2025 (2) TMI 649 - AT - Income Tax

Reassessment Proceedings Quashed: Invalid Jurisdiction Under Section 147 r.w.s. 148; Transfer Procedures Not Followed Properly.

The Court ruled in favor of the assessee, determining that the reassessment proceedings initiated under section 147 r.w.s. 148 were invalid due to a lack ... Reopening of assessment u/s 147 - transfer of jurisdiction from one Income Tax Officer to another - Validity of order of the Income Tax Officer, Exemption, Ward, Ghaziabad - HELD THAT:- We find that the Income Tax Officer, Ward 3(2), Bulandsahar, was having the records of the assessee when he received the AIR information. It appears that the ITO Bulandsahar found out that the assessee is madarsa, a registered society, so the proper jurisdiction belonged to Income Tax Officer, Ward-Exemption, Ghaziabad and consequently transferred the records of the assessee to Income Tax Officer, Ward-Exemption, Ghaziabad on 08.04.2018. We however, note that after transferring the case records to the Income Tax Officer, Ward- Exemption, Ghaziabad, the Income Tax Officer, Ward 3(2), Bulandsahar issued notice u/s 148 on 26.03.2018. Thereafter, the Income Tax Officer, Ward-Exemption, Ghaziabad completed the assessment u/s 144/147 of the Income Tax Act on 25.10.2018. There is serious lapse in following the law. We find that this is a case where the AO [ITO Ward 3(2), Bulundsahar] has transferred the case of the assessee from Bulundsahar to Ghaziabad [ITO Ward-Exemption), Ghaziabad]. Subsequent to the transfer from his office, the ITO Ward 3(2), Bulundsahar issued notice u/s 148. Furthermore, we find that the Revenue has not established that the ITO Ward 3(2), Bulundsahar had valid jurisdiction over the assessee for issuance of the notice u/s 148. Once the jurisdiction of the Income Tax Officer for issuance of notice u/s 148 is not established, the entire subsequent proceedings become invalid in the eyes of law. We accordingly hold that the re-assessment made is without jurisdiction and quash the order of the Income Tax Officer, Exemption, Ward, Ghaziabad. Grounds of the assessee are allowed. The issues presented and considered in the legal judgment are as follows:1. Whether the reassessment proceedings initiated under section 147 r.w.s. 148 and the subsequent assessment order were legal and within jurisdiction.2. Whether the transfer of jurisdiction from one Income Tax Officer to another was done following proper procedures.3. Whether the additions made to the income of the assessee were based on valid grounds and evidence.4. Whether the order passed by the National Faceless Appeal Centre (NFAC) was against the principles of natural justice.Issue-wise detailed analysis:Issue 1:Relevant legal framework and precedents: Section 147 r.w.s. 148 of the Income Tax Act.Court's interpretation and reasoning: The Court found that the reassessment proceedings were initiated without proper jurisdiction as the Income Tax Officer had transferred the case to another officer before issuing the notice under section 148.Key evidence and findings: The transfer of case records from one Income Tax Officer to another.Application of law to facts: The Court determined that the lack of jurisdiction of the Income Tax Officer who issued the notice under section 148 rendered the subsequent proceedings invalid.Conclusions: The Court held that the reassessment made was without jurisdiction and quashed the order of the Income Tax Officer.Significant holdings:- The Court found that the lack of established jurisdiction for issuing the notice under section 148 invalidated the reassessment proceedings.- The Court allowed the grounds of the assessee and quashed the order of the Income Tax Officer, ruling in favor of the assessee.In conclusion, the legal judgment analyzed the validity of reassessment proceedings, the transfer of jurisdiction between Income Tax Officers, the basis for additions to the income of the assessee, and the adherence to principles of natural justice in the order passed by the NFAC. The Court ultimately ruled in favor of the assessee, holding that the reassessment was without jurisdiction and quashing the order of the Income Tax Officer.