Tribunal quashes reassessment order due to procedural errors

The Tribunal quashed the reassessment order dated 10.03.2016, passed under section 144 read with section 147, due to an invalid notice issued by a non-jurisdictional officer. The appeal was allowed, declaring the reassessment proceedings null and void, emphasizing the violation of natural justice principles and procedural irregularities.

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Issues Involved:
1. Validity of the notice issued under section 148 by a non-jurisdictional Assessing Officer.
2. Validity of the reassessment order passed under section 144 read with section 147.
3. Compliance with principles of natural justice.
4. Jurisdictional challenges and procedural irregularities.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under section 148 by a non-jurisdictional Assessing Officer:
The primary issue raised by the assessee was the validity of the notice issued under section 148 by the Income Tax Officer (ITO), Ward-1(1), Puducherry, who did not have jurisdiction over the assessee. The Tribunal observed that the jurisdiction over the assessee, a business entity with a name starting with 'M', lay with the ITO, Ward-4, Puducherry. Despite this, the notice under section 148 was issued by ITO, Ward-1(1), Puducherry, and later, the case was transferred to ITO, Ward-4, Puducherry, without any formal order under section 127 or notice under section 129. The Tribunal concluded that the notice issued by the non-jurisdictional officer was invalid and the consequent reassessment order was void ab initio.

2. Validity of the reassessment order passed under section 144 read with section 147:
The reassessment order dated 10.03.2016 was passed by ITO, Ward-4, Puducherry, based on the notice issued by ITO, Ward-1(1), Puducherry. The Tribunal highlighted that the reassessment proceedings initiated by a non-jurisdictional officer and completed by another officer without issuing a fresh notice under section 148 or section 143(2) were invalid. The Tribunal relied on precedents from the Gujarat High Court and Calcutta High Court, which held that reassessment notices issued by officers without jurisdiction are not mere irregularities but are fundamentally flawed, rendering the reassessment proceedings null and void.

3. Compliance with principles of natural justice:
The assessee argued that the principles of natural justice were violated as there was no proper opportunity given before passing the impugned order. The Tribunal noted that the reassessment order was passed ex-parte and out of time, without jurisdiction, and without following the prescribed procedure. The Tribunal emphasized that any order passed in violation of natural justice principles is considered a nullity in law.

4. Jurisdictional challenges and procedural irregularities:
The Tribunal addressed the jurisdictional challenges raised by the assessee, noting that the jurisdiction of an Assessing Officer is determined by orders under sections 120, 124, and 127 of the Income Tax Act. The Tribunal found that the ITO, Ward-1(1), Puducherry, did not have jurisdiction over the assessee, and there was no formal order transferring the case to ITO, Ward-4, Puducherry. The Tribunal referenced multiple judicial precedents to support the conclusion that reassessment orders based on invalid notices are void.

Conclusion:
The Tribunal quashed the reassessment order passed under section 144 read with section 147, dated 10.03.2016, as it was based on an invalid notice issued by a non-jurisdictional officer. The appeal filed by the assessee was allowed, and the reassessment proceedings were declared null and void. The order was pronounced in the open court on 29th July 2022.

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