TaxTMI 
TaxTMI 
2025 (9) TMI 1569
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....reafter, when assessee objected the jurisdiction of the AO who was conducting enquiries, case of assessee was transferred to DCIT, International Taxation, Circle-3(1)(2), New Delhi who based on the information that the assessee has claimed Long Term Capital Gain ("LTCG") of INR 2,47,91,254/- as bogus made the addition of the same by invoking the provision of section 68 of the Act. 3. In first appeal, Ld.CIT(A) confirmed the addition made by the AO thus, the assessee is in appeal before the Tribunal by taking following grounds of appeal:- (A) "That on the facts & circumstances of the case the learned AO and CIT (A)-43 while passing the order U/s 143(3) and U/s 250 respectively erred in: i) Invoking and confirming the provisions of Sec. 68 while ignoring that the assessee was neither required nor has maintained any Books of Accounts for the relevant Assessment Year. ii) Confirming addition of Rs. 2,47,91,254/- under section 68 which was returned as Long Term Capital Gain u/s 10(38). ⅲ) Wrongly treating capital gain on sale of long-term equity shares of a listed company as income from other sources though the shares were sold through recogn....
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....es to the root of the matter: a. That the Impugned Assessment Proceedings are void ab initio as the Notice u/s 143(2) of the Income Tax Act, 1961 was issued by the Assessing Officer who was having no jurisdiction, and the Assessing Officer to whom the file was transferred at the request of the AR of the Assessee did not assume jurisdiction by issuing a Notice u/s 143(2) as required under section 143 of the Income Tax Act. The Impugned Assessment may please be quashed on this ground alone. b. That the Ld. A.O has proceeded on frivolous facts that a listed company was having a share capital of 2,40,000 shares only, and therefore, the Assessee was virtually a sole public share holder holding 50000 shares. The Ld. A.O based on this understanding only, proceeded to make the impugned addition. Ld. CIT (A) also failed to comment on this grave error in its whole Order. This tenaciously establish the Non-application of mind the lower authorities and the additions were made on complete wrong facts." 5. Before us, Ld.AR for the assessee submits that the additional grounds taken are purely legal in nature and therefore, same deserves to be admitted. 6. After considering....
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.... Ld.AR also filed detailed written submission on the additional grounds taken which is reproduced as under:- A. "The case of the assessee Meena Swarup, PAN: AMRPS5792E ("Assessee") was selected for scrutiny u/s 143(3) of Income Tax Act, 1961 ("IT Act, 1961") for the reason of selling 50,000 equity shares of M/s Parag Shilpa Investment Ltd ("Scrip") for Rs 2,52,91,230/- and claiming exemption of long-term capital gain of Rs 2,47,91,254/- u/s 10(38) of the IT Act, 1961. B. At the outset it is submitted that the case was selected for scrutiny by ITO. Ward, 30(2), Delhi by issuing a notice u/s 143(2) dated 21.09.2015. However, he was not having jurisdiction over the Assessee as the Assessee was a non-resident, which is an admitted fact by the revenue authorities and is evident from her ITR and Intimation u/s 143(1) of the Income Tax Act, 1961 for Ay 2013-14 & Ay 2014-15. C. It is a matter of fact that the DCIT, International Taxation Circle- 3(1)(2) framed the Assessment Order without issuing necessary Notice u/s 143(2) of the Act to assume the jurisdiction. Proceedings initiated by ITO Ward 30(2) are void-ab-initio hence the Impugned Order passed without ass....
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....e which falls for consideration is whether the assessing officer, who had jurisdiction over the assessee at the relevant time had issued notice under section 143(2) of the Act before taking up the scrutiny assessment under section 143(3). Before we go into the facts, we take note of the legal position as laid down by the Hon'ble Supreme Court in Asstt. CIT v. Hotel Blue Moon [2010] 188 Тахmann 113/321 ITR 362, wherein the Hon'ble Supreme Court held that omission on the part of the assessing officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with. Further, we also take note of the decision in the case of CIT v. Gitsons Engineering Co. [2015] 53 taxmann.com 108/231. Taxman 506/370 ITR 87 (Mad.), wherein it was held that the word 'shall' employed in section 143(2) of the Act, contemplates that the assessing officer should issue notice to the assessee so as to ensure that the assessee has not understated income or has not computed excessive loss or has not under paid the tax in any manner. It was further held that....
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....ssessing officer, who had jurisdiction post the said date had not issued notice under section 143(2) of the Act within the prescribed period of six months from the end of the financial year in which the return was filed. This factual position could not be controverted by the revenue before us. As pointed out by the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), non-issuance of notice under section 143(2) is not a procedural irregularity and, therefore, it is not curable. Thus, on facts, it having been established that no notice was issued under section 143(2) of the Act, the order passed by the Tribunal was perfectly legal and valid. The revenue also sought to rely upon section 292BB of the Act to justify their stand that notice is deemed to be valid and sought to bring the assessee's case under the circumstances mentioned in section 292BB. This question was considered by the Tribunal and it was pointed out that section 292BB provides that where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any of the provision of the Act, which is required to be se....
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.... g. Reliance is placed on Asstt. CIT v. Hotel Blue Moon (2010) 321 ITR 362 wherein the Hon'ble Supreme Court has held that that omission on the part of the assessing officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and therefore issuance of notice u/s 143(2) is a statutory requirement before completing the Assessment. h. It is also submitted that Hon'ble Allahabad High Court in the case of CIT v. M.I. Builders (P) Ltd [2012] 349 ITR 271 held that the notice issued by Non- jurisdictional Assessing Officer is invalid, no records can be transferred when the proceedings were invalid ab-initio, and such transfer cannot validate any proceedings taken in continuation thereof." 10. On the other hand, Ld. Sr. DR supports the order of lower authorities and submits that assessee has not challenged the jurisdiction within one month from the service of notice u/s 143(2) of the Act and therefore, in terms of provision of section 124(3) of the Act, notice issued by ITO, Ward-28(4), New Delhi [wrongly mentioned as ITO, Ward-30(2), New Delhi] in the report submitted by AO dated 24.04.2025 cannot be challenged now afte....
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....ase of the assessee was transferred to DCIT, International Taxation, Circle-3(1)(2), New Delhi and Fourth the DCIT, International Taxation, Circle-3(1)(2), New Delhi who completed the assessment. 15. Section 124(3) of the Act referred by Ld. Sr.DR, relates to the case where territorial jurisdiction is challenged however, it not for the cases where the very subject matter of jurisdiction is challenged as has been done in the present case. Thus the provisions as contained in section 124(3) of the Act are not applicable to the facts of the present case, and as such assessee can challenge the very subject matter of the jurisdiction at any stage. Hon'ble Delhi High Court in the case of Abhishek Jain vs ITO (supra) in para 22 observed that "...... As far as territorial jurisdiction or pecuniary jurisdiction are concerned, objection should be taken at the earliest possible opportunity and / or before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stand at a different footing. Therefore, territorial jurisdiction cannot be equated with lack of subject matter of jurisdiction. 16. Further it is evident from the facts that ....