ITAT JAIPUR:- QUASHES REASSESSMENT ORDER DUE TO NOTICE WAS ISSUED BY   AO NOT HAVING JURISDICTION

QUASHES REASSESSMENT ORDER DUE TO NOTICE WAS ISSUED BY   AO NOT HAVING JURISDICTION

Sunil Chablani

Versus

Circle (Intl.Tax) (ITAT Jaipur)

Appeal No. I.T.A no. 68/JP/2024

Date of Judgement/Order : 22/07/2024

Background:

The assessee, Sunil Chablani, contested the issuance and jurisdiction of a notice under Section 148 of the Income Tax Act. Chablani had not filed an Income tax return for the year in question, despite having sold an immovable property for ₹69,90,000 for A.Y 2018-19. The revenue issued a notice u/s 148 on Dt 30.03.2022, after obtaining approval from the PCIT, Udaipur, which was served via email. Chablani challenged the notice’s validity, asserting his status as a non-resident (NRI) and questioning the jurisdiction of the ITO, Ajmer. The tribunal reviewed the evidence and confirming his NRI status. and found that the Income Tax Officer, Ajmer, lacked the proper jurisdiction and reassessment notices must be issued by appropriately authorized officers. Consequently, the tribunal quashed the reassessment order.

Important Paras

Para 11. In the rejoinder the ld. AR of the assessee submitted that the issue of jurisdiction was first taken up the assessee has challenged the issue of notice itself and therefore, merely the return is not filed the non-jurisdictional AO has no power to issue and regularize the illegal jurisdiction and thereby the assessment. The ld. AR of the assessee filed a detailed rejoinder to the submission made by the ld. AO through the ld. DR and the same is reproduced herein below

“Para wise comments/rejoinder follows as:

1. In response to the contention that the AO had no jurisdiction, it was contended that after coming to know from the assesse only, the jurisdiction of the case was transferred to DCIT, CIRCLE (INTL. TAX), Jaipur and it was the duty of the assessee to disclose correct
   • (Reply Para 1) It is submitted that in fact the AO is rather trying to avoid the real It’s a fact that the assessee cannot change the jurisdictional detail (PB-1 17), (PB-11-105) however the AO is silent as to precisely what is the date on which he transferred the jurisdiction or further how AO himself can transfer unless there is a Notification by the competent authority transferring the jurisdiction from ITO WD-2, Ajmer to the International Taxation but unfortunately no detail has been supplied. Also there is absolutely no comment made by them on the PAN profile which shows the jurisdictional detail as DCIT, International Taxation which is not within the control of the assessee. Exactly when international taxation is shown or was changed from ITO Ajmer to that, has not been explained by the AO. Further the assessee has duly discharged its duty while uploading the details for the passport, wherein PAN No,, as required by the concerned authority (in para 2.9 page 2 of passport Application Form) was duly filled in. Now it is internal affair of the two ministries /departments, which is beyond the control of the assessee. Pertinently, the very starting point and the very base of the present impugned proceeding u/s 148A are the registered sale deed dated 28.07.2017 (PB 26-39) showing the sale consideration of Rs. 69.90 lakh, referring to which only, allegation of non- disclosing of LTCG is made by the AO. Interestingly, in the first few lines of above sale deed only at internal page 1 (PB 30), it is stated that the appellant (the seller) was residing at Dubai, UAE during that relevant point of time. Thus, it was very well known to the Department that the appellant had been residing at Dubai, therefore, the correct jurisdiction rested with the international taxation.

• (Reply Para 1) Further on the aspect of S. 124(3), the Id. DR completely failed to controvert the submissions and the case laws cited in our revised WS dated 05.2024, which are once again relied upon.

2. (Reply Para 2) With regard to the contention of the issuance of the impugned notice u/s 148 after 04.2022 and hence the same was barred by limitation, it is solely an internal affair of the department as to when the notice digitally signed on 30.03.2022 is instantly entered and transmitted in the ITBA system. Also, the notice is instantly transmitted to the e-filing portal of the assessee under e-proceedings. However, when one looks upon the e-portal at the relevant place, there appears no date and time of uploading the impugned notice u/s 148 after digitally signing. In any case, the Hon’ble Allahabad High Court in the case of Daujee Abhushan Bandar (2022) 136 com 246 (DC 23- 35) has already considered same very contention but in that case the notice, having been sent on the registered e-mail id only on 06.04.2021, was held time barred as limitation expired on 31.03.2021, which is also a case here. Interestingly, the DR also cited the same very decision. Hence, the repeated contention that the digitally signed notice entered in the computer resource outside the control of the originator on Wednesday, 30.03.2022 at 4:55 PM cannot be accepted. Consequently, the impugned notice firstly, was barred by limitation u/s 148 and secondly, no valid approval as required from the PR CCIT/DGIT was not obtained. Hence, it was invalid.

3. (Reply para 4) The repeated allegation of non-cooperation and not furnishing of evidences is completely contrary to the facts on record. The appellant being an NRI, for last several years was not able to manage his affairs and therefore, all evidences were filed before the DRP as evident from paper of index (PB16) and the relevant documents were even referred to by the AO itself in the assessment order pursuant to the directions of the DRP who sent all those papers vide its directions u/s 144C(5) to the AO.
4. Reply Para 5) As regards absence of DIN on the direction u/s 144C(5), the Ld. DR has ignored that subsequent mentioning of DIN number is not the solution. The fact is that on that direction order, DIN was mentioned manually and told to appellant vide separate Precisely, such situation has been dealt in the case of Ashoka Commercial Enterprise vs ACIT (2023) 334CTR757 (Bom.) in Pr18 (DC 127).
5. (Reply para 7) The Ld. DR has very clearly misread the date of the Notification as 03.2023 as against the correct date of 29.03.2022 (PB104) and impugned notice was issued next day on 30.03.2022 without complying with the said Notification. There no other adverse comment/argument raised by the Ld. DR.
6. Thus, all the contentions raised by the Ld. DR in the reply are of no substance, either on legal side or on facts and therefore, the appeal of the SAC, appellant deserves to be allowed on all

The above submissions have been made based on the instructions and the information provided of/by the client.” The ld. AR of the assessee submitted that ITO, Ajmer has accepted the fact that the assessee is NRI and therefore, he himself transferred the case record. In support the ld. AR of the assessee relied upon the PAN profile filed and copy of order sheet entries filed by the ld. DR. As regards the issue and service of notice the same is not correct. Notice was emailed on 13.04.2022. So the notice issued is beyond three years’ time and the approval of the CCIT is also not obtained.

Para 12. We have heard the rival contentions and perused the material placed on record. In this appeal the assessee has taken almost in all 11 grounds of appeal challenging the finding of the lower authority on facts as well as on legal grounds. In ground no. 1 & 2 the assessee has challenged the validity of issue of notice and connected approval together with the jurisdiction of the ld. AO who issued the notice to the assessee. Since this ground no. 1 & 2 goes into the route of all other grounds the bench decided to deal that ground first.

Para 12.1 The facts related to the disputes as cullied out from the record is that the assessee for the year under consideration has not filed any income tax return. The revenue was in possession of the information that the assessee had sold an immovable property for a sale consideration of Rs. 69,90,000/-.

Since there was no ITR filed the transaction remained unverified. Accordingly, after recording the reasons for escapement assessment, a notice u/s 148 of the Act was issued to the assessee on 30.03.2022 with prior approval taken from the PCIT, Udaipur. That notice dated 30.03.2022 was served to the assessee on 13.04.2022 through email and for that the assessee filed the copy of the mail issued by ITO, Ajmer. Since, the assessee has taken the issue of jurisdiction as well as service of the notice the ld. DR was upon request given time to seek comments on the legal issue raised by the assessee. The ld. AO submitted a report / comment on the case vide his letter dated 24.05.2024 wherein the ld. AO contended that the assessee was non-filer and his residential status was not known to the AO and the initial proceedings were carried out by the then AO on the basis of PAN Card details available with him. Thus, the ld. AO did not controvert the fact that the assessee is NRI as per his PAN profile filed and has simply relied upon the fact that the ld. AO did not know the status of the assessee and based on that aspect, he assumed jurisdiction. The ld. AO also reported that the assessee was having the opportunity to challenge the jurisdiction within time limit. He went on further that since the assessee failed to do so, after completing the assessment proceedings, the assessee cannot take liberty to challenge the jurisdiction. As regards the service of notice the ld. AO submitted that “In this matter, limitation to issue notice u/s. 148 of the Act was going to be expired on 31.03.2022. Accordingly, notice was issued to the assessee through the ITBA system on 30.03.2022 itself. In this regard, a copy of a system generated note sheet showing the chronological events of the assessment proceedings of this case are enclosed herewith. The entry dated 30.03.2022 appearing in the note sheet shows that notice u/s 148 of the Act was issued to the assessee on 30.03.2022. As such, the minimum requirement to initiate the reassessment proceedings u/s 148 of the Act fulfils appropriately.” The ld. AO as regards the service of notice relied upon the decision of Hon’ble Allahabad High Court.

Para 12.2 The assessee in the paper book filed submitted copy of pass port which was valid from 16.03.2015 to 13.03.2025 and place of issue is Dubai (APB-18), at page 20 the details of old passport and place of issue shows Dubai. At page 17 of the paper book the jurisdictional details of the assessee is filed it shows the “Circle (Intl.Tax), Jaipur. Thus, the ld. AO while sending this report based on the submission has not controverted this aspect of the matter which establishes that the residential status of the assessee is undisputedly NRI as on the date of issue of notice u/s. 148 of the Act. Thus, based on this evidence placed on record and the same being not controverted we are of the considered view that when the assessee is non-resident as on the date of issue of notice u/s. 148 of the Act. The bench further noted from order sheet entry dated 16.03.2023 that Faceless Assessment Unit (FAU) requested through NaFAC to transfer out this case from them because the case is of non-resident individual or of a foreign company and can be assessed only at international charge. Thus, the contention raised by the assessee has already been observed by the FAU in the assessment proceeding when the case was transmitting from ITO, Ajmer to FAU. In the light of these facts we are of the considered view that the ITO, Ward-2(2), Ajmer has no jurisdiction when the notice u/s. 148 was issued on 30.03.2022. Therefore, the in order to sustain the validity of the reassessment, a reassessment notice is required to be issued by an Assessing Officer having proper jurisdiction over the assessee to whom such notice has been issued. Based on the evidence placed on record and after giving sufficient time to the revenue to rebut the contention based on the set of evidence placed on record, but revenue could not demonstrate that when the notice issued on 30.03.2022, ITO, Ward 2(2), Ajmer, has valid jurisdiction.

In the light of this fact, we quash the order of the assessment and ground no. 1 & 2 raised by the assessee is allowed.

Para 12.3 Ground no. 4, 5 & 6 are related to the merits of the case wherein the ld. AR of the assessee submitted before us that the additional evidence filed by the assessee has already been admitted by the ld. DRP and ld. AO did not consider even the original cost of the property sold for which all the evidence placed on record and the assessee has provide before the ld. DRP that there is no income left to charge the tax by filling the computation of capital gain but the ld. AO in the draft order taken one stand and after the direction of the ld. DRP added the sum without considering the fact and without issuing any fresh show cause notice. Thus, the order of the assessing officer is perverse and required to be quashed.

Para 12.4 Ground no. 3 relates the DRP proceedings, ground no. 7 general in nature, ground no. 8 relates not mentioned of the DIN in DRP order, ground no. 9 relates to consider the assessment in faceless manner and ground no. 11 is charging of tax u/s. 115BBE of the Act. Since we have allowed the appeal of the assessee on technical grounds, all these other grounds raised by the assessee becomes educative in nature.