ITO lacks jurisdiction to issue Section 148 reopening notice for corporate assessee with returns exceeding Rs. 30 lacs

The ITAT Mumbai held that a reopening notice u/s 148 issued by an ITO lacked jurisdiction over a corporate assessee resident in Mumbai with filed returns exceeding Rs. 30 lacs. Per Instruction No. 1 of 2011, such cases fall under the jurisdiction of Dy. Commissioner or Asst. Commissioner of Income Tax only. Following the Bombay HC precedent in Ashok Devi Chand Jain, the tribunal ruled that s. 148 notices are jurisdictional and defects therein are incurable. The appeal was decided in favor of the assessee.

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Issues Involved:
1. Validity of jurisdiction assumed by the AO u/s 147 of the Act.
2. Legality of the assessment order due to non-issue of valid notice u/s 143(2) of the Act.
3. Confirmation of addition made u/s 68 of the Act regarding long-term capital gain.

Summary:

Issue 1: Validity of Jurisdiction Assumed by the AO u/s 147 of the Act
The assessee challenged the validity of the jurisdiction assumed by the AO u/s 147 of the Act. The CIT(A) confirmed the jurisdiction by relying on judgments without establishing their applicability to the appellant's facts. The Tribunal admitted an additional ground that the notice u/s 148 was invalid as it was issued by an Income Tax Officer (ITO) without jurisdiction. The Tribunal referred to the Bombay High Court decision in Ashok Devi Chand Jain, which held that a notice issued by an officer without jurisdiction is invalid. Consequently, the Tribunal quashed the assessment order.

Issue 2: Legality of the Assessment Order Due to Non-Issue of Valid Notice u/s 143(2) of the Act
The assessee contended that the assessment order was invalid as no valid notice u/s 143(2) was issued for the return filed in response to the notice u/s 148. The CIT(A) dismissed this ground, stating that the notice u/s 143(2) was issued within the prescribed time limit after the return was filed. The Tribunal did not address this issue further as the appeal was allowed on the additional ground of invalid jurisdiction.

Issue 3: Confirmation of Addition Made u/s 68 of the Act Regarding Long-Term Capital Gain
The CIT(A) confirmed the addition of Rs. 2,53,74,801/- made u/s 68 of the Act, treating the long-term capital gain on the sale of shares of Nouveau Global Ventures Ltd. as non-genuine. The CIT(A) relied on the decision of the Kolkata High Court in Swati Bajaj, disregarding the jurisdictional High Court's binding decision cited by the appellant. The Tribunal did not delve into this issue as the appeal was allowed on the jurisdictional ground.

Conclusion:
The Tribunal quashed the assessment order based on the additional ground that the notice u/s 148 was issued by an officer without jurisdiction, rendering the order invalid. Other grounds of appeal were left open.

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