2020 (1) TMI 1311 - AT - Income Tax

Invalid assessment order overturned due to improper notice issuance by officer lacking jurisdiction. Jurisdictional compliance emphasized.

Soma Roy C/o. S.N. Ghosh & Associates Versus Asstt. Commissioner of Income Tax, Circle-1, Durgapur

The Tribunal allowed the appeal of the assessee as the assessment order was deemed invalid due to the improper issuance of the notice under section 143(2) ... No issue of notice u/s 143 - Addition u/s 68 - HELD THAT:- We hold that the assessment order is bad in law for the reason that the Assessing Officer having jurisdiction over the assessee, has not issued a notice u/s 143(2) of the Act as required by the statute. Notice issue by the officer having no jurisdiction of the assessee is null and void. When a notice is issued by an officer having no jurisdiction, Section 292BB of the Act, does not comes into play. Coming to the argument of the ld. D/R that objection u/s 124(3) of the Act has to be taken by the assessee on rectifying notice u/s 143(2) of the Act from a non-jurisdictional assessing officer, need not adjudicate this issue - Appeal of the assessee is allowed. Issues Involved:1. Validity of the assessment order due to the issuance of notice under section 143(2) by an officer lacking jurisdiction.2. Legality of the addition made under section 68 of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Validity of the Assessment Order:The primary issue revolves around whether the assessment order is valid when the statutory notice under section 143(2) of the Income Tax Act, 1961, was issued by an Income Tax Officer (ITO) who did not have jurisdiction over the assessee. The assessee argued that the assessment order framed under section 143(3) was invalid because the notice under section 143(2) was issued by an officer without jurisdiction. The relevant statutory notice was issued by the ITO, Ward-1(1), Durgapur, on 29/09/2016, but the assessment was completed by the Assistant Commissioner of Income Tax (ACIT), Circle-1(1), Durgapur, who had jurisdiction over the assessee.The Tribunal referred to several case laws, including the decision in the case of Shri Sukumar Ch. Sahoo vs. ACIT, which emphasized that the jurisdiction to issue the notice under section 143(2) lies with the officer having jurisdiction over the assessee. The Tribunal also cited the Hon'ble Supreme Court's decision in CIT vs. Laxman Das Khandelwal, which clarified that Section 292BB of the Act does not cure the complete absence of notice and only addresses infirmities in the manner of service of notice.The Tribunal concluded that the assessment order was bad in law because the notice under section 143(2) was issued by an officer who did not have jurisdiction over the assessee. This made the entire assessment process invalid, as the statutory requirement of issuing a notice under section 143(2) by the jurisdictional officer was not fulfilled. Consequently, the Tribunal allowed the appeal of the assessee on this ground, rendering the assessment order null and void.2. Legality of the Addition Made Under Section 68:The second issue concerned the addition of Rs. 12,70,000/- under section 68 of the Income Tax Act, 1961, on the grounds that the cash deposits in the assessee's bank account were unexplained. The assessee contested this addition, arguing that the lower authorities had erred in their findings.The Tribunal, however, did not delve deeply into the merits of this issue. Given that the assessment order itself was declared invalid due to the improper issuance of the notice under section 143(2), the Tribunal deemed it unnecessary to adjudicate on the merits of the addition under section 68. The invalidity of the assessment order rendered any further discussion on the addition academic and irrelevant.Conclusion:The Tribunal allowed the appeal of the assessee, primarily on the basis that the assessment order was invalid due to the improper issuance of the notice under section 143(2) by an officer without jurisdiction. This decision was supported by various precedents and legal principles, emphasizing the necessity of jurisdictional compliance in the issuance of statutory notices. Consequently, the Tribunal did not address the merits of the addition made under section 68, as the invalid assessment order nullified the need for such consideration.