2014 (1) TMI 1242

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....uments were found at the time of search. Those documents pertained to certain housing societies, viz., Suryamandi Co. Op. Housing Society, Manavmandir Co. Op. Housing Society and Vithalnagar Co. Op. Housing Society. On the basis of those documents, it was alleged that the assessee was involved with those societies. The assessee is an architect by profession. His statement was recorded. Thereupon it was informed that he was engaged in the planning of those societies. On that basis, the proceedings u/s. 153C was initiated against the assessee and notice u/s 153C r.w.s. 153A was issued on 11.02.2005. The assessee was directed to file the details of the investment in those societies. In compliance, the assessee has informed that being an architect he has earned only professional income. The assessee has furnished return of income along with P & L A/c and Balance-sheet. Books of account were produced for verification. For A.Y. 1998-99, it was noted by the AO that the assessee has received unsecured loans of Rs.3,20,000/- which was taxed in the hands of the assessee u/s. 68 of IT Act. For A.Y. 1999-00 an addition of Rs.9,70,000/- was made u/s. 68 of IT Act. In addition, it was also held ....

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....e the additional ground taken and accepted by the Hon'ble ITAT; the first logical step was to call for the satisfaction note. A letter No.CIT(A) GNR/Bharat J. Rao/2012-13 dated 6/9/2012 was written to the AO of the appellant, i.e. AC1T, Mehsana Circle, Mehsana directing him to attend with the following: -    i). Copy of Satisfaction recorded for initiating proceedings u/s 153C against the assessee.    ii). The copy of Appraisal Report of the group.    iii). The copies of documents and seized or found in the search proceedings which are contended to be belonging to the appellant.    iv). Copy of reply of the appellant dated 27.3.2006 filed during the course of assessment proceedings vide which he is alleged to have accepted that the received 1% of project cost from the 3 societies as consulting fees...............    8. In the absence of any satisfaction Note, I go on to examine whether even otherwise we can say that some document or asset belonging to the assessee was found and seized. The assessment orders do not refer to any of the document or asset as belonging to the appellant. The allegation is at the most that during the ....

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....e; it is held that the condition precedent for issuance of notice is not fulfilled and therefore, action taken under s. 153C of the Act stands vitiated.    The impugned notices dt. 11/2/2005 issued under s. 153C of the Act are hereby quashed and set aside. This order is being passed respectfully following the judgment of jurisdictional Hon'bie Gujarat High Court in the case of Shri Vijaybhai N. Chandrani (supra) reported in 231 CTR (Guj.) 474.    I, therefore, direct cancelling of all the assessments made for all these years." 4.1 Since, the learned CIT(A) has quashed the impugned assessment order, therefore, the Revenue is in appeal before us. 5. From the side of the Revenue Department, learned CIT-DR, Mr. T.P. Krishna Kumar appeared. He has raised a legal objection that if at all the assessee was inclined to object the jurisdiction of the AO then he should have raised the objection within a period of one month from the date on which he was served with the impugned notice. According to him, the admitted factual position was that the jurisdiction was not challenged before the AO. Even it was not challenged in the first round of appeal before learned CIT(A). ....

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....r law. In respect of an irregular exercise of jurisdiction Section 124 prescribes that the assessee has to object the same within the time prescribed, relevant portion is extracted below :-    "Unlike the 1922 Act which referred to the 'place of assessment', this section refers to the 'jurisdiction' of the AO. It is important to note the sense in which the word 'jurisdiction' is used in this context. The distinction between want of inherent jurisdiction, i.e., inherent incompetency, on the one hand, and irregular exercise or assumption of jurisdiction on the other hand, is well settled. A party may waive objection to irregular exercise or assumption of jurisdiction; but there can be no question of waiver where there is a want of inherent jurisdiction because in such a case the order must be treated as a nullity. Under this Act, if an order is made by an AO other than the one entitled to exercise jurisdiction, it may amount merely to irregular exercise or assumption of jurisdiction; and if the assessee has not objection within the time prescribed by sub-s(3), he would be deemed to have waived his objection and the order would be valid and effective. If an administrative o....