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IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH “B”, LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER
ITA No.756 & 757/LKW/2011
Assessment Years:2007-08 & 2008-09
Dy. CIT
Range VI, Lucknow
(Appellant)
Shri. Ram Agarwal
559/Kha/258-A, Srinagar
Singarnagar, Alambagh, Lucknow
TAN/PAN:ADOPA9503B
(Respondent)
C.O.Nos. 01 & 02/LKW/2012
[ in ITA No.756 & 757/LKW/2011]
Assessment Years:2007-08 & 2008-09
Shri. Ram Agarwal
559/Kha/258-A, Srinagar
Singarnagar, Alambagh,
Lucknow
TAN/PAN:ADOPA9503B
(Cross-Objector)
Department by:
Assessee by:
Date of hearing:
Date of pronouncement:
v.
v.
Dy. CIT
Range VI, Lucknow
(Respondent)
Shri. Y.
Shri. K.
12 11
08 01
P. Srivastava, D.R.
R. Rastogi, Advocate
2014
2015
ORDER
PER SUNIL KUMAR YADAV:
These appeals are preferred by the Revenue against the
respective order of the ld. CIT(A), inter alia, on the following grounds:GROUNDS IN I.T.A. No. 756/LKW/2011:
1.
The CIT(A) has erred in law and on facts of the case is not
appreciating that the assessee voluntarily filed his return of income
at Kashipur for A.Y. 2007-08 giving a local residential address and
therefore, the jurisdiction was with ITO, Kashipur
2.
The CIT(A) has erred in law and on acts and failed to appreciate that
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the assessee's representative complied with the notice u/s!48 and
asked for the reasons and on the subsequent date of hearing he has
stated that the return filed earlier may be treated as return filed
u/s!48. Further, he has not challenged/objected to the AO's
jurisdiction, as the provisions of section 292BB of the I.T. Act, before
the completion of assessment.
3.
The CIT(A) has erred in law and on facts in failing to appreciate that
an order u/s!27 was passed after completion of the assessment by
the CIT, Haldwani transferring the jurisdiction of CIT-II, Lucknow.
This clearly shows that till such order jurisdiction was with ITO,
Kashipur.
GROUNDS IN I.T.A. No. 757/LKW/2011:
1.
The CIT(A) has erred in law and on facts of the case and failed to
appreciate that the return of income for A.Y. 2008-09 was e-filed.
The assessee's representative complied with the notice u/s 148 an
[asked, for the reasons and on the subsequent date of hearing he
has stated that the return filed earlier may be treated as return filed
u/s!48. Further he has not challenged/objected to the AO's
jurisdiction, as per the provisions of section 292BB of the I.T. Act,
1961 before the completion of assessment.
2.
The CIT(A) has erred in law and on facts in failing to appreciate that
an order u/s 127 was passed after completion of the assessment by
the CIT, Haldwani transferring the jurisdiction of CIT-II, Lucknow.
This clearly shows that till such order jurisdiction was with ITO,
Kashipur Appellant crave leaves to add or amend any one or more of
the grounds of appeals, as stated above, as and when need to doing
so arises with the prior permission of the Hon'ble Court
2.
The assessee has also filed cross objections assailing the orders of
the ld. CIT(A), inter alia, on the following grounds:GROUNDS IN C.O. No. 01/LKW/2012:
:-3-:
1.
That the Ld. C.I.T. (A)-II, Lucknow did not appreciate that the
Appellant is a Contractor and filed the Return as per provisions of
section 44AD of the Income Tax Act at an Income of Rs. 146810-00
on a turnover of Rs.1820510-00. However, due to writing error Rs.
18020510-00 mentioned in the return.
2.
The Ld. C.I.T. (A) did not appreciated that Ld. A.O. had estimated
the income at Rs.1502840-00 and making an addition of Rs.
1356030-00 against the income shown Rs. 146810-00 as per
provisions of section 44AD of I. T. Act on a turnover of Rs.182051000 being 8.06%.
3.
The Ld. C.I.T. (A) did not appreciated that Ld. A. 0. erred on facts
and in law in adding Rs. 858843-00 u/s 68 of I. T. Act inspite of the
fact, deposits with P. N. B., Bank Account Number 45340001402223
are the business receipts/ transfer of funds for which income has
been shown as per provisions of section 44 AD of I. T. Act.
4.
The Ld. C.I.T. (A) did not appreciate that there was a reasonable
cause for not making the proper compliance, as appellant is residing
at Lucknow and his C.A. had not giving correct legal advice and
information about the case.
GROUNDS IN C.O. No. 02/LKW/2012:
1.
The Ld. C.I.T. (A)-II, LKO. did not appreciated that Ld. A. O. made
the addition of Rs. 141068-00 being disallowance of Depreciation,
inspite of the fact, Net Profit from Contract Work has been shown at
Rs.382576-00 out of Gross Receipts of Rs.3852648/-.
2.
The Ld. C.I.T. (A)-II, LKO. did not appreciated that Ld. A. O. erred on
facts and in law in making an addition of Rs. 108560-00 as
Unsecured Loan.
3.
The Ld. C.I.T. (A)-II, LKO. did not appreciated that Ld. A. O. erred on
facts and in law in making addition of Rs.4108952-00 as Sundry
Creditors.
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4.
The Ld. C.I.T. (A)-II, LKO. did not appreciated that Ld. A. O. erred on
facts and in law in making addition of Rs.514595-00 as Peak Cash
Deposits in Bank, inspite of the fact, the deposits were made out of
the withdrawals and funds received from Contract Work.
5.
The Ld. C.I.T. (A)-II, LKO. did not appreciated that Ld. A. O. did not
appreciated that there was a reasonable cause for not making the
proper compliance, as appellant is residing at Lucknow and his C.A.
had not giving correct legal advice and information about the case.
3.
In both the appeals, the issue is almost common; therefore, we deal
with the facts involved in I.T.A. No. 756/LKW/2011.
4.
During the course of hearing of the appeal, the ld. counsel for the
assessee has invited our attention that the assessment was reopened under
section 147 of the Income-tax Act, 1961 (hereinafter called in short “the
Act") by issuing notice under section 148 of the Act by the Income Tax
Officer-III, Kashipur.
The said notice was served by affixture at the
address of the assessee at Kashipur and the assessment was completed
under section 147/144 of the Act.
5.
Before the ld. CIT(A), assessee has took a plea that the Income Tax
Officer-III, Kashipur has no jurisdiction over the assessee, as the assessee
is an old Income-tax assessee and assessed to tax vide PAN –
ADOPA9503B, which is under the jurisdiction of Income Tax Officer-IV(3),
Lucknow. Therefore, the notice issued under section 148 of the Act was
issued by an Officer having no jurisdiction over the assessee. Thus, the
assessment framed consequent thereto deserves to be annulled.
6.
The ld. CIT(A) re-examined the facts in the light of assessee’s
contentions and was of the view that undisputedly the assessee was
assessed to tax vide PAN – ADOPA9503B, which is under the jurisdiction of
the Income Tax Officer-IV(3), Lucknow. It was also observed by the ld.
CIT(A) that before the impugned assessment year, the assessments were
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framed by the Income Tax Officer, Lucknow, as the returns were filed with
JCIT, Range IV, Lucknow. Even after the impugned assessment year, the
return for assessment year 2008-09 was filed with the JCIT, Range IV,
Lucknow on 23.2.2008 and was processed under section 143(1) of the Act
by Shri. Virendra Singh, Income Tax Officer –IV(3), Lucknow.
The ld.
CIT(A) further held that since Income Tax Officer-III, Kashipur has no
jurisdiction over the assessee, the notice issued by him under section 148
of the Act is not valid, therefore, the assessment framed consequent
thereto is to be annulled.
7.
Aggrieved, the Revenue has preferred an appeal before the Tribunal
and has placed reliance upon the assessment order; whereas the ld.
counsel for the assessee, besides placing reliance upon the order of the ld.
CIT(A), has contended that for framing assessment under section 147 of
the Act, issuance of valid notice under section 148 of the Act by a
competent Officer is a condition precedent. When valid notice is not served
upon the assessee, the assessment framed consequent thereto deserves to
be annulled, as the same is not sustainable in the eyes of law.
8.
Having given a thoughtful consideration to the rival submissions and
from a careful perusal of the orders of the authorities below, we find that
undisputedly the assessee has been filing returns of income with JCIT,
Range IV, Lucknow and the ld. CIT(A) has observed in his order that
returns of income for assessment years 2000-01 to 2006-07 were filed with
JCIT, Range IV, Lucknow. Even for assessment year 2008-09, the return
was filed with JCIT, Range IV, Lucknow and it was processed under section
143(1) of the Act by the Income Tax Officer-IV(3), Lucknow. The Income
Tax Officer-III, Kashipur has issued notice under section 148 of the Act on
the basis of the return incorrectly filed with him by the assessee, but before
issuing notice to the assessee, the Assessing Officer should have verified
from the PAN whether he has jurisdiction over the assessee, and if it I
found that the return is not filed with the concerned Assessing Officer, the
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return filed with him should have been forwarded to the concerned
Assessing Officer. Otherwise, the return filed with him cannot be called to
be a valid return and is non est in law. In any case, the Assessing OfficerIII, Kashipur has no jurisdiction over the assessee to issue notice under
section 148 of the Act for reopening the assessment under section 147 of
the Act. Since the notice issued under section 148 of the Act is to be held
invalid, the assessment framed consequent thereto cannot be held to be
valid and deserves to be annulled.
9.
We have carefully examined the order of the ld. CIT(A) and we find
that the ld. CIT(A) has elaborated all the relevant facts in his order and in
the light of various judicial pronouncements, he has rightly adjudicated that
the notice issued by the Income Tax Officer-III, Kashipur is not a valid
notice, as it was issued by an Officer having no jurisdiction over the
assessee.
The relevant observations of the ld. CIT(A) are reproduced
hereunder for the sake of reference:-
“4(3) I have examined the facts and circumstances of the case. I
have considered the facts and circumstances of the case,
submissions of the appellant and the impugned assessment order.
From the submissions made before me and copies of documents
filed before me, I find the following facts, which are material to the
decision on the issue at hand:1. The appellant has residence at Lucknow at 559/Kha/258A,
Srinagar, Sringarnagar, Alambagh, Lucknow.
2. The PAN number of the appellant is ADOPA9503B and the
jurisdiction of the appellant lies with Range-VI, Lucknow
3. Return of income for the assessment year 1999-2000 was filed
with ACIT-2(3), Lucknow on 11.02.2000 showing income of Rs.
55,000/-.
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4. Return of income for the assessment year 2000-2001 was filed
with JCIT, Range-4, Lucknow on 03.09.2001 showing income of
Rs. 62,300/-.
5. Return of income for the assessment year 2001-2002 was filed
with JCIT, Range-4, Lucknow on 03.09.2001 showing income of
Rs. 66,100/-.
6. Return of income for the assessment year 2002-2003 was filed
with JCIT, Range-4, Lucknow on 31.07.2002 showing income of
Rs. 68,970/-.
7. Return of income for the assessment year 2003-2004 was filed
with JCIT, Range-4, Lucknow on 17.11.2003 showing income of
Rs. 1,86,8257-.
8. Return of income for the assessment year 2004-2005 was filed
with JCIT, Range-4, Lucknow on 25.10.2004 showing income of
Rs. 1,67,105/-.
9. Return of income for the assessment year 2006-2007 was filed
with JCIT, Range-4, Lucknow on 31.07.2008 showing income of
Rs. 2,37,600/- and was processed under section 143(1) of the Act
and refund of Rs. 8,215/- was issued by Shri R.D. Shukla, ITOIV(3), Lucknow.
10. Return of income for the assessment year 2008-2009 was filed
with JCIT, Range-4, Lucknow on 23.10.2008 showing income of
Rs. 2,37,600/- and was processed under section 143(1) of the Act
on 10.05.2009 and refund of Rs. 15,590/- was issued by Shri
Virendra Singh, ITO-IV(3), Lucknow.
4(4) It would appear from the facts narrated above that the
jurisdiction of the assessee lies with Range -IV, Lucknow (RangeVI, Lucknow post change of jurisdiction). However, the notice
under section 148 of the Act has been issued and served by
affixture at Kashipur by the Income Tax Officer-3, Kashipur.
Before, I examine the legality of assessment completed by the
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Income Tax Officer-3, Kashipur, it is imperative to examine the
status of return of income for the impugned assessment year
2007-2008 which was filed by the appellant on 24.03.2008 at
Kashipur showing total income of Rs. 1,46,810/-. Hon'ble Apex
Court in the case of Industrial Trust Vs CIT (1973) 91 ITR 550 (SC)
held that a return filed before an officer who held no jurisdiction
over assessee is a non-est return. Accordingly, the return of
income filed by the assessee at Kashipur was itself without
jurisdiction and was a non-est return in the eyes of Law. In other
words, the said non-est return of income filed by the assessee at
Kashipur for the impugned assessment year 2007-2008 did not
provide a valid jurisdiction to the ITO-3, Kashipur to act on the said
return. The ITO-3, Kashipur did not get the jurisdiction to act on
the said return of income in absence of an order under section 127
of the Act transferring the jurisdiction of the assessee from
Lucknow to Kashipur merely because the assessee had filed a
return without jurisdiction which was non-est in the eyes of Law.
4(5) The question that now needs to be examined is whether the
ITO-3, Kashipur had jurisdiction over the assessee and therefore
was the ITO-3, Kashipur justified in issuing a notice under section
148 of the Act and completing the assessment thereafter. The
facts narrated above clearly show that the jurisdiction over the
case of the appellant les at Lucknow. The issuance of notice under
section 148 of the Act by the ITO-3, Kashipur was without
jurisdiction. Hon'ble ITAT, Lucknow examined the issue in the case
of M.I. Builders (P) Ltd. Vs ItO (2008) 115 ITD 419 (LUC) and laid
down as under "27. In the instant case, the assessment has been framed by Addl.
CIT. Range-1, Lucknow in pursuance to the notice issued Under
Section 148(1) by the ACIT. Range-IV. Lucknow. Even though the
Addl. CIT. Range-1, Lucknow held jurisdiction over the assessee to
frame the assessment but as the initiation of reassessment
proceedings Under Section 148(1) are bad in law, therefore,
reassessment so framed cannot be held to be legally valid. Hon'ble
P&H High Court in Lt. Col. Paramjit Singh v. CIT (Supra), relied on
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in the ld. A.R. of the assessee, held that reassessment framed by
an officer having no jurisdiction would be invalid. In that case the
notice was issued Under Section 148(1) by ITO. Jalandhar to
reassess the assessee for the assessment year 1988-89 but it was
quashed by Hon'ble P&H High Court, on the ground that assessee
is being assessed regularly at Pune and his case has not been
transferred from Pune to Jalandhar even though, the assessee has
shifted his residence from Pune to Jalandhar. Similarly, Hon'ble
Gauhati High Court in Naginmara Veneer and Saw Mill Pvt. Ltd. v.
DCIT (Supra), relied on by the l.d. A.R. of the assessee, held that
notice issued Under Section 148(1) by DCIT was invalid as he did
not have jurisdiction to do so even though his ITO did have
jurisdiction to issue such notice.
28. The argument of Learned D.R. that since the assessee has not
objected to the assessment framed for the assessment year 200102 and, therefore, ACIT. Range-IV. Lucknow can validly issue
notice Under Section 148(1) is not sustainable in law. As discussed
above, protection of the proceedings and assessment thereafter on
account of failure of the assessee to object within the time allowed
Under Section 124(3) is available to specific proceeding and not to
every proceedings. Erroneous assumption of jurisdiction cannot, in
general, be validated. Such validation is specific in Section 124(3).
Secondly, principles of estoppel are not applicable to Income tax
proceedings. What may be acceptable or held in one year or in one
proceeding cannot be in general held to be applicable to other
proceedings. It is held by Hon'ble Gujarat High Court in Anant Mills
Ltd. v. CIT (Supra) that estoppel is not applicable to successive
assessments. In any case, estoppel cannot be made applicable to
assumption of jurisdiction. It has to be specifically provided in the
statute. We, therefore, do not find any force in the arguments in
this regard submitted by the Learned D.R. The same are,
therefore, rejected. So far as the merit of the case is concerned, in
our considered view they arc merely academic as reassessment is
cancelled as having been initialed without jurisdiction.
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29. As a result, we hold that the issuance of notice Under Section
148(1) by ACIT, Range-IV. Lucknow was without jurisdiction and
therefore, invalid. The assessment framed on that basis by Add/.
CIT. Range-1. Lucknow will also be invalid and therefore, is
cancelled. The appeal of the assessee is therefore, allowed."
Similar findings were given by Hon'ble ITAT, Delhi Bench 'F' in the
case of ITO Vs Naseman Farms (P) Ltd (2011) 45 SOT 99
(Delhi)(URO) wherein it was held by the hon'ble court that the
Assessing Officer at Agra not being Assessing Officer qua assessee
, he could not have assessed or reassessed any escaped income of
the assessee for the year under consideration under section 147
and he could not have served assessee with a notice under section
148 for the year under consideration. It was also laid down that
section 292BB of the Act did not cure jurisdictional defect in notice.
Similar findings were given by Hon'ble ITAT, Delhi Bench 'E' in the
case of Mehta Brothers Vs ITO in ITA No. 2822 and 2861/Del of
2008 as under Since, in the present case, the jurisdiction over the assessee was
lying with ITO, Delhi, he should have issued a fresh notice u/s 148
of the Act after receiving the information from ITO, Jammu instead
of proceeding directly to complete the assessment by issuing
notice u/s 143(2) on 30.8.2007. Since the notice u/s 148 issued by
ITO, Jammu is without jurisdiction inasmuch as ITO, Jammu had
no jurisdiction to assess the present assessee, the very assessment
completed by the AO, New Delhi, on the basis of the notice issued
u/s 148 by the AO, Jammu would invariably be without jurisdiction
inasmuch as no valid proceedings u/s 148 has been issued by the
AO, Delhi having jurisdiction over the present assessee. Therefore,
on this legal ground, assessment made by the AO, New Delhi, is
void ab initio and without jurisdiction. We, therefore, cancel the
assessment refer now to the decision of Hon'ble High Court of
Kerala in the case of P.A. Ahammed Vs CIT (2006) 282 ITR 334
(Kerala) where it has been held as under: -
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'IT authorities-transfer of case-jurisdiction of AO-Explanation to s.
127 clarifies that 'case' means the entire proceedings under the
Act-When a transfer is effected the entire files, old as well as
pending, and the returns filed get transferred to the new officer to
whom the file is transferred-Contention of the petitioner that the
earlier officer continues to retain jurisdiction to made assessments
even after transfer of raid files to another officer has no merit-Two
AOs cannot retain concurrent jurisdiction over the same assessee
in any case."
4(6) The cases of the appellant for the earlier Assessment Years
have been completed by AO having jurisdiction at Lucknow. The
impugned assessment for Assessment Year 2007 -2008 has been
completed by ITO-3, Kashipur without jurisdiction. I therefore find
that the ITO-3, Kashipur has, completed the assessment in the
case of the appellant even though the jurisdiction vested with AO
at Lucknow. The ITO-3, Kashipur had no jurisdiction to either issue
any notice under section 148 of the Act to the appellant or
complete the assessment framed by him under section 144 of the
Act in pursuance of notice issued under section 148 of the Act. The
assessment framed without jurisdiction is void-ab-initio. Relying on
the decision of Hon'ble Courts supra, I annul the assessment
framed by the ITO-3, Kashipur as the notice issued under section
148 of the Act was without jurisdiction. The grounds of appeal are
allowed.”
10.
Since we do not find any infirmity in the order of the ld. CIT(A), we
confirm the same.
11.
Similar is the position in I.T.A. No. 757/LKW/2011. In that case, the
return of income was e-filed and the assessment was reopened on the
basis of AIR information received by the Income Tax Officer-III, Kashipur
and additions were made in the hands of the assessee. It was contended
before the ld. CIT(A) that the return for assessment year 2008-09 was filed
with the JCIT, Range IV, Lucknow and it was also assessed under section
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143(1) of the Act by the Income Tax Officer-IV(3), Lucknow. Since the
Assessing Officer having jurisdiction over the assessee was Income Tax
Officer-IV(3), Lucknow, notice issued under section 148 of the Act by
Income Tax Officer-III, Kashipur is not a valid notice, therefore, the
assessment framed consequent thereto is not valid and deserves to be
annulled.
On the similar facts, we have taken a view in the foregoing
appeal that the notice under section 148 of the Act is not valid, as it was
issued by an Officer having no jurisdiction over the assessee and therefore
the assessment framed consequent thereto deserves to be annulled.
Therefore, in this case also we uphold the order of the ld. CIT(A), who has
annulled the assessment, following the view taken in foregoing appeal.
12.
Since the appeals of the Revenue are dismissed, the cross objections
of the assessee become infructuous and are dismissed.
13.
In the result, appeals of the Revenue and cross objections of the
assessee are dismissed.
Order was pronounced in the open court on the date mentioned on
the captioned page.
Sd/[A. K. GARODIA]
ACCOUNTANT MEMBER
Sd/[SUNIL KUMAR YADAV]
JUDICIAL MEMBER
DATED:8th January, 2015
JJ:1812
Copy forwarded to:
1.
2.
3.
4.
5.
Appellant
Respondent
CIT(A)
CIT
DR
Assistant Registrar