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Facts
For AY 2015-16, the assessee filed an ITR and claimed exempt income u/s 10(38). The case was selected for scrutiny, leading to multiple notices u/s 143(2) and 142(1) from different Income Tax Officers (ITO) in Delhi and Noida, with frequent transfers of the case between jurisdictions. Despite the assessee's objections to the changing jurisdiction, the assessment was ultimately completed by ITO, Ward 8(2), Delhi, and the CIT(A) dismissed the assessee's jurisdictional challenge.
Held
The Tribunal held that the various ITOs involved in the assessment for AY 2015-16 did not establish proper jurisdiction and that the case transfers between them were executed in a "whimsical manner" without adequate justification or adherence to Section 127 of the Act. Crucially, no valid notice under Section 143(2) was issued by an Assessing Officer with established jurisdiction within the statutory time limit, rendering the entire assessment proceeding invalid.
Key Issues
Whether the assessment order passed was invalid due to lack of proper jurisdiction by the Assessing Officer and the non-issuance of a valid notice under Section 143(2) within the statutory period by a jurisdictional AO.
Sections Cited
10(38), 120, 124, 127, 142(1), 143(2), 143(3), 292BB, 115WD, 115WE, 139
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Income Tax Appellate Tribunal, DELHI BENCHES : E : NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI ANUBHAV SHARMA
ORDER
PER ANUBHAV SHARMA, JM:
1. This appeal is preferred by the Assessee against the order dated 02.09.2019 of the Commissioner of Income Tax (Appeals)-3, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No.3/10164/2017-18 arising out of the appeal before it against the order dated 19.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), by the ITO, Ward-8(2), New Delhi (hereinafter referred to as the Ld. AO).
Assessee Mahavir Singhal had filed his return of income for the assessment year 2015-16 on 30-09-2015 with ward 25(1), Delhi at a total income of Rs.7,28,540/- comprising of income from salary, income from house property, income from business, STCG and income from other sources. Besides this, he had also claimed Rs.60,96,900/- as exempt income u/s 10(38) on account of long term capital gains from sale of listed shares on which STT was paid. The case was selected for scrutiny under CASS. Though the proceedings of assessment for the AY 2014-15 were going on with the Income Tax Officer, Ward 70(2), notice U/S 143(2) of the Income Tax Act, 1961 dated 19-09-2016 was received for AY 2015-16 from the Income Tax Officer, ward 40(1), Delhi. Again notices u/s 143(2) and 142(1) were received from the Income Tax officer, ward 2(2), Noida time and again. All these notices were duly replied with though the assessee had objected the jurisdiction at Noida and requested the concerned authority to drop the proceedings. Again, a notice u/s 142(1) of the Income Tax Act, 1961 dated 07-11-2017 was received from Income Tax Officer, ward 8(2), Delhi. The notice and proceedings were duly complied with though no notice u/s 143(2) was received from Ward 8(2), Delhi. The assessment order dated 19-12-2017 was passed by Income Tax Officer, ward 8(2), Delhi assuming the jurisdiction.
The assessee had raised challenge of exercise of jurisdiction to pass assessment order before CIT(A) which was disposed of by CIT(A) by following relevant observations in paras 4.1 to 4.2.1:- 2 “4.1 The appellant has contended that the statutory notice u/s 143(2) of the Act was issued by ITO, Ward-40(1), Delhi on 19.09.2016 and another such notice was issued by ITO, Ward-2(2), Noida on 29.09.2016 despite the fact that the assessment proceedings for AY 2014-15 were pending with ITO, Ward-70(2), Delhi at that time. It is also submitted that the assessment was finally completed by ITO, Ward-8(2), Delhi and the case was transferred from one AO to another without following proper procedure as prescribed in section 127 of the Act. In this regard, the AR has submitted as under: “Notice u/s 143(2) issued were without jurisdiction:- The assessee had filed his return of Income for the AY 2015-16 at his business address at Noida but with the Income Tax Officer Ward 25(1), Delhi having jurisdiction upon him based on his permanent residence. Assessment for AY 2014-15 was pending before the Income Tax Officer, Ward 70(2), New Delhi but a notice u/s 143(2) dated 19-09-2016 was received by the Income Tax Officer Ward 40(1), Delhi. Notice u/s 143(2) dated 29-09-2016 was also received by-the assessee from Income Tax Officer, Ward 2(2), Noida. As there cannot be two simultaneous jurisdiction at the same time, these notices were Without-jurisdiction and were objected by the assessee. Copies of the following are being enclosed herewith for your kind perusal:- Notice of demand along with copy of Assessment order for AY 2014-15 Copy of notices u/s 143(2) dated 19-09-2016 and 29-09-2016 . Copy of letter objecting the jurisdiction at Noida Copy of Mail rejecting the objection on jurisdiction.
Jurisdiction of case transferred without following procedures The Income Tax Officer, Ward 2(2), Noida had after rejecting the objection of the assessee on jurisdiction, issued notice u/s 142(1) of the Act. Thereafter, he transferred the file suo moto to the Income Tax Officer, Ward 8(2), Delhi. Provision regarding power to transfer the case has been provided under section 127 of the Act and according to this the Income Tax Officer is not empowered to do so. The Ld. Assessing Officer i.e. Income Tax Officer, Ward 8(2) has thus framed the assessment without getting proper jurisdiction according to law, hence the same may please be declared as null & void. Relied upon:- ACIT Vs Smt. Harinder Sachdev (ITA No. 4776/Del of 2009) ITAT Delhi. Harvinder Singh Jaggi Vs ACIT (2016) 157 ITD (Delhi-Trib.)”
4.2 I nave considered the facts of the case and the submission made by , the AR. It is observed that the appellant had himself filed the ITR at Delhi with ITO, Ward-25(1) in which the appellant had mentioned his address of Noida. In view of this, the ITO at Noida had issued the notice to the appellant. The appellant objected to the assessment proceedings to be carried by ITO, Noida and vide letter dated 13.11.2017, requested that the assessment be completed by the Delhi based AO. In this regard, reference is made to the decision of Hon’ble Delhi High Court in the case of Abhishek Jain vs ITO 405 ITR 1 [2018], in WRIT PETITION (CIVIL) No. 11844/2016, wherein vide Order dated 01.06.2018, it has been held that- “37. The view we have taken, finds support from the decision of the Patna High Court in Mahalliram Ramniranjan Das vs. CIT (1985) 156 ITR 885, wherein the decision of Delhi High Court in Kanji Mai & Son's case (supra) was referred to. Reference was also made to the decision of the Supreme Court in Guduthur Bros. vs. ITO (1960) 40 ITR 298 (SC), and the matter was remanded to the authority to continue with the proceedings from the stage irregularity had occurred. It was observed that the tribunal was not right in annulling the assessment. It would be also appropriate here to refer to the decision in Hindustan Transport Co. vs. Inspecting Asstt. Commissioner of Income Tax and Anr. (1991) 189 ITR 326 of the Allahabad High Court-Lucknow Bench, wherein it has been observed as under:- "A survey of the above provisions of the Act highlights the following situations. After creating the various Income Tax authorities, the Act does not prescribe their respective jurisdiction or functions. Any case can be dealt with by any Income Tax authority with the possible exception of the Board. Accordingly, the various Income Tax authorities are of co-ordinate jurisdiction. What function or functions, which authority or officer, shall perform is left to be decided either by the Board or by the Commissioner. On what principles the Board and the Commissioner will allocate the functions is not indicated in the Act. The principle is, however, apparent from the nature of the enactment. The Act has been enacted with a view to collect revenue. Income Tax is the main source of revenue for the State. It is through revenue that the machinery of the State is run. It is desirable that the tax should be collected as early as possible. Collection of tax is preceded by assessment thereof. It is consequently desirable that the assessment proceedings should be completed expeditiously but expeditious disposal of an assessment does not mean that the assessee may be put to unwarranted harassment or prejudice. Therefore, the Board and the Commissioner shall take into account the convenience of the assessee also. It is with this purpose in view that it has., been provided in Sub-section (1) of Section 127 that, whenever possible, an opportunity of hearing may be given to the assessee while transferring a case from one place to another. Since the assessee does not suffer any inconvenience or prejudice if a case is transferred locally, no such opportunity has been prescribed. From these provisions it is obvious that the Board and the Commissioner will exercise the power of allocation of junctions to various authorities or officers in the exigency of tax collection with due regard, to the convenience of the assessee. In other words, the allocation is a measure of administrative convenience: In such a situation, the concept of jurisdiction cannot be imported and, certainly, not in the sense of invalidating the resultant action on account of the defect in the exercise of functions. Being an enactment aimed at collecting revenue, the Legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has, therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in Section 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board.. Courts do not come into the picture. From the above provisions of the Act, it is apparent that the Act does hot treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first question, therefore, is that the power is administrative and procedural and is to be exercised in the " interest of exigencies of tax collection and the answer to the second question is that, under the Act,a defect arising from allocation of Junctions is a mere irregularity which does not affect the resultant action.
In Commissioner of Income Tax vs. Shivkumar Agrawal (1990) 136 ITR 734 (Orissa), it was held that imposition of penalty by the Assistant Commissioner in view of the amendment was without jurisdiction in light of an earlier judgment but there was no dispute about validity of initiation of the said proceedings. Once proceedings were validly initiated but disposed of by an officer having no jurisdiction, the proceedings do not come to an end but should be finalized by an officer having jurisdiction. Therefore, while accepting the decision of the tribunal on the question of cancellation of penalty, the High Court held that the proceedings had not been finalized and could be finalized by the Income Tax Officer. In the present case, proceedings were initiated both by the AO, Delhi and ITO Dimapur. Even if it is assumed that the proceedings initiated, by AO, Delhi were not in accordance with law, there is no finding and indeed the respondent did not contest the proceedings initiated by ITO, Dimapur. ITO, Dimapur had accepted that the assessment order should be passed by AO, Delhi. Even if the said opinion/belief was wrong, it would not affect the initial initiation of proceedings by ITO, Dimapur, who had passed the assessment orders in the second round.
A Division Bench of Bombay High Court in Commissioner of Income Tax vs. BharatkumarModi 2000) 246 ITR 693, referred to the well settled principle of law; setting out the difference between lack of jurisdiction and irregular exercise of authority/ jurisdiction. Proceedings are a nullity when the authority taking it, has a no power to have seisin over the case. But an order is not a nullity or in exercise of void abintio jurisdiction, when the Assessing Officer does not confront the assessee with- the material in his possession. The said error is an irregularity which could be corrected by remitting the matter. Powers of annulment and power to set aside and remit the case, have to be exercised keeping in mind the distinction between lack of jurisdiction and irregularity in exercise of authority/jurisdiction. The latter can be rectified and should be rectified as early as possible. Annulment of assessment would mean that the entire assessment proceedings would become ab initio void and the consequences were different from merely setting aside." 18. S. S. Ahluwalia (supra), examines several decisions which were relied upon by the assessee in the said case and were held to be not germane and applicable. This decision also explains provisions of Section 127 of the Act and scope and ambit of the said power, to observe that the section does not speak of the transfer of jurisdiction but transfer of case as defined in Section 127. Expression "concurrent jurisdiction" is mentioned in sub-section (3) to Section 127 of the Act. Elucidating the legal effect of Sections 120, 124 and 127 of the Act, it was observed in S. S. Ahluwalia. (Supra):- "(13)The provisions indicate that Sectionsl20, 124 and 127 of the Act recognizes flexibility and choice, both with the assessee and the authorities i.e. the Assessing Office before whom return, of income could be filed and. assessment could be made. The Assessing Officer within whose area an assessee was carrying on business, resided or otherwise income had accrued or arisen (in the last case, subject to the limitation noticed above) has jurisdiction. Similarly, the Assessing Officer also has authority due to class of income or nature and type of business. The Act, therefore, recognized multiple or concurrent jurisdictions. Provisions of Section l24 ensure and prevent two assessments by different assessing officers, having or enforcing concurrent jurisdiction. There cannot be and the Act doss not envisage two assessments for the s-ame year by different officers. (Reassessment order can he by a different officer)." 19. We would reiterate that sub-section (1) to ,Section 124 states that the Assessing Officer would have jurisdiction over the area in terms of any direction or order issued, under sub-section (I) or sub-section (2) to Section 120 of the Act. Jurisdiction would depend upon the place where the person carries on business or profession or the area in which he is residing. Sub- section (3) clearly states that no person can call in question jurisdiction of an Assessing Officer in case of non-compliance and/or after the period stipulated in clauses (a) and (b), which as observed in S. S. Ahluwalia (supra) would negate and reject arguments predicated on lack of subject matter jurisdiction. Where an assessee questions jurisdiction of the Assessing Officer within the time limit and in terms of sub-section (3), and the Assessing Officer is not satisfied with the correctness of the claim, he is required to refer the matter for determination under sub-section (2) before the assessment is made. Reference of matter under sub-section (2) would not be required when Assessing Officer accepts the claim of the assessee and transfers the case to another Assessing Officer in view the objection by the assessee. (In terms of sub-section (3) to Section 124 of the Act, the petitioner had lost his right to question jurisdiction of the Income Tax Officer, Ward No. 1 (1), Noida.) 20. Sub-section (5) to Section 124, though limited in scope, would also be applicable in the facts and circumstances of the present case as the Income-Tax Officer, Ward-1 (1), Noida had the power to assess income accruing or arising within the area as it is not the case of the petitioner- assessee that the said officer did not have jurisdiction in view of location of the bank account and/ or petitioner's place of work. Section 124(5) of the Act saves assessment made by an assessing officer provided that the assessment does not bring to tax anything other than income accruing, arising or received in that area over which the assessing officer exercises jurisdiction. However, notwithstanding Section 124(5), the Act does not postulate multiple assessments by different assessing officers, or assessment of part or portion of an income [see Kanjimal & Sons Vs. Commissioner of Income Tax, New Delhi, (1982) 138 ITR 391 (Del)]. Thus, it is necessary that the Assessing Officers having concurrent jurisdiction ensure that only one of them proceeds and adjudicate. This is the purport and objective behind sub-section (2) to Section 124 of the Act- 21. Contention of the petitioner that the transfer by Income-Tax Officer, Ward-1 (1), Noida to Income- Tax Officer, Ward-58 (2), Delhi required an order under Section 127 of the Act is fallacious and without merit. Section 127 relates to transfer of case from one Assessing Officer having jurisdiction to another Assessing Officer, who is otherwise not having jurisdiction as per directions of the Board under Section 120 and Section 124 of the Act. Under. sub-section (1), transfer order under Section 127can be passed by the Director General, Chief Commissioner or Commissioners from one Assessing Officer to another Assessing Officer subordinated to them. Sub-section (2) applies where the Assessing Officer to whom the case is to be transferred is not subordinated to the same Director General, Chief Commissioner or Commissioners of the Assessing Officer from whom the case is to be transferred. This is not a case of a transfer under Section 127 of the Act. This is a case in which the assessee had raised an objection stating that the Income-Tax Officer, Ward-1 (1), Noida should not continue with the assessment as-the petitioner-assessee was . regularly filing returns with the Income-Tax Officer, Ward-58 (2), Delhi. Objection as raised were treated as made in terms 'of sub-section (3) to Section 124, notwithstanding-the fact that there was delay and non-compliance. The Income-Tax Officer, Ward-1 (1), Noida accepted the request/prayer of the petitioner and. had transferred pending proceeding to the Assessing Officer, Ward-58 (2), Delhi. Therefore, there was no heed, to invoke ,and follow the procedure mentioned in sub-section (2) to Section 127 of the Act. Section 127 of the Act would come into play when the case, is to be: transferred from the Assessing Officer having jurisdiction to a third officer not having jurisdiction over an assessee (a case) in terms of the directions of the Board under section 120 of the Act. Section 127 of the Act could also apply when the department wants transfer of a case, and Sections 120 and 124 of the Act are not attracted.
Counsel for the petitioner had relied upon judgment of the Supreme Court in Hasham Abbas Sayyad Vs. Usman Abbas Sayyad & Ors., (2007) 2 SCO 355 which draws distinction between a person or authority lacking- inherent jurisdiction Which makes the order passed by them a nullity, and therefore, principle of estoppel, waiver and acquiescence or even res judicata which are procedural in nature, would not have any application. Such, orders passed without jurisdiction would suffer lack of coram non judice and cannot be given effect to. This decision refers to Harshad Chiman Lai Modi Vs. DLF Universal Ltd. & Anr., (2005) 7 SCC 791, which classifies and draws jurisprudential difference amongst territorial or local jurisdiction; pecuniary jurisdiction; and jurisdiction over the subject matter. As far as territorial or pecuniary jurisdictions are concerned, objection should be taken at the earliest possible opportunity and /or before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stands on a different footing.
In mew of the above discussion, objections as to the jurisdiction of assessing officer in the present case cannot be equated with lack of subject matter jurisdiction. They relate to place of assessment. Income-Tax Officer Ward 1(1), Noida would not per se lack jurisdiction, albeit he had concurrent jurisdiction with the Income-Tax Officer Ward 36(l)/58, Delhi. In the facts of the present case the contention raised about the lack of jurisdiction would not justify quashing the notice under Section 147/148 of the Act.
Accordingly, we do not find any merit in the present petition and the same is dismissed. Stay order is vacated. However, in the facts of the present case there would be no order as to costs. ”
4.2.1 In the present case, it is observed that the appellant had himself mentioned the Noida address in the ITR and on his request only; the case was transferred to Delhi. In View of the above facts and the legal position as discussed above, the contentions of the appellant regarding the jurisdiction of the AO are found to be baseless and therefore, the same are rejected and the grounds of appeal are dismissed.”
4. Now here before us, apart from other grounds on merits the assessee has raised ground No.1 challenging the findings of the CIT(A) dismissing the ground of the appellant that the assessment was lacking of or without jurisdiction. The ld. AR has relied the sequence of events and his stress was on the argument that when the notice was issued for present AY 2015-16 by ITO, Ward 40(1) u/s 143(2) on 19.09.2016, the assessment for AY 2014-15 was also pending with ITO, Ward-70(2). It was, thus, submitted that the notice could not have been issued by ITO, Ward 40(1). It was further submitted that the AO had suo moto transferred the assessment to ITO, Ward 2(2) where objections were raised with regard to the exercise of jurisdiction which was rejected and thereafter, the case was transferred to ITO, Ward 40(1), Delhi, and ITO, Ward 8(2) Delhi concluded the assessment. Thus, relying the following judgements, it was submitted by the ld. counsel that the assessment was completed without a valid notice u/s 143(2) of the Act by the jurisdictional Assessing Officer and otherwise the assessment was completed by an AO who was not having the jurisdiction:- (i) P.A. Ahammed Vs Chief Commissioner of Income Tax (2006) 282 ITR 334 (Ker); (ii) Sunworld Infrastructure Pvt Ltd Vs ITO Ward 24(3), New Delhi; (iii) Rungta Irrigation Limited Vs ACIT Central Circle- 3(1), Kolkata. (iv) Abhishek Jain Vs Income Tax Officer, Ward 55(1), Delhi (2018) 405 ITR 1 Delhi. 4.1 Reliance in this regard was also placed on ACIT vs. S.K. Industries (2022) 141 taxmann.com 569 (SC) wherein the Hon’ble Delhi High Court judgement in WP(C) 4014/2016 in S.K. Industries vs. ACIT, Circle-50(1), New Delhi, dated 31.05.2017 was sustained.
4.2 The ld. DR has heavily relied the submissions and the response of the AO and we consider it appropriate to reproduce the same below:- Submission dated 20/05/2024 “In this regard, it is humbly submitted that the following submission may kindly be considered with regard to issue of jurisdiction and service of notice u/s 143(2): Brief background/facts: Notice u/s 143(2) was first issued by Ward 40(1), Delhi on 19.09.2016. Later, the case was transferred to Noida Office (Ward 2(2)) on the basis of address mentioned in the ITR of the assessee for AY 2015-16 and notice u/s 143(2) was again issued on 29.09.2016. However, upon consequent request by assessee, the case was transferred back to Ward 40(1), Delhi vide transfer order dt.05.10.2017. Later, notice u/s 142(1) was issued on 07.11.2017 by Ward 8(2), Delhi and assessment proceedings u/s 143(3) were completed and assessment order dt. 19.12.2017 was passed. Submission with regard to assessee’s ground that order u/s 143(3) was passed without jurisdiction: • Jurisdiction by Ward 8(2), Delhi was assumed in accordance with Order dt. 15.11.2014 u/s 120 of the act, whereby jurisdiction over companies having registered office or principal place of business in Delhi and whose name begins with alphabet “El to Eq” and also jurisdiction of their managing director(s) or director(s) or manager(s) or secretary fall with Ward 8(2), Delhi. In the present case, assessee was a director in the company M/s Emgreen Impex Pvt. Ltd. and thus, jurisdiction over assessee 10 was correctly assumed u/s 120 and a separate order u/s 127 for transfer of jurisdiction is not required. • Address of the assessee was mentioned as Pitampura, Delhi in the ITR filed for AY 2014-15, which falls under Ward 40(1), Delhi for non- corporate charges in accordance with above mentioned order dt. 15.11.2014 and accordingly, notice u/s 143(2) was first issued by the ITO, Ward 40(1), Delhi. • As per the jurisdictional history, assessee’s PAN was with Ward 40(1), Delhi since 2006 and in 2017, it was transferred to Ward 8(2), Delhi and during this span of around 10 years, no objection was ever raised regarding jurisdiction. • Without prejudice to above submissions, it is further submitted that assessee submitted his reply vide letter dt.23.11.2017 in response to notice u/s 142(1) dt.07.11.2017 issued by Ward 8(2), Delhi, in which no objection was raised regarding assumption of jurisdiction or service of notice u/s 143(2). In this regard, Section 292BB of the act is reproduced here: “Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was— (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.” • Sec 124 of the act may also be considered in this regard, relevant portion of which is reproduced 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 which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WEor sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier; (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120.” • Further, Ld. CIT(A) has also dismissed assessee’s plea regarding non--assumption of jurisdiction by AO after following relevant procedure prescribed u/s 127, citing decision of Hon’ble High Court of Delhi in Abhishek Jain Vs ITO 405 ITR 1(2018) in which it was highlighted that if jurisdiction has been assumed in accordance with direction of the Board u/s 120, section 127 does not come into play.” Submission dated 01/07/2024 “In this regard, it is humbly submitted that in response to the details as asked by Hon’ble Bench in previous hearing(s), following submission may kindly be considered in addition to our earlier submission in the hearing dt. 20.05.2024: Brief background/facts: Notice u/s 143(2) was first issued by Ward 40(1), Delhi on 19.09.2016. Later, the case was transferred to Noida Office (Ward 2(2)) on the basis of address mentioned in the ITR of the assessee for AY 2015-16 and notice u/s 143(2) was again issued on 29.09.2016. However, upon consequent request by assessee, the case was transferred back to Ward 40(1), Delhi vide transfer order dt.05.10.2017. Later, notice u/s 142(1) was issued on 07.11.2017 by Ward 8(2), Delhi and assessment proceedings u/s 143(3) were completed and assessment order dt. 19.12.2017 was passed. In addition to our earlier submission on 20.05.2024, it is submitted as under with regard to assessee’s ground that order u/s 143(3) was passed without jurisdiction: • The PAN of the assessee as per PAN jurisdiction history details was lying with ITO Ward 40(1), Delhi since 25.01.2006. The assessee filed his ITR for AY 2014- 15 with address at Pitampura South, Delhi. As per CBDT notification dt.22.10.2014, the jurisdiction of the assessee on the basis of the address as per said ITR lies with ITO Ward-40(1), Delhi. Thus, the ITO Ward-40(1), Delhi has issued the notice dt. 19.09.2016 u/s 143(2) of the Act for the assessment year in appeal.
• Later, when it came to the notice that the assessee is a director in M/s Emgreen Impex Pvt. Ltd., then in accordance with CBDT notification dt.22.10.2014, the case was transferred from ITO, Ward-40(1), Delhi to ITO, Ward-8(2), Delhi (said CBDT notification is enclosed). • For migration of PAN from ITO, Ward-40(1), Delhi to ITO, Ward- 8(2), Delhi, a proposal was sent to CIT office and then, the PAN was transferred by CIT office itself to respective jurisdiction i.e. Ward 8(2), Delhi on 29.03.2017 (please refer to PAN Jurisdiction History enclosed). • Without prejudice to above submissions, Sub-section 3(a) of Sec 124 of the act may kindly be considered in this regard, which is reproduced 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 which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WEor sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier” In this case, the assessee never, at any stage of the assessment proceedings, raised any objection against jurisdiction assumed by ITO, Ward-8(2), Delhi. In view of the above, it is kindly requested to dismiss the jurisdictional ground raised by the assessee and decide the appeal on merits of the case.”
On hearing both the sides, it comes up that the assessee had filed return of income on 30.09.2015. The assessee received a notice on 18.09.2015 u/s 143(2) of the Act for AY 2014-15 from ITO, Ward-40(1), Delhi and this assessment for AY 2014-15 was transferred to ITO, Ward 70(2), Delhi on 22.09.2015 and, thereafter, ITO, Ward-70(2), Delhi, issued notice u/s 143(2) for AY 2014-15. In regard to the present assessment year AY 2015-16, notice u/s 143(2) was issued on 19.09.2016 which was received by post and on e-mail on 20.09.2016. This notice was issued by ITO, Ward-40(1), Delhi. At the time of 13 issuance of this notice on 19.09.2016 assessment for AY 2014-15 was pending with ITO, Ward-70(2), Delhi. Thereafter, on 26.09.2016, ITO, Ward-40(1) suo moto transferred the assessment to ITO, Ward 2(2), Noida. Thereafter, on 04.10.2016, notice u/s 143(2) of the Act dated 29.09.2016 was issued by ITO, Ward-2(2), Noida. In the mean time, on 30.12.2016, assessment for AY 2014- 15 was completed by ITO, Ward-70(2), Delhi. The assessee, thereafter, received a notice u/s 143(2)/142(1) from ITO, Ward-2(2), Noida on 19.01.2017 which the assessee had replied on 31.01.2017 giving information of the change of address and raising specific objection over the issue of notice by ITO, Ward- 2(2), Noida. Thereafter, on 05.10.2016, the case was transferred to ITO, Ward- 40(1), Delhi and the assessee received a notice dated 07.11.2017 u/s 142(1) from ITO, Ward-8(2), Delhi, where the assessee filed objections with regard to jurisdiction on 23.11.2017. However, assessment was completed on 19.12.2017 by ITO, Ward-8(2).
We have given thoughtful consideration to the matter on record and the submissions. As we go through the submissions and material before us, we find that the Revenue does not dispute the fact that for previous AY 2014-15, notice was initially issued by ITO, Ward 40(1), Delhi and subsequently, the ITO, Ward 40(1), Delhi had suo motto transferred the case for AY 2014-15 to ITO, Ward- 70(2) Delhi and, ultimately, the assessment for AY 2014-15 was concluded on 30.12.2016 by ITO, Ward 70(2), Delhi. Thus, in this period, admittedly, ITO, Ward 40(1), Delhi, was of the belief that the jurisdiction for assessment of the 14 assessee lies with ITO, Ward 70(2), Delhi only and not with him. Certainly thus the issuance of notice u/s 143(2) for present AY 2015-16 again by ITO, Ward 40(1) Delhi on 20.09.2016 is questionable. 6.1 In the response filed by the AO, it claimed that this notice u/s 143(2) was issued by ITO Ward 40(1) for AY 2015-16 because the assessee disclosed income from business and profession. However, we find that then, ITO, Ward 40(1), New Delhi by letter dated 26.09.2016, copy of which is available on record, at page 31 of the paper book had transferred the assessment for this AY 2015-16 to the office of Addl. CIT, Range-1, Noida with a note that as an abundant precaution, notice u/s 143(2) of the Act was issued but the case falls under the jurisdiction of Addl. CIT, Range-1, Noida. We further see that by this letter dated 26.09.2016, a request was made to issue a fresh notice u/s 143(2) of the Act. It was further mentioned that the PAN of the assessee was still with Ward 40(1), New Delhi and, accordingly, a request was also made to ACIT, Range-1, Noida to make a request in the system for transfer of PAN to their ward. This establishes that contrary to what is now submitted ITO Ward 40(1) Delhi believed that he did not have initial jurisdiction to issue notice u/s 143(2) on 20/09/2016.
6.2 Then we find that subsequently, ITO, Ward 2(2), Noida issued a notice u/s 143(2) on 29.02.2016. Pertinent to mention is that the assessee had filed the return of income on 30.09.2015 and the limitation for issuance of notice u/s 143(2) was 30.09.2016. Assessee has claimed that this notice was received on 4.10.2016. But what is crucial is that in the reply filed by the AO before us, there is no mention as to for what valid reasons case was transferred to Noida Ward 2(2). Thus the issue of notice dated 29.02.2016 is not being defended to assume jurisdiction for completing assessment u/s 143(3) of the Act. It is mentioned in response that the assessee’s PAN was with Ward 40(1), Delhi, since 2006 and it was in 2016, PAN was transferred to Ward-8(2), Delhi. Thus we can conclude that ITO Ward 2(2) Noida did not have jusridiction still ITO Ward 40(1), Delhi had transferred the case to Noida. This discussion in itself is sufficient to conclude that no valid notice was issued u/s 143(2) of the Act by jurisdictional AO.
Further if the case of AO is examined it is also pleaded in the response by the AO that jurisdiction of Ward 8(2), Delhi existed due to order date 15.11.2014 u/s 120 of the Act, where jurisdiction over companies having registered office or principal place of business in Delhi and whose name begins with alphabets “El to Eq’ and also jurisdiction of their managing directors, etc., fall with Ward 8(2), Delhi and as the assessee was director in the company M/s Emgreen Impex Pvt. Ltd., the jurisdiction was correctly assumed u/s 120 and a separate order u/s 127 for transfer of jurisdiction is not required.
7.1 We are of the considered view that if that was the case, then, on what basis notices u/s 143(2) was first issued by Ward 40(1), Delhi on 19.09.2016 or by ITO, Ward 2(2), Noida on 29.09.2016.
Further, as we go through the correspondences between different tax authorities and the assessee, we find that by letter dated 31.01.2016 available at page 36 of the paper book, the assessee had written to ITO, Ward-2(2), Noida to disclose in response to notice issued from the said office as to under which provision the notice is issued as the notice mentions two different sections of the Act for which by letter dated 13.02.2016 available at page 33, it was informed to the assessee by ITO, Ward 2(2), Noida that the notices u/s 143(2) already stands issued on 19.09.2016 and 29.09.2016 and that the notice dated 19.09.2017 issued by ITO, Ward 2(2), Noida is one u/s 142(1) of the Act and, therefore, on the notice both sections 143(2)/142(1) are mentioned.
8.1 It further comes up that thereafter, on 23.02.2017 the assessee wrote to ITO, Ward 2(2), Noida that he had questioned the exercise of jurisdiction by ITO, Ward 2(2), Noida as the notice was issued u/s 143(2) by ITO, Ward 40(1), Delhi. Further, by letter dated 22.07.2017, the assessee again questioned the exercise of jurisdiction by ITO, Ward 2(2), Noida. It was specifically mentioned that the assessee had objected to the transfer from Delhi to Noida and that by email dated 01.03.2017, the objections of the assessee were dismissed on the ground that address on the ITR is relevant for the purpose of deciding the 17 jurisdiction. The copy of this e-mail is made available at page 34 of the paper book. It comes up that thereafter ITO, Ward 2(2), Noida, by letter dated 05.10.2017, a copy of which is available at page 40 of the paper book, again transferred the assessment proceedings to ITO, Ward 40(1), New Delhi on the pretext of request of the assessee that as he resides in Delhi and files return for several years with ITO, Ward 40(1), New Delhi. Pertinent to observe from this letter dated 05.10.2017 is that ITO, Ward 2(2), Noida was also not sure of jurisdiction of Ward 40(1), New Delhi as he mentioned that; “if the jurisdiction lies with some other circle/ward, the case record may please be transferred to the concerned AO. The matter is time barring on 31.12.2017.”
8.2 However, thereafter, the notice u/s 142(1) of the Act was issued on 07.11.2017 by ITO, Ward 8(2), New Delhi to which the assessee has replied by letter dated 23.11.2017 with the following preliminary objections as appear form the copy of this letter available at page 43 of PB:- “Please refer to order sheet entry dated 13-11-2017. In this regard, it is very humbly submitted that the return for the AY 2015-16 was filed by the assessee on 30-09-2015. The case of the assessee for the AY 2014-15 was taken to scrutiny and notice u/s 143(2) was issued by the Income Tax Officer, Ward 40(1) on 18-09-2015 which was later on transferred to ward 70(2), Delhi being Jurisdictional Assessing Officer on the basis of my residential address. Thereafter the case was being taken up by the Income Tax Officer Ward-2(2), Room No. 404, 4th Floor, A-2D- Sector 24, Noida- UP-201301. Vide Email dated 1-3-2017, Income Tax officer, Noida has already rejected my objections on his jurisdiction. It is, therefore, respectfully submitted to let me know, whether the same case has now been transferred to your goodself or it is a separate case of scrutiny being taken up by your goodself.”
It can be observed that CIT(A) has dismissed this objection of non- issuance of notice u/s 143(2) of the Act by Jurisdictional AO with simple finding on assumption that in the present case, as assessee had himself mentioned the Noida address in the ITR and on his request only the case was transferred to Delhi, so assessment is not vitiated. The question actually to be examined was if jurisdictional AO had issued notice u/s 143(2) with in time which Revenue has failed to justify and establish the validity of issuance of the notice u/s 143(1) by ITO, Ward 40(1) on 20.09.2016. We find no justification as to how the tax authorities of Noida Office, when transferred the case of the assessee to Ward 40(1), Delhi, even to say on request of assessee, the same ultimately, reached Ward 8(2), Delhi, from where the final assessment order was passed. We are of the considered view that even if it is assumed that in accordance with the order dated 15.11.2014 u/s 120 of the Act, the jurisdiction vested with Ward 8(2), Delhi, then, why the assessment for the previous year AY 2014-15 stood transferred from the ITO, Ward 40(1) to ITO 70(2) from where the assessment order was passed on 31.01.2017.
We are of the considered view that it is not a case where the notice was issued and assessment completed by invoking provisions of concurrent jurisdictions, rather, it appears that in whimsical manner the AOs had exercised jurisdiction under the Act and transferred the assessment. There is no substance in the contention that due to sections 292BB or sub-section (3)(a) of section 124 of the Act, the assessee is barred to raise the ground objecting to the assumption of jurisdiction. More particularly when objections were raised at earliest and even considered by assessing officers.