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Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,
Before: SHRI B.P. JAIN
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘SMC’ BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER [A.Y. 2011-12] Shri Yogesh Yadav Vs. The I.T.O 1796, Sectro 10-A Ward 4(4) Gurgaon Gurgaon PAN : AAPPY8589 B [Appellant] [Respondent] Date of Hearing : 03.10.2017 Date of Pronouncement : 09.10.2017 Assessee by : Shri Kapil Goel, Adv Revenue by : Shri T. Vasanthan Sr. DR ORDER This appeal of the assessee arises from the order of the ld. CIT(A)-1, Gurgaon vide order dated 25.01.2016 for assessment year 2011-12.
Too many facts are not required to be noted as dispute raised before me lies in narrow compass as to the validity of assessment order passed by income tax officer, Ward II(3), Gurgaon. Assessee has filed an application under rule 11 of ITAT rules to raise additional ground.
Said application is reproduced below for the sake of ready reference: “Since relevant facts are narrated and admitted in first para of AO’s order same are not repeated for sake of brevity. To put briefly, it is admitted by Ld AO in impugned order in very first para that first jurisdictional notice u/s 143(2) dated 28/08/2012 taking return u/s 139(1) filed with Gurgaon Jurisdiction & Addresss (on 26/07/2011) was issued by ITO Ward 2(1) Ghaziabad which was later transferred without any valid and statutory order u/s 127 to ITO Ward II (3) Gurgaon in May 2013 whereafter Gurgaon AO issued notice u/s 142/143(3) on 15/05/2013. Since it is admitted by internal transfer between Ghaziabad and Gurgaon ITO’s that former did not had any valid jurisdiction over the assessee and Gurgaon ITO had jurisdiction over the assessee, so notice u/s 143(2) issued on 28/08/2012 is bad and non jurisdictional and non est and further notice u/s 143(2) dated 15/05/2013 is time barred and is beyond the stipulated time limit under section 143(2) proviso. So assessment framed on basis of invalid and non est notices u/s 143(2) by Gurgaon ITO Ward II(3) is palpably bad and non jurisdictional and deserves to be quashed in light of admitted facts.
For sake of convenience, ITAT rule 11 is reproduced below:
“11. Grounds which may be taken in appeal.- The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule:
Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground.
By now it is well settled by Apex Court decisions in cases of NTPC 229 ITR 383 SC, and Jute corporation 187 ITR 688 & Gujarat high court in P.V.Doshi case 113 ITR 22 (legal ground can be raised for first time in collateral and second round also) that legal ground can be very well raised for first time before this hon’ble ITAT which goes to the root of the matter and pertains to assumption of jurisdiction (here jurisdiction to frame assessment is assailed).
On basis of above stated Apex court verdicts and Gujarat high court decision in case of PV Doshi 113 ITR 22, since appellant was not guided about its right to challenge the legality of assessment proceedings at earlier stages before lower authorities by then representing counsel, so in view of over whelming jurisprudence squarely covering the instant issue in assessee favor from Delhi, Allahabad and P&H high courts and Delhi ITAT which is enclosed here with this application, on identical and similar assessment being jettisoned and disapproved, your honors leave is humbly sought to raise following legal ground:
Additional Grounds: “That on the facts and in the circumstances of the case and in law, the notice issued u/s 143(2) dated 28/08/2012 and 15/05/2013 in this case is bad in law, without jurisdiction, and also the assessment order passed on the foundation of such notice and order passed by Ld CIT-A, are liable to quashed ”
“That on the facts and in the circumstances of the case and in law, the notices issued u/s 143(2), order passed by Ld AO thereon, and impugned order of Ld CIT-A are liable to be quashed .”
Before closing this application , we wish to humbly submit that consistent views of the Hon’ble courts in identical & similar cases in assesee’s favor, we humbly goad on your honors to please accept our this application of additional legal grounds and allow the same in light of various decisions which covers the present case.”
On basis of aforesaid application under rule 11 of ITAT rules assessee has pleaded that present assessment deserves to be quashed. The crucial dates which are emerging out of assessment order passed by the assessing officer are noted below: a. return of income filed with Gurgaon address in Gurgaon jurisdiction on 26/07/2011 (copy placed on records with additional ground)
b. notice under section 143 (2) issued on 28/08/2012 by income tax officer Ward 2(1) Ghaziabad (copy placed on records with additional ground) c. transfer of file from ITO Ward 2(1) Ghaziabad to ITO Ward II(3) Gurgaon on 13/05/2013 (as per facts admitted in assessment order that the jurisdiction lies with Gurgaon officer); d. notice under section 143(2) issued by ITO Ward II(3) Gurgaon on 15/05/2013
On basis of aforesaid chronology of events, it was vehemently pleaded by Ld Counsel of the assessee that impugned order passed by assessing officer, as confirmed by ld. CIT(A), deserves to be quashed, on two legal aspects namely that impugned assessment framed on basis of notice issued under section 143(2) by ITO Ward II(3) Gurgaon on 15/05/2013 is bad as said notice is time barred as same could be issued up to 30 of September 2012 that is 6 months from the end of the financial year in which return of income is filed, here return was filed on 26/07/2011 and said 6 months expired on 30/09/2012 and accordingly notice issued on 15/05/2013 by ITO Ward II(3) Gurgaon is apparently invalid. Secondly the transfer made between ITO Ward 2(1) Ghaziabad to ITO Ward II(3) Gurgaon without valid order passed under 127 on basis of positive Agreement between 2 CCIT’s is apparently invalid. Reliance was placed by Ld. counsel of the assessee on following decisions: i) Delhi E bench of ITAT decision in case of Al Faheem Meatex Exports Pvt Ltd order dated 09/06/2017 in ITA 6122/Del/2015 (copy placed on records) ii) Hon’ble Supreme Court decision in case of Noorul Islam Education Trust vide order dated 21/10/2016 in civil appeal number 10234/2016 (copy placed on records)
Against aforesaid submissions of assessee’s counsel, ld. DR pleaded that additional ground raised by the assessee should not be admitted. Ld DR pleaded that transfer between ITO Ward 2(1) Ghaziabad to ITO Ward II(3) Gurgaon was necessitated due to PAN database. Ld DR pleaded that assessee did not raise proper objection before assessing officer in this regard under section 124 (3). Ld DR relied on Delhi high court decision in case of Mega Corpn Ltd vide order dated 23/02/2017 to support his point, copy of which was filed during the course of hearing. In rejoinder Ld. counsel of the assessee stated that once address of “Gurgaon” was mentioned on the face of return and same was filed with Gurgaon jurisdiction then by no means
Ghaziabad ITO could issue the notice under section 143(2). Moreover, according to Ld counsel of the assessee since facts of present case are identical to the case of Al Faheem Meatex Exports Pvt Ltd (supra) following the same present assessment order deserves to be quashed. Further he emphasized on categorical requirement of section 127 for transferring file between officers where different chief commissioners are involved that not only proper order must be passed but also they must be positive requirement between the 2 competent authorities which was glaringly missing in present case. On basis of this Ld. Counsel of the assessee prayed for quashing of the proceedings.
After carefully hearing the rival contentions in light of facts narrated above I am of the considered opinion that additional ground raised by the assessee in his application under rule 11 of the ITAT rules deserves to be admitted being purely legal and jurisdictional ground which goes to the root of the matter and for which necessary facts are available on record. In admitting this additional ground I am supported by recent Hon'ble P&H high court decision in case of VMT Spinning reported at (389 ITR 326) and Hon’ble Delhi high Court decision in case of Silver Line reported at 383 ITR 455, wherein Hon’ble Appex
NPTC 229 ITR 383 is relied. Following this I admit the additional grounds raised by the assessee.
On the dates which are noted hereinabove in this order, it remains undisputed that firstly the officer who has framed impugned assessment namely ITO Ward II(3) Gurgaon has issued notice u/s 143(2) belatedly on 15/05/2013 which is admitted on 1st page of the impugned order which should have been issued before 30/09/2012 being time barred under section 143(2). Secondly, merely on the files being exchanged between 2 ITO’s without formal and valid order passed under section 127 does not satisfy the requirement of law. Once the facts as narrated above are accepted, on basis of decisions relied by the Ld. counsel of the assessee, I have no hesitation in accepting the pleas raised before me.
As far as time barred notice under section 143(2) is concerned, there can be no quarrel that not following the said prescription of statute, the resultant assessment framed would be treated as nullity. In present facts notice issued by right jurisdictional officer, namely ITO, Ward II(3) Gurgaon on 15/05/2013 after time barring date on 30/09/2012 as counted from return filing date on 26/07/2011 is patently illegal and unlawful and cannot be sustained. Accordingly on this short count itself the assessment framed by the assessing officer is quashed. The same facts were in the case of Al Faheem Meatex Exports Pvt Ltd (supra) wherein this Tribunal at para No. 6 has upheld the same plea raised by the assessee by holding that provisions of section 124(3) does not come to the rescue of the revenue because in the present case assessee is filed return of income showing the address of Meerut and subsequently, according to the assessing officer jurisdiction lies with him, but the impugned notice under section 143 (2) was issued on 29/08/2011 by DCIT circle Ghaziabad. Therefore this tribunal in said cited decision came to conclusion that notice under section 143(2) which should have been issued by 30/09/2011 by correct jurisdictional officer was not issued and hence assessment was quashed. The decision relied by Ld DR is on different and distinguishable facts. Had there been no transfer between two assessing officers, as noticed above then the situation would have been different but since in present case the person who initiated proceedings under section 143(2) that is ITO 2(1) Ghaziabad himself admitted that jurisdiction lies with ITO Ward II(3) Gurgaon who has ultimately passed the impugned order, then it was must be proved that correct jurisdictional officer, ITO Ward II(3) Gurgaon, timely issued the notice u/s 143(2) which is patently missing on the face of the record. On parity of facts/reasoning with the case of Al Faheem Meatex Exports Pvt Ltd (supra) I hold that present assessment framed is void ab initio.
As far as transfer of jurisdiction under section 127 is concerned, the mandatory and prior requirement of the law for having the valid order on basis of positive Agreement between two competent authorities, which is admittedly missing in the present facts, as explained in aforesaid Hon’ble Supreme Court decision in Norul’s case, the transfer made by one ITO to another ITO operating under different CCIT’s, cannot be sustained and accordingly, the resultant assessment order passed is held to be nullity.
In view of above, I hold that notice under section 143(2) on 15/05/2013 by ITO Ward II(3) Gurgaon was time barred and transfer made by Ghaziabad ITO to Gurgaon ITO without valid/required order under section 127 is invalid. Accordingly the additional grounds raised by the assessee are allowed. Other grounds raised on merits become infructuous.
In the result, the appeal of the assessee is allowed. The order is pronounced in the open court on 09.10.2017.