Income Tax Appellate Tribunal - Delhi
Shri Ranjeet Singh vs Asstt. Commissioner Of Income-Tax on 13 June, 2008
ORDER
K.D. Ranjan, Accountant Member
1. These cross appeal by the assessee and Revenue arise out of order of the ld. CIT (Appeals)-XXX, New Delhi. These appeals were heard together and for the sake of convenience are disposed of by this consolidated order.
2. The first issue for consideration in assessee's appeal relates to assumption of jurisdiction under Section 147 of the I.T. Act. The facts of the case stated in brief are the notice under Section 148 of the Act was issued for assessment year 1098-99 on 30th March. 2005 by Income-tax Officer, Ward : 2(2). Ghaziabad. In response to the notice it was submitted by the assessee that he had filed return with the Dy. Commissioner of Income Tax Circle 21(2) Delhi and was being regularly assessed by him. However, it was stated that return filed originally may be treated a return filed in response to notice under Section 147 of the Act. Thereafter the file was transferred by Income-tax Officer. Ward : 2 (2), Ghaziabad, to the Dy. Commissioner of Income-tax. Circle 40 (1). New Delhi. The DCIT. Circle: 40(1) New Delhi passed assessment order on 31st March, 2006.
3. The assessee challenged the assessment on the grounds of jurisdiction before the ld. CIT (Appeals). It was stated that the assessee filed return of income for assessment year 1998-99 declaring total income at Rs. 2,72,089/- and the said income was assessed as such vide intimation dated 29/06/1999 under Section 147(1)(a) of the Act issued by DCIT, Circle : 21(2), New Delhi. It was also stated that in the reasons recorded the reassessment proceedings were initiated on wrong notion and belief which arc contrary to the facts on record. The assessing officer had recorded the following reasons:
The assessee Shri Ranjeet Singh has received a sum of Rs. 25,80,678/- against acquisition of land on 28/01/1998 and has also received interest of Rs. 13,04,939/- on 11/02/1998. Shri Ranjeet Singh has also made FDRs in the names of his family members and interest on such FDRs is assessable in his hand. Since, the assessee has not filed return for the assessment year 998-99 disclosing interest income and capital gain. I have reason to believe that income of Rs. 13,04,939/- on account of interest received and capital gain on the sale of land has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961.
In view of reasons recorded as above it was submitted that the income byway of capital gains was not chargeable to tax as agricultural land did not fall within the purview of Section 2(14) of the Act defining the term 'capital asset'. It was also submitted that on interest of Rs. 13,04,939/- tax deducted at source amounting to Rs. 1,46,153/- was claimed in the return of income filed before DCIT and credit for the same has been allowed in the intimation dated 29/0671999. The assessee was granted a refund of Rs. 95,686/-. Therefore, there was no concealment of income. Since the assesses had already filed return of income admitting income earned from compensation, reopening of assessment was done contrary to the facts as mentioned in the reasons recorded. This contention of the assessee was, however, rejected by the ld. Commissioner of Income-tax on the ground that the assessing officer was in possession of information on the basis of which he came to the conclusion that income of the assessee had escaped assessment. He accordingly upheld the re-opening of the assessment.
4.1 Before us the ld. AR of the assessee, Shri Salil Kapoor. assailed the reopening of assessment on the grounds of assumption of jurisdiction under Section 147 of the Act. He submitted that the notice under Section 148 was issued by Income-tax Officer. Ward : 2 (2), Ghaziabad, whereas the assessee was regularly assessed in New Delhi. For assessment year 1998-99 the return was filed in Delhi, which was processed under Section 143(1)(a) of the Act on 29/06/1999. Copy of the return and intimation is placed at page Nos. 37 and 38 of the paper-book filed by the assessee. It was also submitted that the assessee is employed in Indian Air Force as Senior Auditor and is residing in Delhi. In 200S when the notice was issued by the ITO. Ward: 2 (2) Ghaziabad, the jurisdiction was that of the assessing officer in Delhi. The assessee owned agricultural lands in Ghaziabad. Merely because the assessee owned lands in Ghaziabad, the assessing officer at Ghaziabad could not exercise jurisdiction. Since the assessee was assessed in Delhi, the ITO, Ward: 2 (2) issued notice under Section 148 of the Act without any jurisdiction and. therefore, the assumption of jurisdiction is had in law. It was also submitted that the notice under Section 148 has been issued by the ITO with the approval of the id. Commissioner of Income-tax. Under Section 151 (2), it is the Jt. Commissioner of Income-tax, whose satisfaction is required before the notice under Section 148 of the Act is issued. The approval given by the ld. Commissioner of Income-tax cannot be treated as given by the Jt. CIT/Addl. Commissioner of Income-tax. On the basis of these submissions, it has been argued that the assumption of jurisdiction was bad in law and consequently the assessment framed is ab initio void.
4.2 On the other hand, the ld. DR submitted that the proposal of the assessing officer was routed through the office of the Addl. Commissioner/Jt. Commissioner. Without routing the file through the Addl. CIT/JCIT and recording of his satisfaction the Id. Commissioner of Income-tax could not have recorded his satisfaction. Therefore, the requirements of Section 151(2) are satisfied. It was also submitted that the jurisdiction of the assessing officer cannot be challenged by the assessee as per Sections 120(2) and 120(3) of the Act. The jurisdictional issue cannot defeat the provisions of Section 4. the charging section. She placed reliance on the following decisions:
(1) Hindustan Transport Company v. Inspecting Assistant Commissioner of Income-tax 189 ITR 326 (All);
(2) Reckit Colman of India Ltd. and Anr. v. ACIT 252 ITR 550 (Cal); & (3) B.R. Industries Ltd. v. CIT and Ors. 255 ITR 593 (Del).
She further submitted that any defect in the notice issued under Section 148 will not be fatal to assessment proceedings in view of provisions of Section 292B of the Act.
5. We have heard both the parties and perused the material available on record. We have also gone through the relevant assessment records. In this case notice under Section 148 of the Act was issued by Income-tax Officer, Ward: 2 (2), Ghaziabad on 30th March, 2005. From the reasons recorded in form No. ITNS 10. we find that the approval to reopen assessment was granted by ld. CIT, Ghaziabad on 30th March, 2005, which was routed through the office of Addl. CIT, Range: 2, Ghaziabad. The proposal was sent by the assessing officer on 28th March, 2005. From the records we also find that the return of income for assessment year 1998-99 was filed with the DCIT, Circle : 21(2), New Delhi, on 9/0671999. The DCIT. Circle: 21(2) processed the return of income Under Section 143(1)(a) vide intimation dated 29/0671999 granting refund of Rs. 95,686/-. These facts are not in dispute.
6. The assessee in response to notice dated 30th March, 2005 filed reply dated 21st April, 2005 stating that he was assessed to tax with DCIT, Circle : 21(2), New Delhi and the return for assessment year 1998-99 was filed with him vide acknowledgement number 001006. The assessee was regular tax-payer and was assessed in Delhi. However, it was staffed that the return already filed with DCIT, Circle: 21(2), New Delhi, might be treated as a return in response to notice under Section 148 of the Act. Thereafter, the counsel of the assessee filed vide letter dated 29/09/2005 enclosing the zerox copies of returns for assessment year 1998-99 to assessment year 2005-06. in support of his contention that the assessee was assessed to tax in Delhi. The ITO. Ward: 2(2), Ghaziabad vide his letter dated 6/12/2005 transferred the case records to the ITO. Ward : 40(1), Connaught Circus, New Delhi, for further action at his end. Thereafter the present assessing officer issued notice for the first time on 21" December, 2005 to the assessee requiring him to file information/details for completion of the assessment. He did not issue any fresh notice under Section 148 of the Act.
7. From these facts it is clear that the assessee was assessed to Income-tax in Delhi and as on 30th March. 2005. The ITO. Ward: 2 (2). Ghaziabad, did not have any jurisdiction over the assessee. Therefore, the notice issued under Section 148 of the Act by the Income-tax Officer, Ward: 2 (2), Ghaziabad. is without jurisdiction. Further under Section 149 of the Act, no notice under Section 148 shall be issued for the relevant assessment year if four years, but not more than six years have elapsed from the end of relevant assessment year unless income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 1,00,000/- or more for that year. Therefore, notice under Section 148 could be issued for assessment year 1998-99 upto 31st March, 2005. The present assessing officer when received the relevant file from Income-tax Officer, Ward : 2(2), Ghaziabad containing material for proceedings initiated under Section 147 in December, 2005, the time of six years had already elapsed, Therefore, he could not have issued further notice under Section 148 of the Act. Accordingly, the assessment framed on the basis of notice issued without jurisdiction is bad in law and does not have legs to stand. The contention of Revenue that the proposal was routed through the file of the Addl. Commissioner is of no help when the assessing officer including the ld. Commissioner and Addl. Commissioner of Income-tax were not having jurisdiction over the case of the assessee on the date when the proposal was sent to the ld. CIT, Ghaziabad. Another contention of the ld. DR is that the assessee cannot challenge the jurisdiction of the AO within the meaning of Section 120. Section 120 of the Act confers jurisdiction on Income-tax authorities as per the procedure prescribed therein. Sub sections (2) and (3) of Section 120 do not automatically confer jurisdiction on territorial basis in respect of person already assessed to tax under the jurisdiction of other Chief Commissioner. The assessee was assessed in the charge of CCIT, Delhi. No orders were passed by the C.B.D.T. empowering the assessing officer or the ld. Commissioner to exercise jurisdiction over the assessee. The assessee has intimated the assessing officer that he was assessed to tax with DCIT Circle 21(2) New Delhi. Therefore, this contention of the Revenue docs not have any merits.
8. The ld. Sr. DR has placed reliance on the decision of Hon'ble Allahabad High Court in the case of Hindustan Transport Company v. Inspecting Assistant Commissioner of Income-tax 189 ITR 326 (All) wherein it has been held that no appeal lies as to the jurisdiction after the assessment. This decision of the Hon'ble Allahabad High Court is not applicable to the facts of the case before us. The assessee has raised the objection immediately after issue of the notice that he was assessed to tax by the DCIT, Circle: 21(2), New Delhi and in fact the file containing notice Under Section 148, reply filed by the assessee. information received by the ITO Ghaziabad etc. was transferred to the assessing officer having jurisdiction over the case. Therefore, it is incorrect on the part of the Sr. DR. to plead that after assessment the assessee cannot take objection to the jurisdiction. In this case the assessee had taken objection to jurisdiction from very beginning of 147 proceedings. She has also placed reliance on the decision of the Hon'ble Calcutta High Court in the case of Reckit Colman of India Ltd. and Anr. v. ACIT 252 ITR 550 (Cal). In this case the Chief Commissioner of Income-tax assigned jurisdiction to the Assistant Commissioner. TDS, Circle : 21 (2) to deal with all the matters relating to all sections contained in Chapter XVII in respect of all persons, who were or could come within the jurisdiction of Jt. Commissioner of Income-tax. The decision of this case is also not applicable as neither the Chief Commissioner of Income-tax nor the C.B.D.T. have assigned jurisdiction over the assessee to the Income-tax Officer, Ward : 2 (2), Ghaziabad. Another case relied upon by the ld. DR is of Hon'ble Delhi High Court in the case of R.R. Industries Ltd. v. CIT and Ors. 255 ITR 593 (Del). In this case the order passed by the ld. Commissioner of Income-tax, Delhi-1, assigning the jurisdiction was challenged by was of Writ Petition. The ratio of this decision is also not applicable as no jurisdiction was assigned to ITO, Ward: 2 (2). Ghaziabad. The ld. DR also contended that the defect in the notice can be ignored under Section 292-B of the Act. Section 292-B of the Income-tax Act, 1961 says that no return of income, assessment, notice, summons or other proceedings etc. shall be invalid, or shall be deemed to be invalid merely by reason of any mistake or defect or omission in such return of income, assessment, notice, summons or other proceedings, if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or in according to the intent and purpose of this Act. The notice issued by the ITO, Ward : 2 (2). Ghaziabad, is not in substance and effect in conformity with the provisions of Section 120 read with Section 147 of the Act. The notice was issued without jurisdiction. Therefore, the provisions of Section 292-B will not be of any help to the Revenue. The provisions of Section 292-B could have been invoked if the ITO, Ward: 2 (2) Ghaziabad, was having jurisdiction over the assesses and some mistake was committed in the notice issued by him under Section 148. Therefore, we do not find any force in the argument of the ld. DR.
9. In view of the above facts, we are of the considered view that the notice issued by the Assessing Officer. Ward: 2(2), Ghaziabad, was without jurisdiction and consequentially the assessment made is bad in law and deserves to be quashed.
10. We order accordingly.
11. Since we have quashed the assessment on jurisdiction, we do not feel it necessary to decide the other grounds of appeal on merits.
12. Now coming to the Revenue's appeal, which relates to deleting the addition of Rs. 25,80,678/- made on account of capital gains arising out of acquisition of land by the Government. Since we have quashed the assessment on the ground of jurisdiction, the appeal filed by the Revenue becomes infructuous and dismissed as such.
13. In the result, the appeal filed by the assessee is allowed and the Revenue is dismissed.
Order pronounced in the open court on 13.06.2008.