2020 (6) TMI 585 - AT - Income Tax

Tribunal Upholds Commissioner's Decision on Income Tax Appeal, Emphasizes Jurisdictional Compliance

Deputy Commissioner of Income Tax, Circle – 2 (2), Kolkata Versus M/s. Boast Traders Pvt. Ltd (Formerly known as ACME Pvt. Ltd.) (Vice-Versa)

The Tribunal upheld the order of the Commissioner of Income Tax (Appeals), dismissing the revenue's appeal and the assessee's cross-objection. Emphasizing ... Reopening of assessment u/s 147 - as contended by the assessee that the ITO Ward-2(2), Kolkata, had no jurisdiction over the case of the assessee, in view of the transfer of jurisdiction on the basis on Pin code - HELD THAT:- In the case on hand, the admitted fact is that the Assessing Officer who issued notice u/s 148 of the Act, had no jurisdiction over the assessee. Thus, case-law relied upon by the ld. D/R, are not applicable to the facts of this case. In the case on hand, objections were raised by the assessee u/s 124(3) of the Act, within one month of receipt of notice u/s 148 of the Act and the Assessing Officer who issued notice u/s 148 of the Act, accepted that he had no jurisdiction on this case and thus transferred the case to the ITO, Ward-4(3), who had jurisdiction. A notice issued by non-jurisdictional Assessing Officer is illegal.- Decided in favour of assessee. Issues Involved:1. Jurisdiction of the Income Tax Officer (ITO) to issue notice under Section 148 of the Income Tax Act, 1961.2. Validity of the reassessment proceedings under Section 147 of the Income Tax Act, 1961.3. Compliance with procedural requirements under Section 143(2) of the Income Tax Act, 1961.4. Legality of the assessment order passed under Section 144(1)/147 of the Income Tax Act, 1961.5. Cross-objection by the assessee supporting the order of the Commissioner of Income Tax (Appeals).Detailed Analysis:1. Jurisdiction of the Income Tax Officer (ITO) to issue notice under Section 148 of the Income Tax Act, 1961:The primary issue in this case was whether the ITO, Ward-2(2), Kolkata, had the jurisdiction to issue a notice under Section 148 of the Income Tax Act, 1961. The reassessment was initiated by the ITO, Ward-2(2), Kolkata, who issued the notice under Section 148 on 22/03/2015. The assessee objected, arguing that the ITO, Ward-2(2), Kolkata, did not have jurisdiction over the case due to a transfer of jurisdiction based on the Pin code. The ITO, Ward-2(2), Kolkata, subsequently transferred the case to the ITO, Ward-4(3), Kolkata, who issued further notices under Sections 143(2) and 142(1) of the Act. The Tribunal held that the initial notice issued by a non-jurisdictional ITO was illegal and void ab initio.2. Validity of the reassessment proceedings under Section 147 of the Income Tax Act, 1961:The reassessment proceedings were challenged on the grounds that they were initiated by an officer who lacked jurisdiction. The Tribunal referred to various case laws, including Elite Pharmaceuticals vs. ITO and S.S. Ahluwalia vs. CIT, to highlight that jurisdictional defects cannot be cured and render the proceedings null and void. As the ITO, Ward-2(2), Kolkata, had no jurisdiction to issue the notice under Section 148, the reassessment proceedings were deemed invalid.3. Compliance with procedural requirements under Section 143(2) of the Income Tax Act, 1961:The Tribunal emphasized the mandatory nature of issuing a notice under Section 143(2) by the jurisdictional Assessing Officer. In this case, the notice under Section 143(2) was issued by the ITO, Ward-4(3), Kolkata, after the case was transferred. However, the initial notice under Section 148 was issued by an officer without jurisdiction, rendering the entire reassessment process flawed from the outset. The Tribunal reiterated that procedural requirements must be strictly followed, and any deviation renders the assessment invalid.4. Legality of the assessment order passed under Section 144(1)/147 of the Income Tax Act, 1961:The assessment order passed under Section 144(1)/147 by the ITO, Ward-4(3), Kolkata, was challenged on jurisdictional grounds. The Tribunal held that since the initial notice under Section 148 was issued without jurisdiction, all subsequent proceedings, including the assessment order, were invalid. The Tribunal cited several judgments, including those from the Calcutta High Court and the Supreme Court, to support the principle that actions taken by an authority without jurisdiction are void ab initio.5. Cross-objection by the assessee supporting the order of the Commissioner of Income Tax (Appeals):The assessee filed a cross-objection supporting the order of the Commissioner of Income Tax (Appeals), who had held that the reassessment proceedings were without jurisdiction and bad in law. The Tribunal, having upheld the CIT(A)'s order, dismissed the cross-objection as infructuous.Conclusion:The Tribunal upheld the order of the Commissioner of Income Tax (Appeals), dismissing the revenue's appeal and the assessee's cross-objection. The Tribunal emphasized the importance of jurisdictional compliance and procedural correctness in reassessment proceedings. The judgment reaffirms that any action taken by an authority without proper jurisdiction is null and void, and procedural lapses cannot be cured post facto.