ORDER
K.D. Ranjan, AM. :
These cross-appeals by the assessee and Revenue arise out of order of the learned CIT(A)-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 s. 147 of the IT Act. The facts of the case stated in brief are that notice under s. 148 of the Act was issued for asst. yr. 1998-99 on 30th March, 2005 by ITO, Ward 2(2), Ghaziabad. In response to the notice it was submitted by the assessee that he had filed return with the Dy. CIT, Circle 21(2), Delhi and was being regularly assessed by him. However, it was stated that return filed originally may be treated as a return filed in response to notice under s. 147 of the Act. Thereafter, the file was transferred by ITO, Ward 2(2), Ghaziabad, to the Dy. CIT, Circle 40(1), New Delhi. The Dy. CIT, 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 learned CIT(A). It was stated that the assessee filed return of income for asst. yr. 1998-99 declaring total income at Rs. 2,72,089 and the said income was assessed as such vide intimation dt. 29th June, 1999 under s. 143(1)(a) of the Act issued by Dy. CIT, 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 are contrary to the facts on record. The AO had recorded the following reasons :
"The assessee Shri Ranjeet Singh has received a sum of Rs. 25,80,678 against acquisition of land on 28th Jan., 1998 and has also received interest of Rs. 13,04,939 on 11th Feb., 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 asst. yr. 1998-99 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 s. 147 of the IT Act, 1961."
In view of reasons recorded as above it was submitted that the income by way of capital gains was not chargeable to tax as agricultural land did not fall within the purview of s. 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 Dy. CIT and credit for the same has been allowed in the intimation dt. 29th June, 1999. The assessee was granted a refund of Rs. 95,686. Therefore, there was no concealment of income. Since the assessee 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 learned CIT on the ground that the AO 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 reopening of the assessment.
4.1 Before us, the learned Authorised Representative of the assessee, Shri Salil Kapoor, assailed the reopening of assessment on the grounds of assumption of jurisdiction under s. 147 of the Act. He submitted that the notice under s. 148 was issued by ITO, Ward 2(2), Ghaziabad, whereas the assessee was regularly assessed in New Delhi. For asst. yr. 1998-99 the return was filed in Delhi, which was processed under s. 143(1)(a) of the Act on 29th June, 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 2005 when the notice was issued by the ITO, Ward 2(2), Ghaziabad, the jurisdiction was that of the AO in Delhi. The assessee owned agricultural lands in Ghaziabad. Merely because the assessee owned lands in Ghaziabad, the AO at Ghaziabad could not exercise jurisdiction. Since the assessee was assessed in Delhi, the ITO, Ward 2(2) issued notice under s. 148 of the Act without any jurisdiction and, therefore, the assumption of jurisdiction is bad in law. It was also submitted that the notice under s. 148 has been issued by the ITO with the approval of the learned CIT. Under s. 151(2), it is the Jt. CIT. whose satisfaction is required before the notice under s. 148 of the Act is issued. The approval given by the learned CIT cannot be treated as given by the Jt, CIT/Addl. CIT. 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 learned Departmental Representative submitted that the proposal of the AO was routed through the office of the Addl. CIT/Jt. CIT. Without routing the file through the Addl. CIT/Jt. CIT and recording of his satisfaction the learned CIT could not have recorded his satisfaction. Therefore, the requirements of s. 151(2) are satisfied. It was also submitted that the jurisdiction of the AO cannot be challenged by the assessee as per s. 120(2) and s. 120(3) of the Act. The jurisdictional issue cannot defeat the provisions of s. 4, the charging section. She placed reliance on the following decisions :
(1)
Hindustan Transport Co. v.
IAC [1991] 189 ITR 326 (All);
(2)
Reckitt Colman of India Ltd. v.
Asstt. CIT [2002] 172 CTR (Cal.) 499 : [2001] 252 ITR 550 (Cal.); and
(3)
B.R. Industries Ltd. v
. CIT [2002] 175 CTR (Delhi) 362 : [2002] 255 ITR 593 (Delhi).
She further submitted that any defect in the notice issued under s. 148 will not be fatal to assessment proceedings in view of provisions of s. 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 s. 148 of the Act was issued by ITO, 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 learned CIT, Ghaziabad on 30th March, 2005, which was routed through the office of Addl. CIT, Range 2, Ghaziabad. The proposal was sent by the AO on 28th March, 2005. From the records we also find that the return of income for asst. yr. 1998-99 was filed with the Dy. CIT, Circle 21(2), New Delhi, on 9th June, 1999. The Dy. CIT, Circle 21(2) processed the return of income under s. 143(l)(a) vide intimation dt. 29th June, 1999 granting refund of Rs. 95,686. These facts are not in dispute.
6. The assessee in response to notice dt. 30th March, 2005 filed reply dt. 21st April, 2005 stating that he was assessed to tax with Dy. CIT, Circle 21(2), New Delhi and the return for asst. yr. 1998-99 was filed with him vide acknowledgement No. 001006. The assessee was regular taxpayer and was assessed in Delhi. However, it was stated that the return already filed with Dy. CIT, Circle 21(2), New Delhi, might be treated as a return in response to notice under s. 148 of the Act. Thereafter, the counsel of the assessee filed vide letter dt. 29th Sept., 2005 enclosing the zerox copies of returns for asst. yr. 1998-99 to asst. yr. 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 dt. 6th Dec, 2005 transferred the case records to the ITO, Ward 40(1), Connaught Circus, New Delhi, for further action at his end. Thereafter, the present AO issued notice for the first time on 21st Dec, 2005 to the assessee requiring him to file information/details for completion of the assessment. He did not issue any fresh notice under s. 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 s. 148 of the Act by the ITO, Ward 2(2), Ghaziabad, is without jurisdiction. Further, under s. 149 of the Act, no notice under s. 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 s. 148 could be issued for asst. yr. 1998-99 upto 31st March, 2005. The present AO when received the relevant file from ITO, Ward 2(2), Ghaziabad containing material for proceedings initiated under s. 147 in December, 2005, the time of six years had already elapsed. Therefore, he could not have issued further notice under s. 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. CIT is of no help when the AO including the learned CIT and Addl. CIT were not having jurisdiction over the case of the assessee on the date when the proposal was sent to the learned CIT, Ghaziabad. Another contention of the learned Departmental Representative is that the assessee cannot challenge the jurisdiction of the AO within the meaning of s. 120. Sec. 120 of the Act confers jurisdiction on IT authorities as per the procedure prescribed therein. Sub-ss. (2) and (3) of s. 120 do not automatically confer jurisdiction on territorial basis in respect of person already assessed to tax under the jurisdiction of other Chief CIT. The assessee was assessed in the charge of Chief CIT, Delhi. No orders were passed by the CBDT empowering the AO or the learned CIT to exercise jurisdiction over the assessee. The assessee has intimated the AO that he was assessed to tax with Dy. CIT Circle 21(2), New Delhi. Therefore, this contention of the Revenue does not have any merits.
8. The learned senior Departmental Representative has placed reliance on the decision of Hon'ble Allahabad High Court in the case of Hindustan Transport Co. v. IAC (supra), 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 Dy. CIT, Circle 21(2), New Delhi and in fact the file containing notice under s. 148, reply filed by the assessee, information received by the ITO, Ghaziabad, etc. was transferred to the AO having jurisdiction over the case. Therefore, it is incorrect on the part of the senior Departmental Representative 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 s. 147 proceedings. She has also placed reliance on the decision of the Hon'ble Calcutta High Court in the case of Reckitt Colman of India Ltd. v. Asstt. CIT (supra). In this case the Chief CIT assigned jurisdiction to the Asstt. CIT, TDS, Cirele 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. CIX The decision of this case is also not applicable as neither the Chief CIT nor the CBDT have assigned jurisdiction over the assessee to the ITO, Ward 2(2), Ghaziabad. Another case relied upon by the learned Departmental Representative is of Hon'ble Delhi High Court in the case of B.R. Industries Ltd. v. CIT (supra). In this case the order passed by the learned CIT, Delhi-I, assigning the jurisdiction was challenged by way of writ petition. The ratio of this decision is also not applicable as no jurisdiction was assigned to ITO, Ward 2(2), Ghaziabad. The learned Departmental Representative also contended that the defect in the notice can be ignored under s. 292B of the Act. Sec. 292B of the IT 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 s. 120 r/w s. 147 of the Act. The notice was issued without jurisdiction. Therefore, the provisions of s. 292B will not be of any help to the Revenue. The provisions of s. 292B could have been invoked if the ITO, Ward 2(2), Ghaziabad, was having jurisdiction over the assessee and some mistake was committed in the notice issued by him under s. 148. Therefore, we do not find any force in the argument of the learned Departmental Representative.
9. In view of the above facts, we are of the considered view that the notice issued by the AO, Ward 2(2), Ghaziabad, was without jurisdiction and consequentially the assessment made is bad in law and deserves to be quashed. We order accordingly.
10. Since we have quashed the assessment on jurisdiction, we do not feel it necessary to decide the other grounds of appeal on merits.
11. Now, coining 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.
12. In the result, the appeal filed by the assessee is allowed and the Revenue is dismissed.