Notice under Section 148 issued without jurisdiction is invalid; assessment under Sections 147 and 144 quashed

The ITAT Lucknow held that the notice issued under section 148 by the AO lacking jurisdiction was invalid. The AO at Bareilly, despite locating the assessee's PAN post non-compliance, had no jurisdiction as the assessee's correct jurisdiction was with the AO at Lucknow. The transfer of proceedings after the limitation period expired did not cure the jurisdictional defect. Consequently, the assessment completed by the AO at Lucknow under section 147 read with section 144 was quashed as bad in law. The ground challenging the reopening was allowed.

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ISSUES:

Whether a notice under section 148 of the Income Tax Act, 1961 issued by an Assessing Officer (AO) lacking jurisdiction is valid and can sustain reassessment proceedings.Whether concurrent jurisdiction exists between different Assessing Officers in issuing notices under section 148.Whether failure to raise objection to jurisdiction within the prescribed period bars the assessee from later challenging the jurisdiction of the AO issuing the notice.Whether the addition on account of alleged undisclosed investment is justified on the merits.Whether principles of natural justice were violated by not affording adequate opportunity to the assessee during the proceedings.

RULINGS / HOLDINGS:

Notice under section 148 issued by an AO who did not have jurisdiction over the assessee is "void ab initio" and the subsequent reassessment proceedings are "bad in law" and must be quashed.Concurrent jurisdiction of AOs is not automatic and must be established by proper assignment or transfer under statutory provisions; mere mention of an address in a sale deed does not confer jurisdiction.Objection to jurisdiction under section 124(3) of the Income Tax Act can be raised within one month of service of notice, but jurisdictional challenge can be raised at any time, including in appeal or execution, especially if the notice is issued by an incompetent officer.The addition on merits was upheld by the lower authorities due to failure of the assessee to satisfactorily explain the source of investment; however, this issue became infructuous after quashing the assessment on jurisdictional grounds.Failure to afford proper opportunity was not pressed before the appellate tribunal and thus was dismissed as infructuous.

RATIONALE:

The legal framework is grounded in the provisions of sections 120, 124, 127, 142, 143, 144, 147, and 148 of the Income Tax Act, 1961, which regulate jurisdiction, issuance of notices, and reassessment procedures.Precedents from the Hon'ble Supreme Court and various High Courts emphasize that issuance of notice under section 148 is a condition precedent for reassessment and must be done by the AO having jurisdiction over the assessee; otherwise, the notice and consequent proceedings are void.Judgments relied upon include the jurisdictional High Court decision in PCIT-2, Lucknow vs. Mohd Rizwan, which held that a Designated Officer authorized only to collect AIR information cannot issue a valid notice under section 148 if not the jurisdictional AO.The principle of estoppel applies where the assessee provides an incorrect address, but this does not extend to conferring jurisdiction where statutory provisions assign jurisdiction to a particular AO based on principal place of business or residence.The decision clarifies that locating PAN after issuance of notice does not validate a notice issued without jurisdiction.Concurrent jurisdiction requires formal assignment under section 120(4)/(5) or transfer under section 127; it is not presumed by mere existence of multiple addresses or information sources.The ruling distinguishes and does not follow the judgment of Abhishek Jain vs. ITO-55(1), which was found to be per incuriam in light of binding jurisdictional High Court authority.

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