan, but due to disturbed conditions, he came back to India under adverse circumstances, and also that there was no fresh issue of a notice u/s 148 by the Assessing Officer, International Taxation. The jurisdiction was assumed by the DCIT, International Taxation on the basis of the notice u/s 148 as issued by ITO Ward-3(l), Chandigarh. As the AO, ITO, Ward 3 (1) did not have 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 11 the jurisdiction to issue the notice u/s 148, realising his mistake, on his own, he transferred the case to the DCIT, International Taxation, Chandigarh which is evident form the following observations of the AO without their being any intimation or request from the assessee:
Later on, on detecting the residential status of the assessee being 'Non-Resident' during the concerned financial year, the territorial AO transferred the assessment record to the International Taxation, Chandigarh vide their letter 10.08.2016 as the jurisdiction over the case of 'Non Resident1 vests with International Taxation.
We have also gone through the order of the ld. CIT(A). The ld. CIT(A) relied on the judgments of the Delhi High Court in the case of’ Abhishek Jain vs. ITO’ is on different facts. The case of the assessee is squarely covered on the basis of the identical facts by the judgment of Sh. Manjit Singh and Others. Findings in the case by the jurisdictional Bench of Chandigarh ITAT are quite apt which is as under:- • The DCIT vs. Shri Manieet Singh as reported in (ITAT Chd, 15.10.2024) "16. Thus, considering the above facts and in case laws, we have no hesitation in holding that since the assessment has been framed by the AO of International Tax on the basis of notice u/s 148 issued by the non-jurisdictional AO, Ward-3(4) Ludhiana, the assessment framed by the AO of International Tax is quashed."
770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 12
Similarly other judgments as cited above by the Ld. Counsel of the assessee on this issue, we have no hesitation in holding that the initiation of proceedings u/s 148 by the ITO Ward-3(1), Chandigarh was bad in law. Since he had no jurisdiction to issue notice to an NRI and consequently the assessment as framed by the Assessing Officer International Taxation is also bad in law as he had proceeded on the basis of notice issued by the ITO, Ward 3 (1), Chandigarh. Thus, the assessment as framed by the Assessing Officer, International Taxation cannot be sustained. Accordingly, it deserves to be quashed.
We are fortified by the finding given in the case of Sh. Manjit Singh in and CO. No. 13/Chd/2022 wherein, the following finding has been given:
"15. We have considered the arguments of Id. Counsel of the assessee and the Id. DR as well as the brief synopsis and written submissions along with the judgments relied upon by both the sides and also the various case laws as cited before us. It is a fact borne out from record that prior to the issue of notice u/s 148 vide notice dated 28.03.2019 for the assessment year under consideration that the assessee is a non-resident as per the facts stated above by the Id. Counsel and the documents submitted before us for Assessment Year 2011-12. It is also a fact that the assessee is a citizen of USA and is holding American Passport and 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 13 notice u/s 148 was issued by the non-jurisdictional ITO and as per the judgment of the Delhi ITAT in the case of Mukesh Kumar and of the Chandigarh Bench and Delhi Be ch of the ITAT and the other judgments of the Bombay High Court and Rajasthan H ;h Court, as cited supra, we have no hesitation in holding that the Assessing Officer Ward-3(4), Ludhiana did not have valid jurisdiction to issue the notice u/s 148, since t was in the knowledge of the department earlier that the assessee was a non-resident and, even the return for AY 2011-12, had been filed, earlier to the notice issued u/s 148 for the year under consideration and the Assessing Officer, International Tax had proceeded with the framing of the assessment without issuing fresh notice u/s 148 and, thus, the assessment as framed by the Assessing Officer, International Tax, is bad in law. We are fortified by the judgment of co-ordinate bench in the case of Sh. Mukesh Kumar as cited supra in which it has been held as under:
The issue of valid jurisdiction is a condition precedent to the validity of any assessment under Section 147 of the Act; therefore, the assessment made pursuant to such notice is bad in law. In support of this proposition we rely upon the cases of Hon'ble Apex Court- in the cases of Y. Narayana Chetty Vs. ITO, 35 ITR 388, 392 (SC); CIT Vs. Maharaja Pratap Singh Bahadur, 41 ITR 421 (SC); and CIT Vs. Robert, 48 ITR 177 (SC). In the light of the above titled principle of law, we have no hesitation to quash the re-assessment it proceedings since there was no valid notice pursuant to which the reassessment proceeding was made in the present case. Accordingly, the appeal filed by the appellant is allowed.
Thus, considering the above facts and in case laws, we have no hesitation in holding that since the assessment has been framed by 770-Chd-2019 – Raman Pillai Sivasankara Pillai Baltana, Punjab 14 the Assessing Officer of International Tax on the basis of notice u/s 148 issued by the non-jurisdictional Assessing Officer, Ward-3(4), Ludhiana, the assessment as framed by the Assessing Officer of International Tax is quashed.
Both the Department and the Assessee have raised certain other issues but since, we have quashed the assessment as framed by the Assessing Officer, International Tax, on the legal issue, the other grounds of appeal are not being adjudicated being academic in nature because the relief has been allowed to the assessee on legal ground.