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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI RAVISH SOOD
आदेश / ORDER PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 30.10.2019, which in turn arises from the order passed by the A.O under Sec. 143(3)/147 of the Income-tax Act, 1961 (in short ‘the Act’) dated 29.12.2017 for the assessment year 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before me:
“1. In the facts and circumstances of the case and in law the initiation of reassessment proceedings u/s.147 of the Income Tax Act, 1961 without fulfilling all mandatory conditions is bad in law and without jurisdiction.
2. In the facts and circumstances of the case and in law the ld. Commissioner of Income Tax (Appeals) has erred in confirming addition of Rs.24,79,290/- as unexplained cash deposit without considering facts and evidences in their entirety.
3. The impugned order is bad in law.
The appellant reserves the right to add, amend, alter, omit or withdraw all or any of the grounds of appeal.”
Also the assessee has raised an additional ground of appeal which reads as under:
“In the facts and circumstances of the case and in law, the assessment order is bad in law, illegal and without jurisdiction for the assessment order was passed by the Income-tax Officer-1(3), Bhilai while notice u/s.148 of the Income Tax Act,
3 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai
1961 was issued by the Income Tax Officer 1(1), Bhilai being the jurisdictional officer.”
Succinctly stated, the A.O on the basis of AIR information that the assessee had made cash deposits of Rs.28.50 lac in his saving bank account No.20057093434 with State Bank of India, Branch : Kumhari, Bhilai but had not disclosed the same in his return of income for the year under consideration thus, reopened his case u/s.147 of the Act. Notice u/s.148 of the Act, dated 25.10.2016 was thereafter issued by the ITO, Ward-1(1), Bhilai.
During the course of assessment proceedings, it was observed by the A.O i.e. ITO, Ward-1(1), Bhilai that as jurisdiction over the case of the assessee was as per Notification No.01/2014-15 dated 15.11.2014 issued by the Joint Commissioner of Income Tax, Range- 2, Bhilai vested with the ITO, Ward-2(1), Bhilai, therefore, he vide his letter dated 03.08.2017 transferred the assessee’s case to the ITO, Ward-2(1), Bhilai with a request that appropriate action be taken on his part, Page 1 of the letter dated 29.11.2022 filed by the Ld. Departmental Representative (for short ‘DR’) in the course of hearing of the appeal. On a perusal of the assessment records it transpires that the ITO, Ward-2(1), Bhilai after receiving the assessee’s case a/w. record(s), had issued a letter dated 06.10.2017 to the assessee,
4 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai therein calling upon him to comply with the notice issued u/s.148 of the Act dated 25.10.2016. In sum and substance, the A.O i.e. ITO, Ward-2(1), Bhilai had proceeded with the assessment on the basis of the notice that was issued u/s.148 of the Act dated 25.10.2016 by the ITO, Ward-1(1) Bhilai. The assessee in compliance to the notice issued u/s.148 of the Act dated 25.10.2016 that was issued by the ITO, Ward-1(1), Bhilai filed his return of income on 16.11.2017 declaring an income of Rs.3,42,910/-. On a perusal of the letter dated 28.09.2022 of the ITO, Ward-1(3), Bhilai addressed to the JCIT (ITAT) Raipur, it transpires that as therein stated the jurisdiction over the assessee’s case was on 01.11.2017 transferred by the ITO, Ward- 2(1), Bhilai to the ITO, Ward-1(3), Bhilai.
4. Assessment was, thereafter, framed by the A.O i.e. ITO, Ward- 1(3), Bhilai vide his order passed u/s. 143(3)/147 of the Act dated 29.12.2017, wherein after making an addition of Rs.24,79,290/- u/s.69 of the Act and the income of the assessee was determined at Rs.28,22,200/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success.
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The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.
I have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
As the assessee has assailed the validity of the jurisdiction assumed by the A.O for framing of the assessment vide his order passed u/s.143(3) r.w.s. 147 of the Act dated 29.12.2017, which involves purely a question of law based on the material available on record and would not require looking into facts any further beyond those available on record, therefore, after hearing the ld. authorized representatives of both the parties I have no hesitation in admitting the same. My aforesaid view that where an additional ground of appeal involving purely a question of law requiring no further verification of facts is raised before the Tribunal, though for the first time, then, the same merits admission is supported by the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC).
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I shall first deal with the claim of the Ld. Authorized Representative (for short ‘AR’) for the assessee that as the A.O i.e. ITO, Ward-1(1), Bhilai had wrongly assumed jurisdiction and reopened the case of the assessee u/s.147 of the Act, therefore, the consequential assessment so framed u/s.143(3) r.w.s 147 of the Act dated 29.12.2017 being based on illegal assumption of jurisdiction cannot be sustained and is liable to be struck down on the said count itself. Elaborating on his aforesaid contention, it was the claim of the Ld. AR that as the jurisdiction over the case of the assessee pursuant to the Notification No.01/2014-15, dated 15.11.2014 of the Joint Commissioner of Income Tax, Range-2, Bhilai was vested with the ITO, Ward-2(1), Bhilai, therefore, the ITO, Ward-1(1), Bhilai had traversed beyond the scope of his jurisdiction and issued notice u/s.148 of the Act dated 25.10.2016. To sum up, it was the claim of the Ld. AR that notice u/s.148 of the Act dated 25.10.2016 that was issued by the ITO, Ward-1(1), Bhilai was liable to be struck down for want of valid assumption of jurisdiction at the stage of reopening of the assessee’s case. The Ld. AR in order to fortify his aforesaid claim had drawn my attention to a letter dated 03.08.2017 that was issued by the ITO, Ward-1(1), Bhilai to the ITO, Ward-2(1), Bhilai (enclosed with the letter dated 29.11.2022 of the JCIT, DR). It was submitted by the Ld. AR that the ITO, Ward-1(1), Bhilai vide his aforesaid letter
7 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai dated 03.08.2017 (supra) had, inter alia, transferred the case of the assessee to the ITO, Ward-2(1), Bhilai by categorically stating that the jurisdiction over his case pursuant to the Notification No.01/2014-15 dated 15.11.2014 was vested with the latter, and had requested him to take appropriate action at his end. It was submitted by the Ld. AR that now when admittedly, as observed by the ITO, Ward-1(1), Bhilai, the jurisdiction over the case of the assessee pursuant to the Notification No.01/2014-15 dated 15.11.2014 was vested with the ITO, Ward-2(1), Bhilai, therefore, the ITO, Ward-1(1), Bhilai had clearly exceeded his jurisdiction by initiating proceedings in the case of the assessee vide notice issued by him u/s.148 of the Act dated 25.10.2016. It was further submitted by the Ld. AR that the case of the assessee was thereafter on 01.11.2017 transferred from ITO, Ward-2(1), Bhilai to ITO, Ward-1(3), Bhilai. It was submitted by the Ld. AR that assessment u/s.143(3) r.w.s. 147 of the Act, dated 29.12.2017 was thereafter framed by the ITO, Ward-1(3), Bhilai. On the basis of his aforesaid contentions, it was the claim of the Ld. AR that the assessment order passed by the A.O u/ss.143(3)/147 of the Act dated 29.12.2017 could not be sustained and was liable to be struck down for want of valid assumption of jurisdiction by the A.O at the stage of issuance of notice u/s.148 of the Act.
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Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities.
As observed by me hereinabove, it is a matter of fact borne from record that proceedings u/s.147 of the Act were initiated in the case of the assessee by the ITO, Ward-1(1), Bhilai on the basis of the following “reasons to believe”: “Reasons for issuing notice u/s.148 As per the information available on records of this office, the assessee has made cash deposits of Rs.28,50,000/- in his bank account during the F.YR. relevant to the assessment year under consideration. However, it is also on records that the assessee has not filed return of income for the said assessment year. Further it is also on records that the assessee was in receipt of Rs.1,89,792/- on which T.D.S under section 194A has been deducted during the financial year under consideration. Thus I have reasons to believe that income to the extent of Rs.28,50,000/- and Rs.1,89,792/- (Total Rs.30,39,792/-) has escaped assessment within the meaning of provision of section 147 of the Income Tax Act,1961 and Therefore, I am satisfied that this is fit case to initiate proceedings u/s 147. Issue Notice u/s 148.” Dated : 09.05.2016 Sd/- (S.D. Bhoskar) ITO-1(1), Bhilai Accordingly a notice u/s.148 dated 25.10.2016 was issued by the ITO, Ward-1(1), Bhilai. As per details filed by the Ld. DR before me, it transpires that the ITO, Ward-1(3), Bhilai vide his letter dated
9 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai 28.09.2022 addressed to the JCIT, ITAT, Raipur had furnished details of change of jurisdiction in the case of the assessee over the years, which reads as under (relevant extracts of the letter):
JURISDICTION HISTORY FROM/AO TO/AO DATE ITO-1(1), Bhilai ITO-1(1), Bhilai 25/10/2016 ITO-1(1), Bhilai ITO-2(1), Bhilai 03/08/2017 ITO-2(1), Bhilai ITO-1(3), Bhilai 01/11/2017 Apart from that, I find from a perusal of the letter dated 28.09.2022 (supra) that the ITO, Ward-1(1), Bhilai had transferred the case of the assessee a/w. records to the ITO, Ward-2(1), Bhilai for the reason that jurisdiction over the assessee’s case as per the Notification No.01/2014-15 dated 15.11.2014 of the Joint Commissioner of Income Tax, Range-2, Bhilai was vested with the latter, i.e. ITO Ward- 2(1), Bhilai. On the basis of the aforesaid facts it is clear beyond doubt that jurisdiction over the assessee’s case pursuant to Notification No 01/2014-15, dated 15.11.2014 remained vested with the ITO, Ward-2(1), Bhilai. Considering the aforesaid facts, I am unable to comprehend that now when jurisdiction over the case of the assessee was vested with the ITO Ward-2(1), Bhilai i.e.
10 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai w.e.f.15.11.2014, then, on what basis notice u/s.148 dated 25.10.2016 was issued by the ITO, Ward-1(1), Bhilai. Be that as it may, I find that the ITO Ward-2(1), Bhilai had pursuant to the transfer of the assessee’s case by the ITO Ward-1(1), Bhilai, had thereafter proceeded with on the basis of the notice u/s.148 of the Act dated 25.10.2016. My aforesaid view is further fortified from a perusal of the letter No. F. NO.ITO2(1)/BHI/2017-18/428 Dt.06.10.2017, wherein the ITO Ward-2(1), Bhilai by referring to the notice issued u/s.148 dated 25.10.2016 that was issued by the ITO Ward-1(1), Bhilai had called upon the assessee to comply with the same and file his return of income. To sum up, I find that the ITO Ward-2(1), Bhilai had pursuant to receipt of the assessee’s case a/w. records had not issued any fresh notice u/s.148 of the Act and had proceeded with on the basis of that as was issued by the ITO, Ward- 1(1), Bhilai on 25.10.2016.
At this stage, I may herein observe that as the ITO, Ward-1(1), Bhilai was admittedly pursuant to the Notification No 01/2014-15 dated 15.11.2014 issued by the Joint Commissioner of Income Tax, Range-2, Bhilai at the stage of initiation of proceedings u/s.147 of the Act was not having any jurisdiction over the assessee’s case, therefore, both the recording of “reasons to believe” on 09.05.2016
11 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai and the issuance of notice u/s.148 on 25.10.2016 by him was devoid and bereft of any force of law. Although the ITO, Ward-2(1), Bhilai on transfer of assessee’s case a/w records, i.e. on 03.08.2017 had substantial time available with him to issue notice u/s.148 of the Act to the assessee, but no such notice was ever issued by him.
Considering the aforesaid factual position I find that my indulgence has been sought for adjudicating the sustainability of the order passed by the A.O u/ss.143(3)/147 dated 29.12.2017, which in turn is based on the initiation of proceedings u/s.147 of the Act on the basis of “reasons to believe”, dated 09.05.2016 a/w issuance of notice u/s.148 of the Act by the ITO Ward-1(1), Bhilai, who at the relevant point of time was admittedly not vested with any jurisdiction over the case of the assessee.
Admittedly, it is a matter of fact borne from record that the ITO, Ward-1(3), Bhilai who had framed the assessment in the case of the assessee u/ss.143(3)/147 dated 29.12.2017 had pursuant to vesting of the jurisdiction on 01.11.2017 by the ITO Ward-2(1), Bhilai had at the time of framing of the assessment the requisite jurisdiction over the case of the assessee. In sum and substance, it is a matter of an admitted fact that the assessment in the case of the assessee vide order u/ss.143(3)/147 dated 29.12.2017 had been framed by the A.O
12 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai i.e. ITO, Ward-1(3), Bhilai, who at the relevant point of time had the requisite jurisdiction over the case of the assessee. My indulgence has been sought for adjudicating as to whether or not the case of the assessee was validly reopened u/s.147 of the Act?
As observed by me hereinabove the ITO Ward-1(1), Bhilai who had recorded the “reasons to believe” on 09.05.2016 and issued notice u/s.148 of the Act dated 25.10.2016, at the relevant point of time was admittedly not having any jurisdiction over the case of the assessee. My aforesaid view is fortified beyond doubt on a perusal of the letter of the ITO Ward-1(1), Bhilai dated 03.08.2017 addressed to ITO Ward-2(1), Bhilai on the basis of which the case of the assessee was, inter alia, transferred to the latter. For the sake of clarity, the aforesaid letter dated 03.08.2017 (supra) is culled out, as under:
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14 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai Considering the aforesaid factual position I am of a strong conviction that as the ITO, Ward-1(1), Bhilai did not have any jurisdiction over the case of the assessee either at the time of recording the reasons to believe, i.e. on 09.05.2016; or at the time of issuance of notice u/s.148 of the Act dated 25.10.2016, therefore, the initiation of proceedings as well as issuance of notice u/s.148 of the Act, dated 25.10.2016 being devoid and bereft of any force of law cannot be sustained and is liable to be quashed.
As regards the claim of the Ld. DR that as the assessee had not called in question the jurisdiction of the A.O as required per the mandate of sub-section (3) of Section 124 of the Act, therefore, he was precluded from assailing the same in the course of present proceedings, I am unable to persuade myself to subscribe to the same. As the assessee involved in the present appeal had not challenged the territorial jurisdiction of the A.O, but in fact had assailed the very inherent jurisdiction of the ITO Ward-1(1), Bhilai for issuing notice u/s.148 dated 25.10.2016, therefore, on the said count itself the aforesaid objection so raised by the Ld. DR cannot be accepted.
Apart from that, the contention of the Ld. DR that now when the assessee as per the mandate of sub-section (3) of Section 124 had 15 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai not called in question the jurisdiction of the A.O within the stipulated time period of one month from the date of receipt of notice u/s.148, dated 25.10.2016 from the ITO, Ward-1(1), Bhilai, therefore, he could not have assailed the same for the very first time in the course of the present proceedings, in my considered view does not merit acceptance. As stated by the Ld. AR and, rightly so, as the notice u/s.148, dated 25.10.2016 issued by the Income-Tax Officer, Ward- 1(1), Bhilai was not a notice issued by an authority falling within the meaning of an “Assessing Officer”, i.e. either of the authorities contemplated in Section 2(7A) of the Act, viz. such authority who was vested with the relevant jurisdiction by virtue of any directions or orders issued under sub-section (1) or sub-section (2) of Section 120 of the Act or any other provision of the Act; or any such authority who was directed under clause (b) of sub-section (4) of Section 120 to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under the Act; therefore, no obligation was cast upon the assessee to call in question his jurisdiction on receipt of notice u/s.148, dated 25.10.2016. My aforesaid conviction that where an assessee is in receipt of notice from an officer who was not vested with the jurisdiction over the case of the assessee either u/s. 124(1) or u/s.127 or by notification or circular or instruction of CBDT, then, no obligation would be cast
16 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai upon the assessee to call in question his jurisdiction as per the mandate of sub-section (3) of Section 124 of the Act is supported by the orders of the co-ordinate benches of the Tribunal, i.e, ITAT, Gauhati in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.) and the ITAT, Kolkata Bench in the case of OSL Developers (P) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621. We further find that a similar view had also been taken by the Hon’ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR 492 (Guj.). It was observed by the Hon’ble High Court that the provisions of sub-section (3) of Section 124 pertains to the dispute of the assessee with respect to the territorial jurisdiction of the A.O and have no relevance in so far the inherent jurisdiction is concerned.
Also, the Hon’ble High Court of Calcutta in its order passed in the case of West Bengal State Electricity Board Vs. Deputy Commissioner of Income Tax & Anr (2005) 278 ITR 218 (Cal.), had observed that it is an admitted proposition that no jurisdiction can be conferred by default or agreement and a decision without jurisdiction is nullity. The Hon’ble Court by drawing support from the judgment of the Hon’ble Supreme Court in the case of Kiran Singh Vs. Chaman Paswan, AIR 1954 SC 340 (Para 6), had observed that a defect of jurisdiction, whether it be pecuniary, or territorial is incurable. Apart
17 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai from that the Hon’ble High Court of Bombay in the case of Bansilal B. Raisoni & Sons Vs. Assistant Commissioner of Income Tax & Anr (2019) 260 Taxman 281 (Bom.), had observed, that the time limit for raising objection to the jurisdiction of the A.O prescribed under sub- section (3) of Section 124 has a relation to the A.O’s territorial jurisdiction and the same would not apply to a case where the assessee contends that the action of the A.O is without authority of law and therefore, wholly without jurisdiction. For the sake of clarity, the relevant observation of the Hon’ble High Court is culled out, as under:
“7. We are also in agreement with the contention of the Counsel for the petitioner that the petitioner's objection to the jurisdiction of the Assessing Officer on the ground that if no search was initiated, notice under Section 153A of the Act could not have been issued, cannot be curtailed on the ground that such objection was raised beyond the period referred to in sub-section (3) of Section 124 of the Act. Section 124 of the Act pertains to jurisdiction of Assessing Officers. Sub- section (1) of Section 124 lays down territorial jurisdiction of the Assessing Officer. Sub-section (2) of Section 124 provides that where the question arises under said section, as to whether an Assessing Officer has jurisdiction to assess any person, such question shall be determined by the authority prescribed under the said sub-section. Sub-section (3) of section 124 provides time limits for a person to call in question jurisdiction of an Assessing Officer. Clause (c) of sub- section (3) of section 124 provides that no person shall be entitled to call in question jurisdiction of an Assessing Officer where an action has been taken under Section 132 or section 132A, after the expiry of one months from the date on which he was served with a notice under sub- section (1) of Section 153A or sub-section (2) of Section 153C of the Act or after the completion of the assessment, whichever is earlier. In clear terms, the time limit for raising objection to the jurisdiction of the Assessing Officer prescribed under sub-section (3) of section 124 has a relation to the Assessing Officer's territorial jurisdiction. The time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without jurisdiction.”
18 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai On the basis of my aforesaid deliberations, I am of the considered view that now when the assessee has assailed the framing of the assessment u/ss.143(3)/147 dated 29.12.2017 on the ground that the initiation of proceedings u/s.147 of the Act by the ITO, Ward-1(1), Bhilai is without authority of law and, therefore, wholly without jurisdiction, then, the aforesaid objection of the Ld. DR that the failure of the assessee to call in question the jurisdiction of the A.O within the time limit prescribed under sub-section (3) of Section 124 cannot be accepted.
I, thus, on the basis of the aforesaid deliberations, am of the considered view that assessment framed on the basis of “reasons to believe” recorded on 09.05.2016 a/w. notice u/s.148 of the Act dated 25.10.2016 issued by the A.O, i.e. ITO, Ward-1(1), Bhilai, a non- jurisdictional Officer, cannot be sustained and is liable to be quashed.
Before parting, I may herein observe that though sub-section (4) of Section 127 of the Act contemplates that the transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred, but the same would by no means
19 Smt. Jaswanti Devi L/h. Late Shri Randhir Singh Dahiya Vs. ITO-1(3), Bhilai come to the rescue of the revenue in the present case. I, say so, for the reason that as the ITO, Ward-1(1), Bhilai at the time of initiating proceedings and issuance of notice u/s.148 dated 25.10.2016 was not vested with any jurisdiction over the case of the assessee, therefore, the aforesaid notice so issued by him de-hors valid assumption of jurisdiction will have no existence in the eyes of law and would be non-est. To sum up, the aforesaid non-est notice u/s.148 dated 25.10.2016 issued by the ITO, Ward-1(1), Bhilai can by no stretch of imagination be validated pursuant to the transfer of the case of the assessee by him on 03.08.2017 to ITO Ward-2(1), Bhilai.
As I have quashed the assessment for want of valid assumption of jurisdiction by the ITO, Ward-1(1), Bhilai for initiating proceedings u/s.147 of the Act on the basis of “reasons to believe” recorded on 09.05.2016 a/w. issuance of notice u/s.148 of the Act dated 25.10.2016, therefore, I refrain from adverting to and therein adjudicating the other contentions advanced by the Ld. AR as regards the merits of the case, which, thus, are left open.
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