2023 (5) TMI 276 - AT - Income Tax

Tribunal voids reassessment order for lack of jurisdiction, stresses importance of valid notice

Shri Deepak Garg Versus DCIT, Central Circle, Karnal.

The Tribunal quashed the reassessment order under Section 143(3) read with Section 147, deeming it void ab initio due to an invalid notice under Section ... Reopening of assessment u/s 147 - Income Tax Officer, Ward-1, Panipat jurisdiction over the assessee issuing the notice - HELD THAT:- Delhi Bench of the Tribunal considered similar situation in the case of Hari Dass Singla Vs. ITO [2022 (6) TMI 1348 - ITAT DELHI] wherein the Tribunal following the co-ordinate bench decision in the case of Mukesh Kumar Vs. ITO [2015 (6) TMI 1142 - ITAT, DELHI] decided the issue in favour of the assessee holding that notice issued by the AO being without jurisdiction has no legal sanctity. Notice issued u/s 148 by the Income Tax Officer, Ward-1, Panipat, since had no jurisdiction over the assessee when the notice was issued the notice is bad in law and consequently the re-assessment framed u/s 143(3) r.w.s. 147 pursuant to such notice by the DCIT, Central Circle, Karnal, is void ab initio. Therefore, the re-assessment order passed under section 143(3) read with section 147 of the Act is hereby quashed. Decided in favour of assessee. Issues Involved:1. Validity of reassessment proceedings under Section 143(3)/147 of the Income Tax Act, 1961.2. Jurisdiction of the Assessing Officer to issue notice under Section 148.3. Addition of Rs.19,35,001/- on account of alleged undisclosed investment in jewellery.4. Procedural lapses and violation of principles of natural justice.Summary:Validity of Reassessment Proceedings:The assessee challenged the reassessment proceedings on the grounds that the notice issued under Section 148 was invalid and the reopening of assessment under Section 147 was without jurisdiction, making the assessment order void ab initio. The Tribunal held that the notice under Section 148 was not issued by the jurisdictional Assessing Officer, rendering the reassessment void ab initio. The Tribunal relied on the Supreme Court's decision in Y. Narayana Chetty v ITO, which emphasized the necessity of a valid notice under Section 148 for reassessment proceedings.Jurisdiction of the Assessing Officer:The Tribunal observed that the original assessment was completed by the Income Tax Officer, Ward-2, Panipat, whereas the notice under Section 148 was issued by the Income Tax Officer, Ward-1, Panipat, who did not have jurisdiction over the assessee. There was no record of an order under Section 127 transferring jurisdiction to Income Tax Officer, Ward-1, Panipat. Consequently, the reassessment proceedings initiated by an officer without valid jurisdiction were held to be invalid.Addition on Account of Undisclosed Investment:The Tribunal did not delve into the merits of the addition of Rs.19,35,001/- under Section 69 for alleged undisclosed investment in jewellery, as the reassessment proceedings themselves were quashed on jurisdictional grounds.Procedural Lapses and Natural Justice:The assessee argued that the Assessing Officer did not provide a certified copy of the reasons recorded for reopening the assessment and did not dispose of the objections raised by the assessee. The Tribunal noted these procedural lapses but did not address them in detail, given the primary decision on jurisdictional grounds.Conclusion:The Tribunal quashed the reassessment order passed under Section 143(3) read with Section 147, holding it void ab initio due to the invalid issuance of the notice under Section 148 by an officer without jurisdiction. All other grounds raised on merits were not addressed as they became academic. The appeal of the assessee was allowed.Order Pronounced:The order was pronounced in the open court on 04/05/2023.