Reason recorded by non jurisdictional AO cannot give jurisdiction to jurisdictional Assessing Officer

Reason recorded by non jurisdictional Assessing Officer cannot give jurisdiction to the jurisdictional Assessing Officer.

ABCAUS Case Law Citation
ABCAUS 3449 (2021) (02) ITAT

Important case law relied referred:
Pankaj Bhai Jayshuklal Shah vs. CIT (2020) 425 ITR 70
Manoj Kumar vs. ACIT reported 79 ITR (Tribunal) 158 Delhi

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the proceedings u/s 147/148 of the Income Tax Act, 1961 (the Act)

It was the case of the assessee that the proceedings had been initiated on the basis of reasons recorded by the A.O. who was not having the jurisdiction and no fresh reasons had been recorded by the jurisdictional A.O.

Thus, it was contended that the whole proceedings were without jurisdiction, illegal and unsustainable in law.

The assessee pointed out that while seeking approval in terms of Section 151, the format clearly showed that the approval had been sought on the reasons recorded by AO who did not had jurisdiction.

Though the Department admitted that the reasons as incorporated in the assessment order were the only reason which had been recorded and signed by the non jurisdictional ITO. However, it was submitted that, this will not making any difference, because reasons had been duly recorded based on tangible material and information on the basis of which proceedings have been initiated u/s 147 and assessment had been framed, therefore, there was no illegality in such proceedings.

The Tribunal noted that it was undisputed fact that the proceedings had been initiated u/s 147 by recording the  reasons by non Jurisdictional Assessing Officer and therefore, notice u/s 148 and  consequent  assessment order had been  framed by the jurisdictional Assessing Officer.

The Tribunal stated that a trite law is that the notice u/s 148 is a jurisdictional notice and the Assessing Officer can validly acquire jurisdiction u/s 147 after recording the reasons and thereafter issuing and serving a notice u/s 148 in accordance with law.

The Tribunal stated that the reasons have to be recorded by the    jurisdictional Assessing Officer for reopening the assessment as contemplated u/s 148(2) and the same officer, i.e., jurisdictional Assessing Officer has to issue a notice u/s 148(1).  Being the matter of jurisdiction, it cannot be envisaged that a non jurisdictional Assessing Officer records the reasons and seeks approval from the higher authorities and then  jurisdictional Assessing Officer takes over the proceedings and   passed the assessment order.  

The Tribunal opined that reason recorded by non jurisdictional  Assessing  Officer  cannot  give jurisdiction  to  the  present   Assessing  Officer.   Following the principle of the Hon’ble High Court the Tribunal held that the proceeding u/s 147/148 was void ab initio and without jurisdiction and same was quashed.

The appeal was allowed in the favour of the assessee.

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