2023 (4) TMI 222 - AT - Income Tax

Assessment quashed under section 143(3) due to invalid notice. Assessee's appeal allowed. Grounds for future adjudication.

Dr. Hari Singh Chandel Govt. Hospital, Champa Versus The Income Tax Officer Ward-2 (2), Bilaspur (C.G.)

The Tribunal quashed the assessment framed under Section 143(3) due to the lack of a valid notice under Section 143(2) from the jurisdictional Assessing ... Validity of order passed by the A.O u/s 143(3) - invalid jurisdiction assumed by the A.O - jurisdiction of Income-Tax Officer, Ward-1(2), Jabalpur - which AO vested with jurisdiction over the assessee’s case? - HELD THAT:- Admittedly, no order u/s.127 of the Act evidencing any transfer of the case of the assessee from the Income-Tax Officer, Ward-2(2), Bilaspur i.e. the jurisdictional Officer to the Income-Tax Officer, Ward-1(2), Jabalpur is available on the assessment record. On the contrary, as observed by us hereinabove, though the jurisdictional history of the assessee reveals that his case on 27.09.2013 was transferred from the Income- Tax Officer, Ward-1(2), Jabalpur to the Income-Tax Officer, Ward-2(2), Bilaspur, but as to on what basis the jurisdiction over his case which since last many years had remained vested with the Income Tax Officer, Ward-2(2), Bilaspur (as evidenced on a perusal of the income tax returns of the preceding years) on the first occasion was transferred to the Income-Tax Officer, Ward-1(2), Jabalpur remains an unresolved mystery till date. On a specific query by the bench as to on what basis the jurisdiction over the case of the assessee was vested with the Income- Tax Officer, Ward-1(2), Jabalpur, the Ld. DR could not give any plausible answer. Only contention of the Ld. DR was that the case of the assessee was allocated to the Income-Tax Officer, Ward-1(2), Jabalpur on the basis of PAN jurisdiction. Thus we are unable to concur with the Ld. DR that the Income-Tax Officer, Ward-1(2), Jabalpur was validly vested with the jurisdiction over the case of the assessee on the basis of allocation of his case on PAN data base. Our aforesaid view that an invalid jurisdiction assumed by the A.O cannot be held to be correct by drawing support from PAN jurisdiction is supported by the order of NVS Builders (P.) Ltd. [2018 (4) TMI 381 - ITAT DELHI] and that of Cosmat Traders P. Ltd. [2021 (4) TMI 1020 - ITAT KOLKATA] We, concur with the contention advanced by the Ld. AR that as the impugned assessment u/s. 143(3), dated 12.03.2014 had been framed de hors any valid notice issued by the jurisdictional AO i.e. Income Tax Officer, Ward-2(2), Bilaspur, therefore, the same cannot be sustained - Appeal of assessee allowed. Issues Involved:1. Validity of the assessment framed under Section 143(3) of the Income-Tax Act, 1961.2. Issuance of notice under Section 143(2) by a non-jurisdictional Assessing Officer.3. Applicability of Section 124(3) regarding the challenge to the jurisdiction of the Assessing Officer.4. Validity of the addition of Rs. 17,87,960/- as unexplained investment under Section 69.Detailed Analysis:1. Validity of the assessment framed under Section 143(3) of the Income-Tax Act, 1961:The assessee, a government employee, filed his return of income for the assessment year 2011-12, which was processed under Section 143(1). Subsequently, the case was selected for scrutiny under Section 143(2). The original assessment framed under Section 143(3) determined the income at Rs. 1,45,44,960/-. The assessee challenged the validity of this assessment on the grounds that the notice under Section 143(2) was issued by a non-jurisdictional officer, rendering the assessment invalid.2. Issuance of notice under Section 143(2) by a non-jurisdictional Assessing Officer:The notice under Section 143(2) dated 01.08.2012 was issued by the Income-Tax Officer, Ward-1(2), Jabalpur, who did not have jurisdiction over the assessee. The jurisdiction was vested with the Income-Tax Officer, Ward-2(2), Bilaspur. The notice from the jurisdictional officer was issued only on 07.01.2014, which was beyond the stipulated six-month period from the end of the relevant assessment year (30.09.2012). Therefore, the assessment framed under Section 143(3) on 12.03.2014 without a valid notice under Section 143(2) was deemed unsustainable.3. Applicability of Section 124(3) regarding the challenge to the jurisdiction of the Assessing Officer:The department argued that the assessee failed to challenge the jurisdiction within the stipulated time under Section 124(3). However, it was held that since the notice under Section 143(2) was issued by an officer who did not fall within the definition of 'Assessing Officer' under Section 2(7A), the obligation to challenge jurisdiction did not apply. The Tribunal supported this view with various judicial pronouncements, including the Hon'ble Supreme Court's judgments in ACIT v. Hotel Blue Moon and CIT v. Laxman Das Khandelwal, which emphasized the necessity of a valid notice under Section 143(2) for a valid assessment.4. Validity of the addition of Rs. 17,87,960/- as unexplained investment under Section 69:The CIT(Appeals) had sustained the addition of Rs. 17,87,960/- as unexplained investment under Section 69, while vacating other additions. However, since the Tribunal quashed the entire assessment for lack of valid jurisdiction, it did not delve into the merits of this addition. The issue was left open for adjudication if necessary in future proceedings.Conclusion:The Tribunal quashed the assessment framed under Section 143(3) dated 12.03.2014 due to the lack of a valid notice under Section 143(2) from the jurisdictional Assessing Officer. Consequently, the appeal of the assessee was allowed, and the other grounds raised were left open. The order was pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963.