S. 292BB — Notice by an AO not having jurisdiction over the assessee — Not a mere irregularity, but an incurable illegality, incapable of being cured by recourse to S. 292BB.

The assessee company,
registered with RoC, Delhi, was having its office at Delhi and it had filed its
tax returns for A.Y. 1998-99 to 2000-01 in Delhi. On the basis of enquiry
conducted by the Investigation Wing of the IT Department, reassessment
proceedings were initiated against the assessee for A.Y. 2001-02 by issuance of
notice u/s.148 by the AO at Agra. Then subsequently the case was transferred to
the AO at Delhi for completion of assessment, it having been found by the AO at
Agra that the return had been filed with AO at Delhi. The CIT(A) annulled the
reassessment on the ground that reassessment notice issued from Agra was without
any jurisdiction.

It is only an AO within the
meaning of S. 2(7A) of the Act, who can assess or reassess any escaped income
u/s.147 of the Act, of an assessee. It is only an AO within the meaning of S.
2(7A) of the Act, who can serve a notice u/s.148 of the Act on an assessee.
Herein, the AO at Agra not being the AO qua the assessee, he could not have
assessed or reassessed any escaped income of the assessee and he could not have
served the assessee with a notice u/s.148 of the Act.

S. 292BB seeks to deem an
action as provided under the Act, to have been done in accordance with the
provisions of the Act. But when, as in the present case, the notice itself was
not in accordance with the provisions of the Act, it was a jurisdictional
defect, which the provisions of S. 292BB of the Act cannot, by any stretch of
imagination, be canvassed to cure.

A ‘proceeding’ as envisaged
by S. 292BB has to be a legally valid proceeding which here it is not, since the
notice for reassessment is bad in law. This also goes for the ‘inquiry’
mentioned in S. 292BB. The assessee, therefore, never appeared in any
proceeding, nor co-operated in any inquiry as required u/s.292BB and so S. 292BB
does not at all come into play.

Further, in the present
case, the assessee is nowhere aggrieved of any of the three situations i.e., (1)
that the notice has not been served on him, or (2) it has not been served on him
in time, or (3) it has been served on him in an improper manner. Rather, the
grievance of the assessee is that the notice served on him was not issued by an
AO having jurisdiction over him. Now this is a jurisdictional issue which goes
to the very root of the matter.

The jurisdictional defect of
the notice having been issued by an AO not having jurisdiction over the assessee,
as such, is not a mere irregularity, but an incurable illegality and is
incapable of being cured by seeking recourse to the provisions of S. 292BB.