2024 (3) TMI 1119 - AT - Income Tax

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 ... Jurisdiction powers to issue Reopening notice in metro city - notice u/s 148 issued by an officer who had no jurisdiction over the Petitioner - accommodation entries of long term capital gain in penny stock - as alleged the return of income filed by the assessee is more than ₹ 30 lacs and as assessee is resident of Mumbai, the jurisdiction of the assessee lies with Astt. Commissioner of Income Tax or Dy. Commissioner of Income Tax and not with the Income Tax Officer - HELD THAT:- The instruction no.1 of 2011, dated 31st January, 2011, clearly provided that assessee being a corporate resident of metro city, having filed return of income at a loss of ₹2.73 crores, will have a jurisdiction of the Dy. Commissioner or Asst. Commissioner of Income Tax only. As decided in case of Ashok Devi Chand Jain [2022 (3) TMI 1466 - BOMBAY HIGH COURT] considering the above instruction has categorically held that the notice issued in that case by the ITO, where the income of the assessee was ₹64.34 lacs is correctly without jurisdiction. The Hon'ble High Court also held that notice under Section 148 of the Act is jurisdictional notice and any defect therein is not curable. - Decided in favour of assessee. 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 ActThe 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 ActThe 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 GainThe 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.