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Facts
The assessee's case was selected for scrutiny for AY 2015-16, and a notice under Section 143(2) was issued by ITO, Ward-58(2), Delhi, despite the assessee's residential address being in Gurgaon since AY 2012-13. After the case was transferred to ITO, Ward-1(4), Gurgaon, no fresh Section 143(2) notice was issued, but an assessment order was finalized making an addition of Rs. 52,61,171/-, which was confirmed by the CIT(A). The assessee raised an additional ground challenging the jurisdiction of the Delhi AO to issue the initial notice.
Held
The Tribunal admitted the additional ground, holding that the ITO, Ward-58(2), Delhi, lacked jurisdiction to issue the Section 143(2) notice as the assessee's residence was in Gurgaon. The Tribunal emphasized that the issuance of a Section 143(2) notice by the jurisdictional AO is a mandatory statutory obligation that cannot be dispensed with or cured. Therefore, the assessment order, being based on a jurisdictionally invalid notice, was quashed.
Key Issues
Whether a notice issued under Section 143(2) of the Income Tax Act by an Assessing Officer lacking territorial jurisdiction is valid, and consequently, whether the assessment order based on such an invalid notice can be sustained.
Sections Cited
143(2), 143(3), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SH. M. BALAGANESH
ORDER PER MS. MADHUMITA ROY:
The instant appeal filed at the behest of the assessee is directed against the order dated 29.03.2019 passed by the CIT(A)- 1, Gurgaon, arising out of the order dated 22.12.2017 passed by the ITO, Ward – 1 (4), Gurgaon under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2015-16.
ITA No.- 3821/Del/2019 Ekta Gupta 2. Alongwith other grounds, the assessee before us, has raised additional ground of appeal to this effect, that the Learned Assessing Officer did not have valid jurisdiction in issuing notice u/s.143 (2) of the Act and therefore, the notice is bad in law and entire assessment order on the basis of such notice, since vitiated, is liable to be quashed.
3. At the time of hearing of the instant appeal, Ld. Counsel appearing for the assessee submitted before us that this particular additional legal ground though not placed before the authorities below, the same can be entertained/admitted by us, in view of the judgment passed by the Hon’ble Apex Court in the matter of National Power Thermal Limited, reported in 229 ITR 383 (SC) and further the judgement passed by the Punjab and Haryana High Court in the matter of VMT Spinning Power Co. Ltd Vs CIT, reported in 389 ITR 326 (P&H). However, the Ld DR has raised his objection to this effect that this particular ground of maintainability of the assessment proceeding has not been raised before the authorities below and thus the same neither can be raised here, nor can be entertained by us, if so raised. In rebuttal, the Learned Counsel for the assessee submitted before us that no additional evidence is required for adjudication of this particular ground of maintainability. Further that there is no disputed question of fact raised in this particular ground. It was further contended by the Learned Counsel for the assessee that the question arose from the facts are already on record. The ITA No.- 3821/Del/2019 Ekta Gupta determination of this particular ground will also aid in determining the assessee’s current tax liability meaning thereby the issue involved herein raised in the additional ground goes to the root of the matter and hence prayed for admission of the same. On this aspect the LD AR further relied upon the CBDT Circular being Notification No.50/2014 dated 27.10.2014. Further that he has drawn our attention to page-13 of the paper book filed before us being the notice issued u/s. 143 (2) of the Act by the ITO, Ward- 58 (2), Delhi showing residential address of the assessee at TG 6/8A, Sun City, Sector 54, Haryana 122002, which has been claimed to be bad in law.
4. Having heard the Learned Counsel appearing for the parties, and having regard to the facts and circumstances of the case, particularly taken into consideration the ratio laid down by the Hon’ble Supreme Court in the case of National Power Thermal Limited, reported in 229 ITR 383 (SC) (supra), we are of the considered opinion that the additional ground as narrated in the foregoing paragraph in regard to the jurisdiction of the Learned AO in issuing notice under Section 143(2) of the Act goes to the root of the matter and thus this additional ground demands adjudication at the very threshold by us. In that view of the matter, the additional ground is, therefore, admitted.
The brief facts leading to the case is this that upon selection of the case for scrutiny under CASS notice under Section u/s. 143
ITA No.- 3821/Del/2019 Ekta Gupta (2) of the Act was issued on 28.07.2016 by the ITO, Ward- 58 (2), New Delhi. Subsequently, the case was transferred to the office of Ward-1 (4), Gurgaon and notice under Section 142(1) of the Act alongwith questionnaire dated 18.08.2017 was issued to the assessee. The assessment was finalized upon making addition of Rs.52,61,171/- by the ITO, Ward 1(4), Gurgaon which was confirmed by the First Appellate Authority in appeal preferred by the assessee. Hence, the instant appeal before us.
The case of the assessee before us is this that the assessee shifted his residence from Delhi to Gurgaon, which is reflecting in the Income Tax Return filed by the assessee for Assessment Year 2012-13 wherein “Gurgaon” is mentioned in the column Towns/City/District. As the fact of change of residential address of the assessee from Delhi to Gurgaon is of the knowledge of the AO, the ITO Ward-58(2) doesn’t have the power to issue notice under Section 143(2) of the Act, and even if it is issued the same has no impact on the assessment proceeding due to lack of jurisdiction. Rather it is the duty incumbent upon the jurisdictional AO i.e. ITO, Ward-1(4), Gurgaon to issue notice under Section 143 (2) of the Act once the matter shifted to his office for assessment of the income of the assessee.
We find that in this particular case such notice under Section 143(2) of the Act dated 28.07.2016 was issued by the ITO, Ward- 58(2), H.No. 308, F-Block, Vikas Bhawan, New Delhi and served
ITA No.- 3821/Del/2019 Ekta Gupta upon the assessee. Though, subsequently the case was transferred to the office of the ITO, Gurgaon, no notice under Section 143 (2) of the Act has been issued by the said ITO, Ward-1(4), Gurgaon. In the absence of such notice being the very basis of the assessment proceeding, the entire assessment proceeding is vitiated and therefore, is liable to be quashed as the case made out by the assessee. In other words the ITO, Ward- 58 (2), New Delhi is not having jurisdiction to issue such notice under Section 143 (2) of the Act and the same is therefore, bad in law and liable to be quashed.
The case of the revenue is this that the fact of change of the address of the assessee from Delhi to Gurgaon at TG-6/8-A, Suncity, Sector-54, Gurgaon when came to the knowledge of the authority through ITR filed by the assessee, the case was transferred to the concerned jurisdictional AO at Gurgaon suo- moto and notice thereupon under Section 142 (1) of the Act was issued upon on 08.08.2017. There is no necessity of issuing further/fresh notice under Section 143(2) of the Act. Further that, the assessee furnished compliance from time to time during assessment proceedings and the ground of jurisdictional error and/or the validity of the notice under Section 143(2) issued by the ITO Ward 58(2), New Delhi or non-issuance of the fresh notice under Section 143(2) issued by the ITO Gurgaon was never challenged by the assessee either before the Assessing Officer or before the First Appellate Authority. On this aspect we have already
ITA No.- 3821/Del/2019 Ekta Gupta narrated our view relying upon the judgement passed by the Hon’ble Apex Court passed in the matter of National Thermal Power (supra) which is not required to be reiterated.
We have further considered the CBDT circular as referred by the assessee being Notification No.50/2014 which clarifies the issue of consideration in initiating assessment proceeding of the assessee by the concerned Assessing Officer in the manner as follows:
“Explanation: For the purposes of this notification,- (i) “residing”means- (a) in the case of an individual, place of residence, unless otherwise provided in this notification; (b) in the case of an Hindu undivided family, place of residence of the Karta; and (c) in the case of a firm or an association of persons or a body of individuals or a local authority and all other artificial juridical persons other than companies, the place where the head office is located. (ii) in cases of companies whose names begin with any of the numericals (hereinafter “numeric companies"), the Principal Commissioners of Income- tax or Commissioners of Income-tax who exercise the powers and perform the functions in respect of companies whose names begin with the alphabet which is same as that of the first alphabet of the name of the numeric companies in words, shall exercise the powers and perform the functions in respect of those numeric companies. (iii) column (2) of the schedule specifies the designation of Income-tax authorities as "Principal Commissioner/ Commissioner of Income-tax". The designation is to be understood as Principal Commissioner of Income-tax or Commissioner of Income-tax. For example, "Principal Commissioner/ Commissioner of Income-tax, Ahmedabad -1” refers to an income tax authority, which could either be Principal Commissioner of Income-tax, Ahmedabad- 1” or Commissioner of Income-tax, Ahmedabad-1.”
ITA No.- 3821/Del/2019 Ekta Gupta 10. Thus, it appears that notice under section 143(2) of the Act is required to be issued by the jurisdictional AO having regard to the place of residence of the assessee. In this particular case , the ITO, Gurgaon is, therefore, supposed to issue the notice u/s. 143 (2) of the Act and not the ITO, Ward- 58(2), Delhi.
We find that the notice under Section 143(2) dated 29.07.2016 was issued by one Kamlesh Chand Meena, WARD – 58 (2), Delhi as annexed page-13 of the paper book filed before us by the assessee. Surprisingly the same was issued to the assessee at his residential address at TG-6/8-A, Sun City, Sector – 54, Gurgaon -122002 Haryana. However, if the Notification being No. 50/2014 dated 22nd October, 2014 is to be taken into consideration as the guideline from Ministry of Finance, Department of Revenue in regard to the assumption of jurisdiction for assessment of the annual income of the assessee, then the ITO, Delhi is having no jurisdiction to issue such notice under Section 143(2) of the Act on the assessee at his residence at Haryana rather the ITO, Gurgaon can only having territorial jurisdiction and competent enough to issue such notice upon the assessee. However, the same admittedly has not been issued by the ITO, Gurgaon upon the assessee. As it is the trite law that issuance of notice u/s. 143 (2) is mandatory, being the first foremost statutory obligation to be complied with by the revenue officer in order to initiate the assessment proceedings under scrutiny, such omission is not curable and having regard this procedural irregularity requirement
ITA No.- 3821/Del/2019 Ekta Gupta of issuance of notice under Section 143 (2) of the Act cannot be dispensed with.
Thus, having heard the Learned Counsel appearing for the respective parties and having regard to the facts and circumstances of the case, we are of the considered opinion that the notice issued under Section 143 (2) of the Act, dated 28.07.2016 by an under the signature of the Ward- 58 (2), Delhi is found to have suffered from lack of jurisdiction, bad in law, having regard to the residence of the assessee lying and situated at Gurgaon in the state Haryana and thus, the same is hereby quashed. As the very basis and /or foundation of the assessment proceeding being the issuance of notice under Section 143 (2) is non est in the eyes of law, the consequential assessment order dated 22.12.2017 is found to have no legs to stand on and thus, accordingly, quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 25.04.2024.