January 2023
Reassessment — Notice u/s 148 — Validity — Condition precedent for notice — Notice should be issued by the AO who has jurisdiction over assessee.
K. B. Bhujle, Advocate
67. Charu K. Bagadia vs. ACIT
[2022] 448 ITR 563 (Mad.)
A.Y.: 2011-12
Date of order: 27th June, 2022
Sections: 147 and 148 of ITA, 1961
Reassessment — Notice u/s 148 — Validity — Condition precedent for notice — Notice should be issued by the AO who has jurisdiction over assessee.
The appellant-assessee’s return of income for the A.Y. 2011-12 was processed u/s 143(1) of the Income-tax Act, 1961. Thereafter, after five years, she received a notice dated 28th March, 2018 issued by the first respondent u/s 148 for reassessment. In response, she submitted a reply dated 26th April, 2018 stating that the first respondent has no jurisdiction to issue such a notice u/s 148 of the Act and therefore, she requested that the reassessment proceedings be dropped. Subsequently, the first respondent transferred the files pertaining to the appellant to the second respondent. Thereafter, the second respondent continued the reassessment proceedings by issuing a notice dated 14th December, 2018 u/s 143(2) r.w.s. 129, directing the appellant to appear and file return of income to the notice u/s 148 of the Act along with supportive documents.
The Appellant filed a writ petition and challenged the validity of notices. The Single Judge of the Madras High Court dismissed the writ petition (Charu K. Bagadia vs. Asst. CIT (No. 1) [2022] 448 ITR 560 (Mad)). The Division Bench allowed the appeal and held as under:
“i) At the outset, be it noted, it is settled law that “a jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, something which he lacked inherently”. The said ratio squarely applies to the case on hand.
ii) Notice u/s. 148 of the Income-tax Act, 1961, is mandatory to reopen an assessment and reassess the income of the assessee and such a notice should have been issued by the competent Assessing Officer, who has jurisdiction. The jurisdictional Assessing Officer, who records the reasons for reopening the assessment as contemplated under sub-section (2) of section 148, has to issue notice u/s. 148(1). Only then, would such a notice issued u/s. 148(1) be a valid notice. The officer recording the reasons u/s. 148(2) of the Act and the officer issuing the notice u/s. 148(1) has to be the same person. Section 129 is applicable when in the same jurisdiction, there is a change of incumbent and one Assessing Officer is succeeded by another; and when once the initiation of reassessment proceedings is held to be invalid, whatever follows thereafter must also, necessarily be invalid.
iii) The first respondent who recorded the reasons for reopening the assessment u/s. 148(2), had no jurisdiction over the assessee, to issue notice dated March 28, 2018 u/s. 148(1). Though the files pertaining to the reassessment proceedings of the assessee were transferred, the second responde
[2022] 448 ITR 563 (Mad.)
A.Y.: 2011-12
Date of order: 27th June, 2022
Sections: 147 and 148 of ITA, 1961
Reassessment — Notice u/s 148 — Validity — Condition precedent for notice — Notice should be issued by the AO who has jurisdiction over assessee.
The appellant-assessee’s return of income for the A.Y. 2011-12 was processed u/s 143(1) of the Income-tax Act, 1961. Thereafter, after five years, she received a notice dated 28th March, 2018 issued by the first respondent u/s 148 for reassessment. In response, she submitted a reply dated 26th April, 2018 stating that the first respondent has no jurisdiction to issue such a notice u/s 148 of the Act and therefore, she requested that the reassessment proceedings be dropped. Subsequently, the first respondent transferred the files pertaining to the appellant to the second respondent. Thereafter, the second respondent continued the reassessment proceedings by issuing a notice dated 14th December, 2018 u/s 143(2) r.w.s. 129, directing the appellant to appear and file return of income to the notice u/s 148 of the Act along with supportive documents.
The Appellant filed a writ petition and challenged the validity of notices. The Single Judge of the Madras High Court dismissed the writ petition (Charu K. Bagadia vs. Asst. CIT (No. 1) [2022] 448 ITR 560 (Mad)). The Division Bench allowed the appeal and held as under:
“i) At the outset, be it noted, it is settled law that “a jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, something which he lacked inherently”. The said ratio squarely applies to the case on hand.
ii) Notice u/s. 148 of the Income-tax Act, 1961, is mandatory to reopen an assessment and reassess the income of the assessee and such a notice should have been issued by the competent Assessing Officer, who has jurisdiction. The jurisdictional Assessing Officer, who records the reasons for reopening the assessment as contemplated under sub-section (2) of section 148, has to issue notice u/s. 148(1). Only then, would such a notice issued u/s. 148(1) be a valid notice. The officer recording the reasons u/s. 148(2) of the Act and the officer issuing the notice u/s. 148(1) has to be the same person. Section 129 is applicable when in the same jurisdiction, there is a change of incumbent and one Assessing Officer is succeeded by another; and when once the initiation of reassessment proceedings is held to be invalid, whatever follows thereafter must also, necessarily be invalid.
iii) The first respondent who recorded the reasons for reopening the assessment u/s. 148(2), had no jurisdiction over the assessee, to issue notice dated March 28, 2018 u/s. 148(1). Though the files pertaining to the reassessment proceedings of the assessee were transferred, the second responde
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