ITO, NEW DELHI vs. SH. HARBANS LAL, NEW DELHI

The first ground taken by the Revenue in its appeal related against quashing of the assessment order made by the Assessing Officer by issuing the notice under Section 143(2) of the Income-tax Act, 1961 (for short “the Act”), dated 21.07.2008, while the Assessing Officer, Ward - 19(4) had no jurisdiction after passing the order under Section 127 of the Act dated 18.03.2004 of the of Commissioner of Income Tax, New Delhi- VII.

The brief facts of the case was that in this case, the assessment has been completed under Section 143 of the Act at an income of Rs.86,60,269/- against the returned income of Rs.64,308/-. The notice under section 143(2) of the Act was issued on 21.07.2008. The assessee in reply to the said notice vide his letter dated August, 2008 challenged the jurisdiction of the Assessing Officer i.e. within the 30 days from the date of the notice under Section 124 of the Act, stating therein that the jurisdiction over the case of the assessee vest with the Income Tax Officer, Ward-29(1) or 21(1), the Assessing Officer completed the assessment. The assessee went in appeal before the Commissioner of Income Tax (Appeals), who held the notice issued under Section 143(2), dated 21.07.2008, to be invalid.

We heard the rival submissions and carefully considered the same along with the order of the tax authorities below. We note that in this case, the issue before us relates to the validity of the jurisdiction of the Assessing Officer. The Assessing Officer, Ward – 19(4) issued notice under Section 143(2) on 21.07.2008 to the assessee. The assessee in writing before the Assessing Officer vide his letter dated 18.08.2008 C.O. No. 202/Del/2011 AY: 2007-08 challenged the jurisdiction of the Assessing Officer and stated that the jurisdiction over his case had been transferred from the Income Tax Officer, Ward- 19(4), New Delhi, to the ACIT, Circle-19(1), New Delhi, by the order under Section 127 of the Act of the CIT, Delhi-VII, dated 08.09.2004. The assessee again vide his letter dated 22.06.2009, asked the Assessing Officer to transfer his case to the ACIT, Circle-19(1) but the Assessing Officer went on continuing the assessment proceedings. The assessee when went in appeal before the Commissioner of Income Tax (Appeals), took the contention that the assessment order is invalid as the Income Tax Officer, Ward-19(4) do not have any jurisdiction over the assessee. We note that the learned CIT(A) annulled the assessment by holding as under: “ 7.2 In his paper-book filed on 24-02-2010, which was forwarded to the assessing officer for remand report, the appellant had filed 110 pages of submissions, including the certified copy of the order-sheet of the assessment proceedings from the file of the ITO, Ward-19(4). Firstly, it is seen that the assessing officer has offered no comments on the issue of jurisdiction, or for that matter on any of the other contentions raised regarding the merits of the additions. Section 124(3) of the I.T. Act lays down that no person shall be entitled to call in question the jurisdiction of an assessing officer after the expiry of one month from the date on which he was served with the notice u/s 142(1) or 143(2). In this case, the notice u/s 143(2) was dated 21.07.2008. The appellant’s letter dated 18-08-2008 has been sent by post by the appellant as per postal receipt dated 18-08- 2008. However, the said letter finds no mention in the order-sheet of the ITO, Ward-19(4). The subsequent letter of the appellant dated 22-06-2009 has also been sent by post as per postal receipt dated 22-06-2009. The first attendance of the counsel has been recorded on the order-sheet on 06-11- 2009. The order-sheet shows no discussion regarding invalid jurisdiction or regarding the letters of objection to jurisdiction filed by the appellant through post. From the case record, it is difficult to conclude whether the objection to jurisdiction taken by the appellant was received by the assessing officer within the one month specified in section 124(3). At the same time, the assessing officer has not disputed the contentions of the C.O. No. 202/Del/2011 AY: 2007-08 appellant forwarded to him on 24-02-2010, with the paper-book which included the order u/s 127 dated 08-03-2004 transferring the jurisdiction to the ACIT, Circle-19(1), and the letters of the appellant dated 18-08-2008 and 22-06- 2009. The order u/s 127 dated 08-03- 2004 of the CIT, Delhi-VII, New Delhi, is a matter of record. Copy of the order u/s 127 was marked to the ITO, Ward-19(4), hence there can be no justification for taking up the assessment proceedings of the A.Y. 2007-08. Irrespective of the fact whether the objection to the jurisdiction was raised by the appellant before the ITO or not, subsequent to the transfer of jurisdiction by the order u/s 127, no jurisdiction vested with the ITO, Ward-19(4) and hence the notice u/s 143(2) dated 21-07-2008 is held to be invalid. As a result, the subsequent assessment proceedings are also held to be bad in law and the assessment is liable to be annulled………………”

The learned Authorized Representative before us, even though vehemently contented and relied on the order of the Assessing Officer but did not dispute the fact that the assessee has objected the jurisdiction of the Assessing Officer within one month from the date of receipt of the notice under Section 143(2), dated 21.07.2008. We also verified this fact from page 443 to the paper book which contains the letter from the assessee written to the Assessing Officer, which reads as under: “Kindly refer to your notice, dated 21-07-2008, issued u/s 143(2) of the Act, and subsequent hearing on 11-08-2008, when the case was adjourned to 01-09-2008. In this connection it is respectfully submitted as under: 2 The case of the assessee for AY 2006-07 was also selected lor scrutiny and the details / letters filed during the course of those proceedings clearly reveals that the assessee is carrying on business under the name and style of M/s Sharp Traders at 2210/04, Aggarwal Market, Katra Tabacoo, Khari Baoli, Delhi-6 and M/s Krishna Associates-&t A-1/3, Prashant Vihar, Delhi-85 as proprietor. Kind attention of your goodself is drawn to Notification dated 31-07-2001 of CBDT and section 124 of the C.O. No. 202/Del/2011 AY: 2007-08 Income Tax Act and it is submitted that the jurisdiction over the case of the assessee vests with 1TO, Ward 29(1) or 21(1) and in any case you have no jurisdiction over the case of the assessee. 3 In addition to the above, kind attention of your goodself is drawn to order dated 08-03-2004 issued by the ld. C1T, Delhi VII, New Delhi and it is submitted that through this order the jurisdiction over the case of the assessee was transferred from ITO, Ward - 19(4), New Delhi to AC1T, Circle — 19(1), New Delhi. It is, therefore, further submitted that your goodself have been divested of the jurisdiction over the case of the assessee and consequentially your goodself have no jurisdiction over the case of the assessee.”

The assessee had challenged the jurisdiction before the Assessing Officer as per the provisions of Section 124(3)(a) of the Act. On the facts of the case, we note that there is no dispute, the learned Commissioner of Income Tax (Appeals), in our view, has correctly interpreted the provisions of Section 124(3)(a) of the Act and held that the notice issued under Section 143(2) of the Act was without jurisdiction. No contrary evidence was brought to our knowledge, in our opinion, no interference is called for in the order of the learned Commissioner of Income Tax (Appeals), annulling the assessment. Thus, the ground no. 1 taken by the Revenue stands dismissed.

Since we have already confirmed the action of the learned Commissioner of Income Tax (Appeals), annulling the assessment, therefore, in our opinion, other grounds taken by the Revenue does not require any adjudication, in view of the decision of Special Bench of this Tribunal in the case of Rahul Kumar Bajaj Vs. CIT, reported in 69 ITD 1 (Nagpur). 8. Coming to the Cross Objection filed by the assessee, since we have already dismissed the appeal of the Revenue and confirmed the C.O. No. 202/Del/2011 AY: 2007-08 action of the learned Commissioner of Income Tax (Appeals) annulling the assessment, therefore, the Cross Objection filed by the assessee, which is supportive to the order of the learned Commissioner of Income Tax (Appeals) has become infructuous stands dismissed as such. 9. In the result, the appeal filed by the Revenue as well as the Cross Objection filed by the assessee are dismissed. The decision is pronounced in the open court on 27thDec., 2016.