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Income Tax Appellate Tribunal, DELHI BENCHES : C : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI VIMAL KUMAR
ORDER PER VIMAL KUMAR, JM:
The appeal filed by the Assessee is against the order dated 02.12.2024 of the ld. Commissioner of Income-tax (Appeals), NFAC, Delhi, [hereinafter referred to as the Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 20.12.2019 of the ld. AO/Income-tax Officer, Ward 34(2), Delhi (hereinafter referred to as ‘the ld. AO’) u/s 144 of the Act for Assessment Year 2017-18.
The brief facts of the case are that the return of income declaring an income of Rs.4,29,700/- was filed on 31.10.2017. The return was processed u/s 143(1) of the Act. The assessee had derived income under the head ‘Income from business or profession’ ‘income from other sources’ and salary. The case was selected for scrutiny under complete scrutiny for the reasons:-
(i) Purchases shown in the ITR is less than the invoices value of imports shown in the export import data. (ii) Custom duty paid as shown in the ITR is less than the duty paid as export import data (iii) Abnormal increase on cash deposits during demonetization period as compared to pre-demonetization period.
Notice u/s 143(2) dated 14.09.2018 was issued. Notice dated 23.11.2019 u/s 142(1) along with questionnaire were issued. No reply was received. The final show cause notice dated 14.12.2019 was issued. The assessee failed to comply with the show-cause notice. However, the assessee filed reply dated 18.12.2019. On completion of assessment proceedings, the ld. AO, vide order dated 20.12.2019, made additions of Rs.32 lakh, Rs.38,91,929/- and Rs.45,12,065/-.
Against the order dated 20.12.2019 of the ld. AO, the appellant-assessee filed appeal before the ld.CIT(A). The ld.CIT(A) set aside the order of the ld.AO for denovo assessment vide order dated 02.12.2024. 2
Being aggrieved, the appellant-assessee preferred the present appeal with the following grounds:- “
1. On the facts and circumstances of the case, the assessment order passed by AO i.e. ITO Ward 34(2), New Delhi need to be quashed as the order is passed without issuing notice u/s 143(2) by the AO having jurisdiction over the appellant.
2. On the facts and circumstances of the case, the authorities below has erred both in law and on facts in the case in treating the amount of cash deposits of Rs.32,00,000/- in the bank accounts as unexplained money u/s 69A rws 115BBE of IT Act ignoring the fact that the above cash deposits are duly accounted for in books of account and therefore, the above provision has no application in present case.
3. On the facts and circumstances of the case, the authorities below has erred both in law and on facts in the case in treating the amount of cash deposits of Rs.32,00,000/- in the bank accounts as unexplained money u/s 69A rws 115BBE of IT Act ignoring the fact that the initial onus has been discharged by the appellant by submitting relevant documents and the AO has not made any adverse inference on the documents submitted by the AO. The additions made by the AO are based on mere suspicion, surmises and conjectures which are unsustainable, arbitrary and unjustified.
4. On the facts and circumstances of the case, the authorities below has erred both in law and on facts in the case in treating unsecured loan of Rs.38,91,929/- as unexplained credits u/s 68 r.w.s 115BBE of the Act ignoring the fact that the initial onus has been discharged by the appellant by submitting relevant documents and the AO has not made any adverse inference on the documents submitted by the AO. The additions made by the AO are based on mere suspicion, surmises and conjectures which are unsustainable, arbitrary and unjustified.
5. On the facts and circumstances of the case, the authorities below has erred both in law and in facts of the case in making impugned addition of Rs.45,12,065/- treating the difference in value of import/custom duty between figures recorded in books and figures available with the AO as undisclosed money ignoring the fact that both the import purchase and custom duty are accounted in books and the difference in figures, if any, has been duly explained in reply to show cause notice by submitting relevant documents and the AO has not made any adverse inference on the documents submitted by the AO.
6. On the facts and circumstances of the case, the authorities below have erred both in law and in facts of the case in making various additions 3 disturbing the trading results deduced from the regular books of accounts without complying with the requirements of rejecting books of account u/s 145(3) of IT Act and consequently completing the assessment on best judgement basis. The Ld. AO in absence of rejecting the books of account was required to compute the income on the basis of books of account in accordance with provision of sec 145(1) of IT Act.
7. On the facts and circumstances of the case, the authorities below have erred both on facts and in law in upholding the passing of order of assessment u/s 144 of IT Act when all the evidences in support of additions are already submitted during course of assessment proceedings and therefore, the passing of order of assessment u/s 144 instead of 143(3) of IT Act vitiates the assessment proceedings.
8. The appellant craves leave to add, delete, modify / amend the above grounds of appeal with the permission of the Hon’ble appellate authority.”
The ld. Authorised Representative for the appellant-assessee, regarding ground of appeal No.1, submitted that the assessment proceedings were illegal as no valid notice u/s 143(2) of the Act was issued. Notice u/s 143(2) of the Act dated 24.09.2018 was issued by ITO, Ward-66(1), Delhi. Copy of notice is at page 293 of the paper book. The ld. AO had no jurisdiction over the assessee. The ITO, Ward 66(1), Delhi, had jurisdiction over those assessees having income from salary/pension income from Indian Air Force, UGC, Foreign Airlines, Rajputana Rifles and whose names begin with the alphabet A to F. The assessee did not fall in any of the above categories. The assessee falls in the jurisdiction of ITO, Ward 34(2), Delhi, by virtue of territorial jurisdiction over Shalimar Bagh and the later authority, based on correct jurisdiction, has completed the assessment u/s 144 of the IT Act. Reliance was placed on:
(i) Vedanta Resources Ltd vs ACIT W.P.(C) No.6372 of 2022 (Orissa) (ii) Louis Dreyfus Company Asia Pte Ltd vs CITW.P.(C) No.9713/2019 (Del) (iii) Nirmal Gupta vs Pr CIT 08/Del/2018 dt: 22.06.2021 (iv) ITO vs M/s NVS Builders P Ltd dt: 08.03.2018 (v) Cosmat Traders P. Ltd. (2021) 128 taxmann.com 174(Kol) (vi) Sanjay Kumar Singhal vs. ITO, ITA No.3581/Del/2023, dated 30.04.2025.
The ld. AR submitted that there was no notice u/s 143(2) of the Act issued by the AO having jurisdiction over the assessee in accordance with the provisions of section 2(7A) r.w.s. 120(3) of the Act. The provisions of sec 292BB does not come to the rescue of the department as it is not a case of non- service of notice but a case of non-issue of notice.
The ld.DR submitted that the ld. AO had passed ex parte order. The ld.CIT(A) has set aside the order of the AO for denovo adjudication.
From examination of the record in the light of the aforesaid rival contention, it is crystal clear that the ld. AO/ITO, Ward-34(2) passed the assessment order dated 20.12.2019 in pursuance of notice u/s 143(2) of the Act dated 24.09.2018 by ITO, Ward-66(1), Delhi as is evident from the copy of notice at page 293 of the paper book. The ITO, Ward-66(1), Delhi, had no territorial jurisdiction over the assessee. A coordinate Bench vide in Sanjay Kumar Singhal vs. ITO, Order dated 30.04.2025, in paras 9 and 10 has held as under:- “9. From the examination of records in the light of aforesaid rival submissions, it is crystal clear that notice by non-jurisdictional ITO, Ward 33(1), Delhi was issued. The impugned order was completed by the Ld. AO, Ward 33(1), Delhi having jurisdiction without issuing any notice. ITRs for the assessment years 2015-16, 2016-17 and 2017-18 at page nos. 5, 12 and 17 of the paper books, jurisdiction of the appellant/assessee was with Ld. AO, Ward 26(1), Delhi. As such, assessment under appeal is the outcome of a jurisdictional notice issued by non-jurisdictional Ld. AO. Therefore, assessment needs to be quashed. Reliance can be placed on decision of following case laws: A. Vedanta Resources Ltd vs ACIT W.P.(C) No.6372 of 2022 (Orissa) B. Louis Dreyfus Company Asia Pte Ltd vs CIT W.P.(C) No.9713/2019 (Del) C. Nirmal Gupta vs Pr CIT dt: 22.06.2021 D. ITO vs M/s NVS Builders P Ltd ITA No.3729/Del/2012 dt: 08.03.2018 E. Cosmat Traders P. Ltd. (2021) 128 taxmann.com 10. As per the ratio of judgment of Hon'ble Bombay High Court in the case of CIT vs. Lalitkumar Bardia (2017) 84 taxmann.com 213 (Bombay), it is well settled law the assessment order has to be passed by the only authority having jurisdiction over an assessee. It is held that mere participation in proceedings or acquiescence would not confer jurisdiction upon the Ld. AO who otherwise was not the Ld.AO of the assessee.”
In view of the above material facts and judicial precedents, it is held that the impugned assessment and appellate order in pursuance of notice by an authority, non-jurisdictional AO, deserves to be quashed. Accordingly, ground of appeal No.1 is allowed. The grounds of appeal No.2 to 8 being not pressed are left open. 6