Assessment Order Quashed Due to Jurisdictional Error

The Tribunal quashed the assessment order as the notice under Section 143(2) was issued by a non-jurisdictional Assessing Officer, rendering the assessment proceedings void ab initio. The appeal by the assessee was allowed, and the Revenue's appeal was dismissed. The Tribunal emphasized that jurisdictional errors in issuing notices cannot be cured, invalidating subsequent assessment proceedings.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO)
2. Computation of cost of acquisition and construction
3. Exemption under Section 54 of the Income-tax Act
4. Validity of capital gains computation

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO):
The primary issue raised by the assessee was the jurisdiction of the AO who issued the notice under Section 143(2) of the Income-tax Act. The assessee, being a non-resident Indian, contended that the notice should have been issued by the ITO (International Taxation) and not by the ITO, Ward 52(5), Delhi. The Tribunal agreed with the assessee, stating that the issuance of the notice by a non-jurisdictional AO is not a mere irregularity but an illegality that renders the entire assessment proceedings void ab initio. This conclusion was supported by precedents from the Hon'ble Supreme Court and various High Courts, which held that jurisdictional errors in issuing notices cannot be cured under Section 292BB of the Act.

2. Computation of Cost of Acquisition and Construction:
The Revenue challenged the CIT(A)'s method of computing the cost of acquisition as of 01.04.1981 based on data from the Ministry of Urban Development instead of relying on documents from the Department of Archives. The Revenue also argued that the cost of construction of the property should have been taken at NIL. However, the Tribunal did not delve into these merits due to the jurisdictional issue that invalidated the entire assessment.

3. Exemption under Section 54 of the Income-tax Act:
The Revenue contended that the CIT(A) erred in holding that the number of residential units in a residential building is not relevant for granting exemption under Section 54, ignoring the specific amendment made by the Finance Act, 2014. Again, this issue was rendered moot due to the jurisdictional defect identified.

4. Validity of Capital Gains Computation:
The assessee argued that the CIT(A) erred in recomputing additions for Long Term and Short Term Capital Gains without appreciating that no property was sold during the relevant year and no sale consideration was received. The assessee also claimed that the valuation of land as of 01.04.1981 was erroneously decreased without referring the matter to the DVO and without providing an opportunity to rebut. The Tribunal did not address these substantive issues due to the foundational jurisdictional error.

Conclusion:
The Tribunal quashed the assessment order on the grounds that the notice under Section 143(2) was issued by a non-jurisdictional AO, making the entire assessment proceedings void ab initio. Consequently, the appeal filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed as infructuous. The Tribunal emphasized that jurisdictional errors in issuing notices cannot be cured and render subsequent assessment proceedings invalid.

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