Court quashes notice under Income Tax Act due to jurisdictional error

The court allowed the petition, quashing the notice issued under Section 148 of the Income Tax Act, 1961, and all subsequent proceedings, including the assessment order. The court found the notice invalid due to jurisdictional issues as the officer issuing the notice was different from the one who recorded the reasons for reopening the assessment. The court emphasized that the officer recording reasons and issuing the notice must be the same person, rendering the notice without jurisdiction. The court also clarified that procedural defects in a jurisdictional notice cannot be rectified under Section 292B of the Act.

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Issues Involved:
1. Jurisdiction of the officer issuing the notice under Section 148 of the Income Tax Act, 1961.
2. Validity of the notice issued under Section 148 of the Act.
3. Procedural lapses and applicability of Section 292B of the Act.
4. Participation of the petitioner in the reassessment proceedings.
5. Objections raised by the petitioner regarding jurisdiction.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the officer issuing the notice under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 29.03.2018 issued by the Income Tax Officer, Ward 2(2), Jamnagar, under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2011-2012. The petitioner contended that the notice was issued by an officer other than the one who recorded the reasons for reopening the assessment, thus making the notice jurisdictionally invalid. The court noted that the reasons for reopening were recorded by the Deputy Commissioner of Income Tax (DCIT), Circle 2, Jamnagar, while the notice was issued by the Income Tax Officer, Ward 2(2), Jamnagar, who did not have jurisdiction over the petitioner.

2. Validity of the notice issued under Section 148 of the Act:
The court referred to Section 148 of the Act, which mandates that the Assessing Officer must record his reasons for issuing a notice under this section. The court relied on the precedent set in the case of Hynoup Food & Oil Industries Ltd. v. Assistant Commissioner of Income Tax, which held that the officer recording the reasons and the officer issuing the notice must be the same person. Since the notice in the present case was issued by an officer who did not record the reasons, the court found the notice to be invalid and without jurisdiction.

3. Procedural lapses and applicability of Section 292B of the Act:
The respondents argued that the issuance of the notice by the Income Tax Officer was a procedural lapse due to the e-assessment scheme and the non-migration of the Permanent Account Number (PAN) in time. They contended that such a procedural defect would be covered under Section 292B of the Act, which allows for the rectification of procedural errors. However, the court held that since the notice under Section 148 is a jurisdictional notice, any inherent defect therein cannot be cured under Section 292B of the Act.

4. Participation of the petitioner in the reassessment proceedings:
The respondents argued that the petitioner had participated in the reassessment proceedings and had only belatedly raised objections regarding the jurisdiction of the officer issuing the notice. They contended that the petitioner should be relegated to the remedy of appeal under the relevant statutory provisions. However, the court entertained the petition given the peculiar facts of the case, where the very jurisdiction of the Assessing Officer was under challenge.

5. Objections raised by the petitioner regarding jurisdiction:
The petitioner had raised objections during the assessment proceedings regarding the jurisdiction of the officer issuing the notice. The Assessing Officer, however, proceeded with the reassessment without addressing these objections adequately. The court found that the Assessing Officer did not understand the petitioner's contention regarding the jurisdictional issue.

Conclusion:
The court allowed the petition, quashing the notice dated 29.03.2018 issued under Section 148 of the Income Tax Act, 1961, and all proceedings pursuant thereto, including the assessment order dated 28.12.2018. The court made the rule absolute with no order as to costs.

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