The ACIT, Central Cirxle-1(2), Ahmedabad V. Shri Jignesh Sudhirbhai Shah, Ahmedabad

ITA 87/AHD/2021

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which partly allowed the appeal of the assessee, Shri Jignesh Sudhirbhai Shah, for the Assessment Year 2012-13. The primary contention was regarding the jurisdiction of the Assessing Officer who issued notices under Sections 148 and 143(2) of the Income Tax Act, 1961. The CIT(A) found these notices to be invalid as the jurisdiction had been altered by a Centralisation Order under Section 127(2) of the Act, which was not adhered to by the Assessing Officer. The Tribunal dismissed the Revenue's appeal, supporting the CIT(A)'s decision and referencing precedents that emphasize the necessity of a valid notice under Section 143(2) for jurisdiction in scrutiny assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129474 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2021
• Other Referred Cases: CIT vs. Hotel Blue Moon, CIT vs. Laxman Das Khandelwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: Set aside
• Section: 147; 68; 148; 143(3); 143(1); 292BB; 143(2); 139(4)

Judgement Text

ITA No.87/Ahd/2021 Assessment Year: 2012-13 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.87/Ahd/2021 Assessment Year: 2012-13 Assistant commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. Vs. Shri Jignesh Sudhirbhai Shah, 41, Parshwa Apartments, New Sharda Mandir Road, Paldi, Ahmedabad – 380 007. [PAN – BBNPS 1083 E] (Appellant) (Respondent) Assessee by Shri Mehul K. Patel, AR Revenue by Shri Sudhendu Das, CIT (DR) Da te o f He a r in g 18.07.2023 Da te o f P ro n o u n ce m e n t 06.09.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Revenue against order dated 19.02.2021 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2012-13. 2. The Revenue has raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in law and on facts in admitting the objections raised over jurisdiction of the Assessing Officer, even though no such objection was raised by the Assessee during the course of assessment proceedings. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that the notice u/s 148 as well as non- issuance of notice u/s 143(2) by the Assessing Officer having valid jurisdiction is basis for quashing the assessment order. This is without appreciating the fact that the assessee was in default and as per section 124(3)(b) and he is not eligible to raise such objection over the jurisdiction of the Assessing Officer. 3. The ld.CIT(A) has erred in not appreciating the fact that in compliance to the notice u/s 148 dated 28.3.2019, the assessee himself submitted the Return of Income after the expiry of 30 days and also before the ITA No.87/Ahd/2021 Assessment Year: 2012-13 Page 2 of 5 Assessing Officer who has issued the notice, which is much after the order u/s 127. Therefore, this objection of the assessee is nothing but an afterthought. This plea of the assessee needs to be rejected. 3.1 During the assessment proceedings, before the Assessing Officer who issued notice u/s 148, no objection in this regard has been raised by the assessee and duly cooperated. Therefore, validity of notice cannot be challenged in view of provisions of Section 292BB of the IT. Act. 4. The order u/s 127 can only be operative for a new charge when the PAN is transferred through systems. As soon as the PAN has been received, the Assessing Officer in Central Circle immediately proceeded for further action and no objection was raised by the assessee. 5. On the facts and in the circumstances of the case and in law, the Id.CIT(A) has erred in not considering the merits of addition of account of commission income of Rs.12,36,14,940/- 6. On the facts and in the circumstances of the case and in law, the Id.CIT(A) has erred in not considering the merits of addition on account of loans and advances received and paid as shown in the bank account of Rs.43,93,000/-. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 8. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. Return of income was filed under Section 139(4) of the Income Tax Act, 1961 on 22.09.2013 declaring total income of Rs.6,05,901/-. The same was processed under Section 143(1) of the Act. Thereafter, on receipt of information from Investigation Wing, the case of the assessee was reopened after recording reasons for reopening the assessment under Section 147 of the Act for A.Y. 2012-13 by issuing notice under Section 148 on 28.03.2019. The due date for filing return of income in compliance to notice under Section 148 was 28.04.2019 but the assessee did not file the return of income on or before the said due date. Reminder notice was issued but the assessee did not file any return of income. Thereafter, show cause notice was issued to the assessee on 07.11.2019 and the assessee filed return of income on 14.11.2019 in response to notice under Section 148 of the Act. During the course of assessment proceedings, the Assessing Officer made addition of Rs.43,93,000/- under Section 68 and 69 of the Act as well as addition of Rs.12,36,14,940/- as commission income. ITA No.87/Ahd/2021 Assessment Year: 2012-13 Page 3 of 5 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT(A) was not right in admitting the objections raised over jurisdiction of the Assessing Officer, even though no such objection was raised by the assessee during the course of assessment proceedings. Notice under Section 148 as well as non-issuance of notice under Section 143(2) of the Act by the Assessing Officer having valid jurisdiction was considered by the CIT(A) without appreciating the fact that the assessee was in default and as per Section 124(3)(b) is not eligible to raise such objection over the jurisdiction of the Assessing Officer. The Ld. DR further submitted that the CIT(A) was not right in taking to account the factual aspect that in compliance to the notice under Section 148 of the Act dated 28.03.2019 the assessee himself submitted return of income after expiry of 30 days and also before the Assessing Officer who should have issued the notice which was much after the order under Section 127 of the Act. During the assessment proceedings before the Assessing Officer who issued notice under Section 148, no objection in this regard has been raised by the assessee and duly co-operated. Therefore, validity of notice cannot be challenged in view of provisions of Section 292BB of the Act. The order under Section 127 of the Act can only be operative for a new charge when the PAN is transferred through systems. As soon as the PAN has been received, the Assessing Officer in Central Circle immediately proceeded for further action and no objection was raised by the assessee. The Ld. DR submitted that the CIT(A) erred in not considering the merits of addition on account of Commission income of Rs.12,36,14,940/- and addition on account of loans and advances received and paid as shown in the bank account of Rs.43,93,000/- under Section 68 and 69 of the Act. 6. The Ld. AR relied upon the order of the CIT(A) and submitted that the jurisdictional Assessing Officer has not issued the mandatory notice and in case of CIT vs. Hotel Blue Moon, 321 ITR 362, the Hon’ble Supreme Court held that issue of a legally valid notice under Section 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment under Section 143(3) of the Act and absence of a valid notice under section 143(2) is not a curable defect. The said view was also reiterated by the Hon’ble Apex Court in the case of CIT vs. Laxman Das Khandelwal, 108 taxmann.com 183. ITA No.87/Ahd/2021 Assessment Year: 2012-13 Page 4 of 5 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee’s place of residence submitted before the revenue authorities where the ITO, Ward - 5(3)(1) Ahmedabad has territorial jurisdiction over the assessee’s case for the year under consideration i.e. A.Y. 2012-13 upto 28.02.2019 as per Section 124(1) of the Act and after which he has divested of his jurisdiction by virtue of Centralisation of Order under Section 127(2) of the Act dated 28.02.2019 passed by the PCIT-5, Ahmedabad. Thus, this is not a case that the assessee has changed its residential address or has applied for fresh PAN number. It is the Department who done the Centralisation Order under Section 127(2) of the Act and it is mandatory on the part of the Revenue to exercise correct jurisdiction once the territorial jurisdiction over the assessee’s case has been shifted Thus, the finding of the CIT(A) in respect of this issue that even Section 124(3) of the Act does not in any way help the Revenue to rectify the action of ITO, Ward – 5(3)(1), Ahmedabad in issuing notice under Section 148 of the Act as well as subsequent notice including notice under Section 143(2) to the assessee. As this exercise by the Revenue is without jurisdiction after Centralisation Order under Section 127(2) of the Act dated 28.02.2019 was passed by the PCIT-5, Ahmedabad. This internal arrangement made by the Department has been upheld by various Courts of law. Besides this, question of issuance of valid notice under Section 143(2) of the Act as raised by the assessee is reiterated in the decisions of Hon’ble Apex Court in the case of CIT vs. Hotel Blue Moon (supra) and CIT vs. Laxman Das Khandelwal (supra). Thus, the finding even by CIT(A) is correct and there is no need to interfere with the findings of the CIT(A). 8. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on this 6 th September, 2023. Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 6 th day of September, 2023 PBN/* ITA No.87/Ahd/2021 Assessment Year: 2012-13 Page 5 of 5 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad