VIJAY KUMAR JAIN,BAPU NAGAR, JAIPUR vs. DCIT, CENTRAL CIRCLE-2, JAIPUR

The only contention raised by Ld. AR for the appellant before us is that this is a case where notice dated 29.03.2018 issued u/s 148 of the Act, by ITO, Ward-6(3), Jaipur can safely be said to be bad in law, being without jurisdiction.

As is available from the assessment order, the assessee filed return of income u/s 139(1) of the Act on 07.09.2011 declaring his income of Rs. 7,10,460/-. In response to the notice u/s 153A of the Act issued on 29.02.2016, same income was declared by the assessee.

Case of the department is that there was information available that the assessee had sold various immovable properties for total sale consideration of Rs. 1,77,97,000/-, which were valued by the Sub-Registrar at Rs. 2,02,34,218/-, for the purpose of stamp duty, and further that the assessee had not shown capital with respect to said properties, in the return of income filed u/s 139(1) of the Act, and that there were reasons to believe that income of Rs. 2,02,34,218/-, chargeable to tax, had escaped assessment as per provisions of Section 147 of the Act. Further, it is a case of the department that in the above situation, proceedings u/s 147 of the Act were initiated and notice u/s 148 of the Act was issued to the assessee on 29.03.2018, by ITO, Ward-6(3), Jaipur after recording reasons and obtaining approval of the competent authorities.

Admittedly, subsequent thereto, as per letter dated 29.06.2018, the assessment record of said case was transferred from the office of ITO, Ward-6(3), Jaipur to the office of Central Circle-2, Jaipur. Case of the department is that case was so transferred as Central Circle-2, Jaipur had jurisdiction over the assessee.

Admittedly, ITO, Central Circle-2, Jaipur, on receipt of the record, found that in response to the above said notice u/s 148 of the Act, the assessee had not filed his return of income, and as such, the assessee was served with notice on 30.08.2018, u/s 142(1) of the Act.

Admittedly, in response to the above said notice u/s 142(1) of the Act , the assessee submitted his response dated 10.09.2018 alleging therein that he had not received any notice dated 29.03.2018, u/s 148 of the Act. Accordingly, the assessee requested for supply of copy of said notice dated 29.03.2018 with proof of its dispatch by Speed Post. Department admits that vide letter dated 20.09.2018, copy of the above said notice dated 29.03.2018, u/s 148 of the Act, was supplied to the assessee by Speed Post, specifying therein that said notice u/s 148 dated 29.03.2018 was sent by Speed Post No. ER020088559IN and duly served upon him on 31.03.2018.

It is case of the department that another notice dated 11.10.2018 was issued by the department to the assessee in view of the fact that he did not file any return in response to the notice. Thereupon, the assessee put forth his reply dated 22.10.2018 to letter dated 11.10.2018. Said response revealed that the assessee requested for dropping of the proceedings, for want of a valid notice u/s 148 of the Act by DCIT, Central Circle-2, Jaipur, even though the previous notice dated 29.03.2018 was admitted to have been issued by ITO, Ward-6(3), Jaipur. The assessee also pleaded therein that any subsequent notice issued by DCIT, Central Circle-2, Jaipur was beyond the period of limitation, in terms of section 149(1)(b) of the Act. Further, it was pleaded that the subsequent notice issued by DCIT disclosed no reasons to believe, and as such, the same was bad in law even on this ground. Ld. AR for the appellant has contended for re-assessment, that reasons to believe must be of the jurisdictional Assessing Officer, and not of any other Assessing Officer, and that in the given situation, the only impugned order as regards the addition upheld, deserves to be set aside.

On behalf of the department, reliance has been placed on letter dated 30.10.2018 submitted by the department to the assessee, and the Sh. Vijay Kumar Jain, Jaipur. observations made by the authorities below, in support of validity of notice u/s 148 of the Act.

On account of non compliance by the assessee to the above said letter dated 30.10.2018, show cause notice dated 17.11.2018 was issued to the assessee. Admittedly, the assessee replied said show cause notice dated 17.11.2018.

As regards the above said objection raised by the assessee before the Assessing Officer regarding jurisdiction, for want of valid notice u/s 148 of the Act, the Assessing Officer observed in the manner as under:- “The reply furnished by the assessee has been considered and not found tenable due to following fact: (A). Assessee's plea that no notice u/s 148 of the I.T. Act was issued by the office of undersigned within the time limit as mentioned in section 149 of the Act rather it was issued by the authority (i.e. ITO ward 6(3), Jaipur) who has no assessment jurisdiction over the assessee is baseless at this stage. It is worthwhile to mention here that assessee did not file any return of income in response to notice u/s 148 of the Act, hence the provisions of section 124(3) of the I.T. Act, 1961 are applicable in this case. The section 124(3) reads as under: (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return" [under sub-section (1) of section 115WD or] under sub-section (1) of section 139, after the expiry of one month from the date on on which he was served with a notice under sub-section (1) of section 142 or [sub-section (2) of section 115WE or] sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; Sh. Vijay Kumar Jain, Jaipur. (b) where he has made no such return, after the expiry of the time allowed by the notice under [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144] to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; [(c) where an action has been taken under section 132 or section 1324, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.] On simple reading of the above provisions of section 124(3)(b) of the Act, it is clear that assessee was entitled to call in question the jurisdiction of the AO only within the time allowed via first notice issued (i.e. 148/142(1)/show cause) whichever is earlier. In assessee's case the first notice issued was u/s 148 on 29.03.2018 wherein time allowed was 30 days but no jurisdictional objection was filed by the assessee till specified time allowed above. The assessee filed the objection over the jurisdiction vide letter dated 17.11.2018 (i.e. around six and half months after). Hence, assessee plea don't have any relevance at this stage. (B). From the above, it is clear that the assessee has been provided sufficient opportunity to comply either via email or postal correspondence. The assessee neither filed any return of income nor produced any substantive material to contradict the information available on record. The assessee has been given sufficient opportunity to explain the same but no explanation has been provided to this office. Further, no return of income has been filed till date. In view of the above circumstances, the undersigned has no option but to make the assessment to the best of judgment u/s 144 of the IT Act after taking into account of all the information and material gathered and available on record which is as under:”

When the same question was raised by the assessee before Learned CIT(A), he dealt with the same by observing as under:- “4.10 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order. The contentions/submissions of the appellant are being discussed and decided as under:- The issue raised by the appellant in this ground of appeal has been discussed and adjudicated in the adjudication of additional ground no. 1 of the appeal wherein the ground of appeal has been dismissed. Even with respect to notice u/s 148 of the Act, it is held by the Hon'ble Delhi High Court in the case of Abhishek Jain v. Income-tax officer, Ward-55(1), New Delhi [2018] 94 taxmann.com 355 (Delhi)/[2018] 405 ITR

Section 148 of the Act provides that before making assessment, reassessment or re-computation, the Assessing Officer is required to issue notice u/s 147 of the Act, directing the assessee to furnish a return of his income within the period specified in the notice. It is well settled that the said notice is to be issued by the Assessing Officer who holds the original jurisdiction over the assessee. In this regard, reference may be made to decision in case of Lt. Col. Paramjeet Singh Vs. CIT (1996) 220 ITR 446, by Hon’ble Punjab & Haryana High Court, wherein it was held as under:-

Herein, as noticed above, admittedly, notice u/s 148 of the Act came to be issued to the assessee 29.03.2018, by ITO, Ward-6(3), Jaipur, who was not the jurisdictional Assessing Officer. Therefore, said notice u/s 148 of the Act issued by ITO, Ward6(3), Jaipur cannot be said to be a valid notice.

The case was transferred from ITO, Ward6(3), Jaipur to Central Circle2, Jaipur, vide letter dated 29.06.2018. It is not in dispute that the jurisdictional Assessing Officer i.e. ITO, Central Circle-2, Jaipur never issued any notice u/s 148 of the Act to the assessee, what to say of Sh. Vijay Kumar Jain, Jaipur. recording of any “reason to believe” that this was a case of escapement of income chargeable to tax or communication thereof to the assessee within the prescribed period of limitation.

Before the jurisdictional Assessing Officer, the assessee, at the very outset, raised objection as regards the validity of the notice u/s 148 of the Act on the ground that jurisdictional Assessing Officer had not issued the same. The jurisdictional Assessing Officer vide letter dated 20.09.2018 simply sent to the assessee, on his request, copy of the previous notice u/s 148 of the Act issued on 29.03.2018. It is not case of the department that the jurisdictional Assessing Officer ever issued fresh notice u/s 148 of the Act to the assessee, and that too within the prescribed period of 6 years from the end of the relevant assessment year. Conclusion 21. In view of the above discussion, we find merit in the contention raised by Ld. AR for the appellant that the notice u/s 148 of the Act issued on 29.03.2018 was invalid in the eyes of law, the same having not been issued by the jurisdictional Assessing Officer and “reasons to believe” have never been recorded by the jurisdictional Assessing Officer. Consequently, the entire reassessment proceedings deserved to be set aside.