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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
The instant appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar [in brevity the CIT(A)], bearing Appeal No. 2/10051/17-18/CIT(A)/Jal dated 27.11.2018 u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2009-10. The impugned order was generated from the order of the Ld. Income Tax Officer,
Tarsem Singh v. ITO Nakodar [in brevity the A.O.] passed u/s 143(3)/147 of the Income Tax Act, 1961 dated 15.12.2016.
Brief fact of the case is that based on AIR information, cash amount to Rs.35,50,000/- was deposited during the financial year 2008-09 in the saving bank a/c of the assessee. The assessee had not filed any return nor had any PAN. Notice u/s 133(6) of the Act was issued for verification of source of cash deposit. After the detailed verification, the assessment was completed u/s 143(3)/147 and the addition was made on unexplained deposit of cash amount to Rs.7,25,000/- and the agricultural income amounting to Rs.5,95,00/- was added back. The tax was levied u/s 115BBE of the Act on addition of Rs.7,25,000/- u/s 69/69A. Aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the order of the Ld. AO. Being aggrieved, the assessee filed an appeal before us.
During hearing, the Ld. counsel of the assessee first argued the technical ground and chronologically mentioned the issue related to reopening u/s 148 of the Act which is as follows:
(a) The Ld. ITO, Nakodar issued notice u/s 133(6) (APB page nos. 3 to 7) (b) The Ld. ITO, Phagwara had issued notices for verification of transactions (APB page nos. 8 & 9) (c) The Ld. ITO, Ward-4, Phagwara had issued notice u/s 148 (APB page no.1)
Tarsem Singh v. ITO The Ld. counsel Mr. J. S. Bhasin, Adv. vehemently argued and mentioned that the Ld. ITO, Nakodar is the proper jurisdiction on the assessee. But the notice u/s 148 which was issued by the Ld. ITO, Phagwara is bad in law. So, the entire assessment procedure is non-est.
Ld. counsel Mr. Bhasin further mentioned that the issue was agitated before the Ld. CIT(A) in page no. 3 para 2 to 4 is extracted as follows:
“2. Interestingly, in this case, what emerges from assessment order and record is that initially, it was the 1TO Nakodar, who first invited information u/s. 133(6) from Capital Bank vide letter dated 6.02.2012 followed by a letter dated 14.2.2012 issued to assessee at his local address. Thereafter, ITO Nakodar, also issued three more letters dated 06.12.2013, 31.12.2013 and 11.08.2014. Then after the lapse of over four months, the next verification letter dated 08.01.2015 was issued by the ITO W-4, Phagwara, followed by another letter dated 20.10.2015. Since the assessee was not in India, all such letters remained un-served and unattended. Therefore, the ITO W-4, Phagwara, finally issued notice u/s. 148 on 29.2.2016, after recording reasons u/s. 148(2).
3. Thus after the ITO W-4 Phagwara assumed jurisdiction u/s. 148, the case was thereafter, transferred by him back to ITO Nakodar, as expressly indicated on page 2 in the opening lines of the impugned order, for reasons not spelled out in the order, nor any notice to this effect was ever served on assessee. Then, the ITO Nakodar, completed the assessment and passed the order under appeal on 15.12.2016 making therein an addition of Rs.7.25 lacs.
Now it is clear beyond doubt from the above stated events that though the territorial jurisdiction in this case was undoubtedly vested with the ITO Nakodar, who did exercise the same by not only issuing the initial notices,, but also by passing the final order, it is not understood as to how the ITO W-4, Phagwara, intercepted in the middle of the proceedings to invoke powers u/s. 148 for recording of reasons, and issue of statutory notice u/s. 148, and thereafter, to transfer back the case to ITO Nakodar. Obviously, the ITO Phagwara, acted in excess of his jurisdiction, for all his mid way acts, statutory in nature, which ought to have been done by ITO Nakodar, and therefore, this infirmity in the proceedings, renders the impugned order a nullity in the eyes of law.”
Tarsem Singh v. ITO The Ld. counsel relied on the judgment of coordinate Bench in the case of Smt. Paramjit Kaur v. ITO Ward (2), Phagwara in & 140/Asr/2019 dated 14.10.2021. The relevant para is extracted as follows:
“6. Having heard rival contentions, perusing the relevant documents, assessment record and case law cited, it is admitted fact that ITO Ward-4 Phagwara, had no Jurisdiction over the case who has recorded the reasons and issued the notice u/s 148 and thereafter transferred the file to the Jurisdictional ITO i.e. Ward-2 Phagwara who in turn framed the assessment. The issue of jurisdiction in this regard is now settled law by orders of the Amritsar Bench, Agra Bench, Chandigarh Bench and Delhi Bench of ITAT where it has been held that firstly the AO who records the reasons and issues a notice u/s 148 should be a Jurisdictional AO and secondly the assessment also has to be framed by the same AO who initiated the proceedings u/s 147, 148. In our view, the assessment order passed by the ITO, Ward-2, Phagwara is without jurisdiction and the same is not in accordance with law, hence required to be quashed. The finding of the Ld. CIT(A) on the issue of jurisdiction and thereby confirming the assessment order are unwarranted and perverse and such a finding against the settled position of law cannot be approved.
In the above view, we accept the grievance of the assessee genuine. We hereby quash the assessment order and the impugned order of the CIT(A) for the aforesaid reasons.”
4. The Ld. Sr. DR only relied on the order of CIT(A) and argued for sustaining the addition.
We heard the rival submissions and relied on the documents available in the record. The assessee has a territorial jurisdiction as well as full jurisdiction under the ld. ITO, Nakodar. The investigation was completed u/s 133(6) and the assessment u/s 143(3)/147 was completed by the same ITO, Nakodar. But non jurisdictional the ld. ITO, Phagwara had issued the notice u/s 148 which is made
Tarsem Singh v. ITO the assessment invalid. The Ld. ITO, Phagwara has no jurisdiction over the assessee. So, the notice issued by the said officer is unjust for by violating the territorial jurisdiction. so, the entire assessment itself invalid from point of law.
Therefore, the order passed U/s 147/143(3) cannot be sustained and liable to be quashed.
In the result, the appeal of the assessee is allowed.