SHRI NARESH KUMAR,ZIRAKPUR vs. ITO, W-3(5), CHANDIGARH

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ITA 1208/CHANDI/2019Status: DisposedITAT Chandigarh14 December 2022AY 2010-115 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order was bad in law because the jurisdictional ITO failed to issue a notice under Section 148 before framing the assessment. The transfer of the case was also not done with the sanction of the competent authority.

What were the facts?

The assessee challenged an assessment order where a notice under Section 148 was issued by a non-jurisdictional Income Tax Officer (ITO). The assessment was subsequently completed by the jurisdictional ITO without issuing a fresh notice under Section 148.

What were the issues?

Whether an assessment order is valid if the jurisdictional Assessing Officer fails to issue a notice under Section 148, and if the case was transferred without proper sanction.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3),Section 127

AI-generated summary — verify with the full judgment below

आदेश/Order

1.

The present appeal has been preferred by the assessee against the order dated 28.06.2019 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as ‘CIT(A)’].

2.

The assessee in this appeal has taken following grounds of appeal:-

1. That the order of the Ld. Assessing Officer upheld by the Worthy CIT(A) is being challenged on the ground of it being bad in law, arbitrary & having been Sh. Naresh Kumar 2 passed ignoring the facts stated by appellant during the course of the appellant proceedings.

2 That the Notice issued under section 148 of the Act is bad in law and against the provisions of the Income Tax Act 1961.

3.

That the order of the Ld. Assessing Officer upheld by the Worthy CTT(A) passed under sec 143(3) of the Income Tax Act, 1961 for the AY 2010-11 treating cash deposit of Rs. 12,11,750/- as unexplained cash deposit is not tenable in law on the facts that same being business receipts deposited to make payments to creditors from whom grocery items were purchased.

4. Any other ground or grounds as may be urged at the time of hearing

3. Apart from these aforesaid grounds of appeal, the assessee has taken following additional legal grounds of appeal:-

1.

That the Notice issued under section 148 of the Act is bad in law and against the provisions of the Income Tax Act 1961 a) Ld. Principal CIT has recorded satisfaction in a mechanical manner, without application of mind to accord sanction for issuing of notice U/s 148 of the Act. b) Notice U/s 148 issued by Non Jurisdictional Assessing Officer and no notice U/s 148 has been issued by jurisdictional Assessing Officer.

2. That the order of the Ld. Assessing Officer upheld by the Worthy CIT(A) is being challenged on the ground of it being bad in law, arbitrary & having been passed Sh. Naresh Kumar 3 ignoring the facts stated by appellant during the course of the appellant proceedings a) Notice U/s 143(2) issued on the same day of filing the Income Tax Return in response to notice issued U/s 148. b) No section has been mentioned by the Ld. AO for making addition for AY 2010-11 3. That the order of the Ld. Assessing Officer upheld by the Worthy CIT(A) passed under sex 143(3) of the Income Tax Act, 1961 for the AY 2010-11 treating cash deposit of Rs 12,11,750/- as unexplained cash deposit is not tenable in law on the facts that same were out of total turnover of the assessee.

4. Any other ground or grounds as may be urged at the time of hearing.

The assessee inter alia has taken the legal ground that no notice u/s 148 was issued by the AO who has framed the assessment order.

4.

Since this additional ground goes to the root of the case, therefore, the same is admitted for adjudication.

5.

The arguments have been heard on the legal ground first. As per Ld. Counsel for the assessee, in this case notice u/s 148 of the Act was issued by the ITO, Ward-4(5) Chandigarh, whereas, the assessment order has been passed by the ITO, Ward-3(5) Chandigarh. The Ld. Counsel has submitted that the ITO Ward 4(5) did not have any jurisdiction either to issue notice u/s 148 of the Act or to pass the assessment order. Though, the assessment order has been passed by jurisdictional ITO Ward-3(5) but before proceeding to frame the assessment order, he was mandatorily Sh. Naresh Kumar 4 required to issue notice u/s 148 of the Act. Since the issuance of notice by the jurisdictional AO was sine qua non, therefore, the assessment framed by him was bad in law.

6.

The Ld. DR, on the other hand, has submitted that the name of the assessee was lying in the PAN Data Base of ITO, Ward-4(5), Chandigarh and since the limitation to issue notice u/s 148 of the Act was going to expire, therefore, the AO / ITO with whom the name of the assessee way lying as per PAN Data Base issued notice u/s 148 of the Act.

However, later on, the case was transferred to the concerned jurisdictional ITO, Ward-3(5) and the assessment has been rightly framed.

7.

I have heard the rival contentions and have gone through the record. Admittedly, the notice was issued by the non-jurisdictional ITO in this case. The concerned jurisdictional ITO, before framing the assessment did not issue notice u/s 148 of the Act, which was sine qua non to assume jurisdiction to proceed with the assessment proceedings.

Moreover, the case has not been transferred with the sanction of the Competent Authority as provided u/s 127 of the Act. The Concerned ITO, Ward-4(5) without getting sanction from the competent authority himself transferred it to ITO Ward-3(5) and since the ITO, Ward-3(5) neither recorded reasons to believe that the income of the assessee has escaped assessment nor he issued notice u/s 148 of the Act, therefore, Sh. Naresh Kumar 5 the assessment framed by him was bad in law. Reliance in this respect can be placed on the decision of the Hon'ble Gujarat High Court in the case of Pankajbhai Jay Sukh Lal Shah Vs. ACIT [2019] 6 TMI 799 – Gujarat High Court. In view of this, the assessment order framed by the ITO, Ward-4(5) being bad in law is hereby quashed.

9.

Since I have already quashed the assessment order, therefore, there is no need to adjudicate the remaining grounds of appeal.

In view of the observation given above, the appeal of the assessee stands allowed.

Order pronounced in the Open Court on 14.12.2022

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