Tax Tribunal Invalidates Assessment Orders Due to Lack of Section 143(2) Notices

The Tribunal found that the assessment orders for A.Y. 2012-13 and A.Y. 2013-14 were invalid and unsustainable in law due to the absence of valid notices under Section 143(2) issued by the jurisdictional Assessing Officer. As a result, the Tribunal quashed the assessment orders. The Tribunal refrained from addressing the merits of the addition made by the Assessing Officer out of agricultural income. The appeals for both assessment years were allowed based on the jurisdictional issue regarding the invalid notices.

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Issues Involved:
1. Validity of the assessment order due to non-issuance and non-service of statutory notice under Section 143(2) by the Assessing Officer (A.O) holding jurisdiction.
2. Justification of sustaining the addition made by the A.O out of agricultural income.

Detailed Analysis:

1. Validity of the Assessment Order:
Background:
The assessee, running a hotel and a club, filed its return of income for A.Y. 2012-13 and A.Y. 2013-14, declaring losses. The return was processed under Section 143(1) of the Income Tax Act, 1961. The case was later selected for scrutiny, and notices under Section 143(2) were issued by the Dy. Commissioner of Income Tax, Circle 1, Jalandhar. The assessee objected, claiming that the jurisdiction remained with the A.O, Range-IV, Jalandhar.

Contentions:
The assessee argued that the assessment framed without a valid notice under Section 143(2) by the jurisdictional A.O was invalid, relying on the Supreme Court judgment in ACIT Vs. Hotel Blue Moon. The CIT(A) rejected this, stating that the jurisdiction was with the ACIT, Circle-1, Jalandhar, and that the provisions of Section 292B would rectify any jurisdictional issues.

Tribunal's Findings:
The Tribunal observed that:
- The assessee had e-filed its return with the A.O, Range-IV, Jalandhar.
- Objections to the jurisdiction were raised timely.
- The A.O failed to refer the jurisdictional issue to the appropriate authority as required under Section 124(4).

The Tribunal highlighted several serious infirmities:
- No order vesting jurisdiction with ACIT/DCIT, Circle-1, Jalandhar, was presented.
- The statutory requirement of recording reasons for transferring the case was not fulfilled.
- The notices issued by ACIT, Circle-1, Jalandhar, were beyond the specified time period and thus invalid.

The Tribunal concluded that the assessment framed under Section 143(3) without a valid notice under Section 143(2) was invalid and not sustainable in law. The Tribunal quashed the assessment orders for both A.Y. 2012-13 and A.Y. 2013-14.

2. Justification of the Addition Made by the A.O:
Since the Tribunal quashed the assessment orders on jurisdictional grounds, it refrained from adjudicating the merits of the addition made by the A.O out of agricultural income.

Conclusion:
The Tribunal allowed the appeals for both A.Y. 2012-13 and A.Y. 2013-14, quashing the assessment orders due to the invalidity of the notices issued under Section 143(2) by the non-jurisdictional A.O. The issue of the addition made by the A.O was not addressed due to the quashing of the assessment on jurisdictional grounds.

Order Pronounced:
The order was pronounced in the open court on 15.01.2019.

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