2024 (5) TMI 961 - AT - Income Tax

ITO Ward 69(1) New Delhi lacked jurisdiction to issue section 148 notice, invalidating reopening assessment proceedings

Saroj Sangwan C/o The Tax Chambers, Advocates & Legal Advisors Versus ITO, Ward-4 (1), Gurgaon, Haryana.

Saroj Sangwan C/o The Tax Chambers, Advocates & Legal Advisors Versus ITO, Ward-4 (1), Gurgaon, Haryana. - [2024] 120 ITR (Trib) 287 (ITAT [Del]) Issues Involved:1. Validity of the order passed by Ld. CIT(A).2. Confirmation of addition made by the AO u/s 143(3)/144.3. Violation of principles of natural justice.4. Validity of reassessment proceedings u/s 148.5. Assumption of jurisdiction for issuing notice u/s 148.6. Validity of reopening assessment proceedings u/s 148.7. Sufficiency of material for issuing notice u/s 148.8. Mechanical approval of reassessment.9. Issuance and service of notice u/s 143(2).10. Jurisdictional validity of notice u/s 148.11. Invocation of provisions relating to unexplained money.12. Demand creation based on AIR information.13. Initiation of penalty proceedings u/s 271(1)(c).Summary:1. Validity of the order passed by Ld. CIT(A):The assessee challenged the order of the Ld. CIT(A) as erroneous, arbitrary, without jurisdiction, illegal, and bad in law.2. Confirmation of addition made by the AO u/s 143(3)/144:The Ld. CIT(A) confirmed the addition of Rs. 12,50,000/- made by the AO on account of cash deposits treated as unexplained money.3. Violation of principles of natural justice:The assessee argued that the assessment order was arbitrary, without mentioning any section for the addition of unexplained money, and disregarded the return of income and responses filed.4. Validity of reassessment proceedings u/s 148:The reassessment proceedings and the impugned order were claimed to be void-ab-initio and not sustainable on the touchstone of section 148.5. Assumption of jurisdiction for issuing notice u/s 148:The notice u/s 148 was argued to be invalid as the necessary ingredients for exercising jurisdiction u/s 147/148 were not satisfied.6. Validity of reopening assessment proceedings u/s 148:The Ld. CIT(A) erred in confirming the reopening of assessment proceedings as valid, despite the notice being issued by an AO without jurisdiction over the appellant.7. Sufficiency of material for issuing notice u/s 148:The notice u/s 148 was claimed to be issued without cogent material or evidence, relying solely on AIR information, which was insufficient to assume valid jurisdiction.8. Mechanical approval of reassessment:The satisfaction recorded by the ACIT and PCIT was argued to be mechanical and without application of mind, vitiating the assessment.9. Issuance and service of notice u/s 143(2):The appeal was decided on merits without appreciating that notice u/s 143(2) was neither issued nor served, rendering the reassessment void.10. Jurisdictional validity of notice u/s 148:The notice u/s 148 was issued by a non-jurisdictional AO, making the assessment order framed u/s 144/147 bad in law and void-ab-initio.11. Invocation of provisions relating to unexplained money:The AO was argued to have erred in invoking provisions relating to unexplained money.12. Demand creation based on AIR information:The demand of Rs. 6,34,970/- was claimed to be based on gross negligence by the AO, treating AIR information of cash deposits as unexplained money.13. Initiation of penalty proceedings u/s 271(1)(c):The AO was argued to have erred in initiating penalty proceedings u/s 271(1)(c).Judgment:The Tribunal found that the notice u/s 148 issued by ITO, Ward 69(1), New Delhi, was without jurisdiction as the jurisdiction was vested with ITO, Ward 4(1), Gurgaon. The reassessment made by ITO, Ward 4(1), Gurgaon, based on the invalid notice, was quashed. Ground nos. 5 & 6 were allowed, and other grounds were not adjudicated as they became academic in nature. The appeal was partly allowed.