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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SRI RAJESH KUMAR & PRADIP KUMAR CHOUBEY
order
: November 22nd, 2024 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2018-19 is directed against the order passed u/s 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (in short the ‘Act’) by the Asst. Commissioner of Income Tax, Circle-2(1), IT, Kolkata [hereinafter referred to as ld. 'AO'] dated 14.12.2023. 1.1. The brief facts of the case of the appellant are that the assessee is a non-resident Indian filed his return of income for the relevant assessment I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. year u/s 139 of the Act at Rs. 1,48,740/-. ITO, Ward-3(2)(6), Surat issued a show cause notice u/s 148A(b) of the Act on the following reasons: “In your case information has been received through insight portal from the DDIT(Inv.)-7(4), New Delhi, that during the course of inquiry / investigation into the “tax evasion through bogus Long Term Capital Gains/short term Capital Loss (LTCG/STCL) by way of manipulated trading”, it was seen that you are one of the beneficiary who have taken bogus profit through scrip of Alankit Limited during the F.Y. 2017-18 relevant to A.Y. 2018-19 amounting to Rs. 13,18,244/-. In another investigation report received through insight portal from the DDIT(Inv.)-5(1), New Delhi, on the investigation into the similar inquiry as above, it is seen that you are one of the beneficiary who have taken bogus profit through scrip of Fireweb India Limited during the F.Y. 2017-18 relevant to A.Y. 2018-19 amounting to Rs. 20,71,632/-. As per the information on the basis of the investigation report, the value of these shares transacted offline is not in line with the market value of these shares as value of shares can easily be manipulated which results in over or under valuation of shares in the books of the beneficiary. As per the findings of the Investigation, you have taken bogus profit through scrips mentioned above, thereby taken benefit of bogus accommodation entry of Long-Term Capital Gain by trading in the above two scrips, total of which comes to Rs. 33,89,876/-. In view of the above, you are requested to show cause as to why a notice U/s.148 of the Act should not be issued on the basis of the information which suggests that income of Rs. 3389876/- chargeable to tax has escaped assessment in your case for A.Y.2018-19. Your reply/explanation, if any, should reach the undersigned through faceless manner within 8 days of receipt of this letter, failing which it shall be presumed that you have nothing to say in the above matter and the proceedings shall be dealt with, in accordance with the provisions of section 148A of the I.T. Act.” 1.2. The ld. AO, Surat passed an order and found the submission of the assessee not tenable thereby holding that Department has sufficient evidences to prove that assessee has carried out transaction in shares of Alankit Limited and Fireweb India Limited and in course of investigation it has been established that the persons involved in such an activity in rigging the share price and the ld. AO, Surat made the following additions; Rs. 13,18,244/- and Rs. 20,71,632/- added to the total income of the assessee as bogus long-term capital gain received from Alankit Limited and Fireweb India Limited during the relevant previous year. The assessee filed petition u/s 144C r.w.s. 147/148 of the Act before the Dispute Resolution Panel, New
Page 2 of 7 I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. Delhi. The Hon'ble DRP passed direction u/s 144C(5) of the Act wherein the Panel upheld the draft assessment order passed by ACIT, Circle-2(1), IT, Kolkata without giving any relief to the assessee. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.3. Ld. Counsel for the assessee challenges the impugned order on various grounds but in course of argument he took a legal ground. The grounds are notices u/s 148A(d) of the Act and u/s 148 of the Act issued by the ld. AO, Surat is without jurisdiction. The ld. Counsel for the assessee submits that notice u/s 148A of the Act issued by the ld. AO, Surat, although the address of the assessee in the notice is of Bokaro in Jharkhand State. Ld. Counsel for the assessee brought the Notification No. 56/2014 and submitted that the said notification would come into force with effect from 15.11.2014. As per the said notification jurisdiction over a non-resident Indian in the territorial limits of the States of West Bengal, Jharkhand, Bihar, Odisha, Sikkim, Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Tripura and Union Territory of Andaman and Nicobar Islands was vested with the Commissioner of Income- tax (International Taxation and Transfer Pricing)- Kolkata vide entry no. 4 in the said notification. The assessee thus submits that the jurisdiction over the assessee’s case was vested with the officers functioning under the control of the Commissioner of Income-tax (International Taxation and Transfer Pricing)- Kolkata and not with officers in Surat. This fact has been admitted by the Department and hence, they transferred the file of the assessee from Surat to Kolkata and the same is mentioned in the assessment order on pages 35/36. This clarifies the issue that the Department itself has agreed that the Assessing Officers in Surat did not hold jurisdiction over the case. The ld. Counsel for the assessee has cited several decisions which are as follows: i) Anand Kumar Dugar vs. ITO, Ward-1 Vapi & Anr. ii) M/s Sym Singhal Alloys Private Limited & Anr. vs. Union of India & Ors.
Page 3 of 7 I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. iii) The Ananda Bag Tea Company Limited vs. Union of India and Others Gsp Piling iv) Constructions Private Limited and Anr. vs. Assistant Commissioner of Income Tax, Central Circle-4 (3) & Ors.
1.4. Contrary to that, ld. D/R supports the impugned order thereby submitting that the assessee did not raise this issue though he participated in the proceedings.
We have gone through the records and find that the assessee is a non- resident Indian and it admits of no doubt in the assessment order as well as in the return of income address of the assessee is of Bokaro (Jharkhand). It is important to mention here that proper order u/s 127 of the Act on the issue of jurisdiction has been passed by the ld. CIT(A) concerned. Some portions of the said order are reproduced herein below: “A proposal from ITO (IT)-Surat has been received in this office for transfer of case in the name of Ajit Kumar having PAN: AIIPK7673F from ITO (IT)- Surat to DCIT (IT), Kolkata. As per submission of AO, the case has been transferred by ITO-Ward-3(2)(6), Surat to the Charge of ITO (IT), Surat without taking NOC. Further, on perusal of return of income filed by assessee, it has been noticed that the assessee's residential status is Non- Resident However, the assessee is having address in India at A. NO. 298, Sector 3 B Bokdaro Steel city, Bokaro-827003, Jharkhand. Therefore, the territorial jurisdiction pertains to DCIT (IT)) Kolkata. The DCIT (IT) has already provided NOC towards transfer in of the above mentioned PAN. In exercise of power conferred by sub-section (2) of Section 127 of the Income Tax Act, 1951 (43 of 1961) and all other powers enabling me in this behalf.
1. Commissioner of Income-Tax (IT & TP), Ahmedabad hereby transfer the case (s), particulars of which are mentioned in column No. 2 and 3 of the schedule hereunder, from the jurisdiction of the officer mentioned in column No. 4 to the jurisdiction of the officer mentioned in column No.5 for the reason that the assessee's residential status was resident. S.no PAN Name of the Assessing Officer Pr.CIT charge Assessee 1 2 3 4 5 6 From To 1 AIIPK7 Ajit Kumar ITO- IT- Surat DCIT(IT), Circle- CIT(FT& TP)- 673F 2(1), Kolkata 2- Kolkata 2.1. Now, we have gone through the cited decisions and find that in a decision passed by Hon'ble Gujarat High Court in the case of Anand Kumar Page 4 of 7 I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. Dugar Versus Income Tax Officer Ward 1 Vapi & Anr. in R/Special Civil Application No. 9058 of 2024. The same is reproduced below:
“AO Jurisdiction to issue notice u/s 148 to a Non-resident Indian - fixed deposits were made out of remittances from Dubai and maturity of existing term deposits, interest on NRE account and inter se transfer of funds between various bank accounts of the petitioner - HELD THAT:- It is not in dispute that the petitioner is a Non-resident Indian residing at Saudi Arabia. Moreover, the address of the petitioner shown in the impugned order and notice is Vijayanagaram, Andhra Pradesh. Therefore, AO at Vapi, has no jurisdiction to issue the notice u/s 148A (a) or 148A (b) of the Act only on the basis of the information available on the insight portal. The petitioner has provided the details with regard to term deposits placed in two accounts with the HDFC Bank and has also provided bank statement with the reply. The petitioner has submitted the entire bank statement and the explanation that being NRE remittance in the account was made by the petitioner from Saudi Arabia out of salary credited and received outside India and out of maturity of the FDR. The petitioner has also provided the date wise details of all credit in the bank account with the HDFC bank during the year. Notice of reopening under section 148A of the Act could be issued only by an Officer who has jurisdiction over the petitioner and only the Commissioner of Income Tax (International Taxation) and from the communication placed on record at Annexure J, ITO, Ward 1, Vijayanagaram, Andhra Pradesh, has the jurisdiction considering the local address of the petitioner. Therefore, notice issued by the respondent, who did not have jurisdiction over the assessee, would be invalid. Moreover, in view of the explanation tendered by the petitioner that he has no taxable income during the year, there was no question of filing any income tax return as the interest accrued on the term deposit is exempted u/s 10 (4) of the Act. Reassessment proceddings set aside - Decided in favour of assessee.” 2.2. Now, so far the submission of the ld. D/R is that the assessee did not raise this issue before the ld. AO whereas he participated in the proceeding. 2.3. We have also gone through the judgments cited by the assessee in case of PCIT-2, Kolkata vs. Cosmet Traders Pvt. Ltd. in ITAT No. 78/2022 IA No. GA/2/2022 dated 15.11.2022.(Cal HC). The Hon'ble Court has held as under: “We have heard Mr. Sou men Bhattacharjee, Learned standing counsel appearing for the appellant/ revenue and Mr. Abhratosh Majumdar, learned Page 5 of 7 I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. senior counsel assisted by Mr. Avara Majumder, learned Advocate for the respondent/assessee. After elaborately hearing the learned Advocates for the parties and carefully perusing the order passed by the Tribunal, we find that the Tribunal was fully justified in allowing the assessee's appeal by taking note of the decision of this Court in the case of Principal Commissioner of Income Tax vs. Oberoi Hotels Pvt. Ltd. reported in [2018] 409 ITR 132 (Cal). In the said decision it was held that the notice under Section 143(2) of the Act was required to be mandatorily issued and Section 292BB had no manner of operation. The earliest of the decision is that of the Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax & Anr. vs. Hotel Blue Moon reported in [2010] 321 ITR 362 (SC), wherein it was held that if an assessment is to be completed under Section 143(3) read with Section 158BC, notice under Section 143(2) should be issued within one year from the date of filing of the block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedure irregularity and is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. This Court in the case of Principal Commissioner of Income Tax-11, Kolkata vs. Nopany & Sons reported in 2022(2)TMI 399- Calcutta High Court held that the proviso to Section 292BB could not stand attracted and the said section cannot be made applicable to the assessee's case. Very recently, the Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax vs. S.K. Industries reported-in [2022] 141 taxmann.com 569(SC) dismissed the Special Leave Petition filed by the revenue against the order of the High ' Court holding that where the assessing officer of a particular Circle passed an assessment order under Section 143(3) without issuing notice under Section 143(2) and only in pursuance with the notice issued under Section 143(2), he had no jurisdiction over the assessee at the relevant time and such assessment order was liable to be set aside. It is the submission of the learned standing counsel for the Department ..- .that the assessee had not raised the question of jurisdiction before the assessing officer but participated in the assessment proceedings and, therefore, could not have raised the said issue before the Tribunal. This argument cannot be acceded to for more than one reasons, firstly, there cannot be any estoppel against the statute. It is not the case of the revenue that the assessee consciously waived his right to raise such a jurisdictional issue. Secondly, the assessee had filed an application before the learned Tribunal seeking leave to raise additional grounds and this application was held and after contest the application was allowed. The learned Tribunal, in fact, recorded that the Department could not controvert any of the submissions of the assessee on the additional grounds which have been raised and, therefore, the application was allowed taking note of thematter that the issue goes to the root of the entire proceedings.
Page 6 of 7 I.T.A. No.: 243/KOL/2024 Assessment Year: 2018-19 Ajit Kumar. Thus, we are of the considered view that the learned Tribunal was fully justified in allowing the assessee's appeal. For the above reasons, the appeal filed by the revenue (ITAT/78/2022) is dismissed and the substantial questions of law are answered against the revenue. Consequently, the connected application for stay (IA No.GA/2/2022) also stands dismissed.”
Going over the facts of the case as well as cited decisions, we are in this view that notice issued u/s 148A of the Act by ld. AO, Surat cannot be said to be a valid notice as ITO, Surat has no jurisdiction to issue any notice. accordingly, on this legal issue, the case of the assessee is hereby allowed and the order passed subsequent to the notice is also hereby set aside.