By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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6 (2008) 117 TTJ 42 (Lucknow)
M. I. Builders (P.) Ltd. v. ITO
ITA No. 111 (Lucknow) of 2006
A.Y. : 1997-98. Dated : 7-9-2007
S. 120, S. 124(3) and S. 148 of the Income-tax Act, 1961 —
Reassessment proceedings initiated by AO not having jurisdiction — Reassessment
completed in continuation of such initiation by AO having jurisdiction —
Reassessment was invalid.
For the relevant assessment year, notice u/s.148(1) was
issued by an Assessing Officer having no jurisdiction over the assessee. On
protest by the assessee within one month of such notice, the case was
transferred to the Assessing Officer having jurisdiction over the assessee and
this Assessing Officer finally passed the reassessment order. The assessee
contended before the CIT(A), inter alia, that the notice u/s.148(1) was
devoid of proper jurisdiction and, therefore, void ab initio.
The CIT(A), however, upheld the reassessment order.
The Tribunal, relying on the decisions in the following
cases, held that the reassessment was invalid :
(a) Lt. Col. Paramjit Singh v. CIT, (1996) 135 CTR
(P&H) 8; (1996) 220 ITR 446 (P&H)
(b) Naginimara Veneer & Saw Mills (P) Ltd. v. Dy. CIT,
(1996) 136 CTR (Gau.) 134; (1996) 219 ITR 527 (Gau.)
(c) Anant Mills Ltd. (In Liquidation) v. CIT, (1993)
109 CTR (Guj.) 231; (1994) 206 ITR 582 (Guj.)
(d) P. A. Ahammed v. Chief CIT, (2006) 200 CTR
(Ker.) 378; (2006) 282 ITR 334 (Ker.)
(e) CIT v. Metal Goods Manufacturing Co. (P) Ltd.,
(1992) 197 ITR 230 (All)
(f) K. V. Kader Haji (Decd.) through LR v. CIT,
(2004) 189 CTR (Ker.) 313; (2004) 268 ITR 465 (Ker.)
(g) ITO v. Ashoke Glass Works, (1980) 125 ITR 491
(Cal.)
The Tribunal noted that the issuance of notice u/s. 148(1) by
the first Assessing Officer was without jurisdiction and, therefore, invalid.
The assessment framed on that basis by the jurisdictional Assessing Officer was
also invalid and, therefore, cancelled.
The Revenue’s stand for protection u/s.124 was also not
allowed by the Tribunal. It noted as follows :
(a) Invoking of S. 124(2) would arise if there was any
chance of validation of proceedings by virtue of S. 124(3) which is not
available to the Assessing Officer in the present case, either under clause
(a) or under clause (b) of S. 124(3).
(b) Protection of the proceedings and assessment thereafter
on account of failure of the assessee to object within the time allowed
u/s.124(3) is available to specific proceedings and not to every proceeding.
Erroneous assumption of jurisdiction cannot, in general, be validated. Such
validation is specific in S. 124(3).
(2008) 117 TTJ 289 (Delhi) (SB)
