Reassessment order invalid when notice u/s.148 issued by non-jurisdictional officer without proper transfer u/s.127

ITAT Raipur held that a reassessment order u/ss.143(3)/147 passed by ITO Ward-2(1), Bhilai based on notice u/s.148 issued by non-jurisdictional officer ITO Ward-1(1), Raipur was invalid. The jurisdictional officer who completed the assessment had not issued any notice u/s.148 but relied on notice from non-jurisdictional officer. No valid transfer of jurisdiction u/s.127 was established by the department. The assessment was held devoid of legal force and the assessee's appeal was allowed.

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Issues Involved:
1. Validity of jurisdiction assumed by the Assessing Officer (A.O) for framing the assessment.
2. Issuance of notice under Section 148 by a non-jurisdictional A.O.
3. Non-issuance of notice under Section 143(2) after filing return of income in response to notice under Section 148.
4. Addition of Rs. 13,86,385/- as undisclosed income from dealing in land.

Issue-wise Detailed Analysis:

1. Validity of Jurisdiction Assumed by the A.O:
The core issue revolved around whether the ITO, Ward-2(1), Bhilai had valid jurisdiction to frame the assessment under Sections 143(3)/147 dated 25.03.2016. The assessee contended that the jurisdiction was improperly assumed since the notice under Section 148 was issued by the ITO, Ward-1(1), Raipur, who did not have jurisdiction over the assessee's case. The Tribunal observed that the assessee was a resident of Durg, and the jurisdiction was with the ITO, Ward-2(1), Bhilai. The assessment framed by the ITO, Ward-2(1), Bhilai on the basis of a notice issued by a non-jurisdictional officer (ITO, Ward-1(1), Raipur) was deemed invalid. This position was supported by various judicial precedents, including CIT Vs Jet Airways (I) Ltd. and Ashok Devichand Jain Vs. UOI, which held that an assessment based on a notice issued by a non-jurisdictional officer is not sustainable.

2. Issuance of Notice under Section 148 by a Non-Jurisdictional A.O:
The Tribunal noted that the notice under Section 148 dated 23.03.2015 was issued by the ITO, Ward-1(1), Raipur, who did not have jurisdiction over the assessee. The case records were later transferred to ITO, Ward-2(1), Bhilai, who framed the assessment without issuing a fresh notice under Section 148. The Tribunal held that the assessment was invalid as the initial notice under Section 148 was issued by a non-jurisdictional officer. This finding was consistent with the judgments of the Hon'ble High Courts in similar cases, which emphasized that an assessment based on a notice by a non-jurisdictional officer is void.

3. Non-Issuance of Notice under Section 143(2):
The assessee argued that the A.O failed to issue a notice under Section 143(2) after the return of income was filed in response to the notice under Section 148. The Tribunal did not specifically address this issue separately, as the assessment was already quashed on the grounds of invalid jurisdiction. However, it was implied that this procedural lapse further supported the assessee's position.

4. Addition of Rs. 13,86,385/- as Undisclosed Income:
The A.O had made an addition of Rs. 13,86,385/- based on the differential amount between the purchase and sale agreements of a land transaction. The CIT(A) upheld this addition. However, since the Tribunal quashed the entire assessment for lack of valid jurisdiction, it did not delve into the merits of this addition. The Tribunal left the contentions regarding the merits of the addition open, as the primary issue of jurisdiction invalidated the entire assessment process.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment framed by the ITO, Ward-2(1), Bhilai, on the basis of a notice issued by a non-jurisdictional officer. The assessment was deemed invalid and devoid of legal force. Consequently, other grounds of appeal raised by the assessee were not adjudicated, and the general ground of appeal was dismissed as not pressed. The judgment emphasized the necessity of valid jurisdiction for the proper issuance of notices and framing of assessments under the Income-tax Act, 1961.

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