Calcutta H.C : Where assessee had been assessed at Kolkata and there was nothing on record to show that assessment records of assessee were transferred either from Kolkata to New Delhi or New Delhi to Kolkata, ITO, New Delhi had no jurisdiction to issue notice under section 148 to assessee

High Court Of Calcutta

Smt. Smriti Kedia vs. Union of India

Assessment Year 1999-2000

Section 148, 127

Soumitra Pal, J.

W.P. No. 1984 Of 2006

April 8, 2011

JUDGMENT

1. In the writ petition, the petitioner, who had all along filed income-tax returns in Kolkata, including return for the assessment year 1999-2000 and is assessed at Kolkata, has challenged the notice under section 148 of the Income-tax Act, 1961 (“the Act” for short, dated March 28, 2006, for the assessment year 1999-2000 (for short “the assessment year”) issued by the Income-tax Officer, Ward-29(3), New Delhi, respondent No. 2 (for short “the said respondent”) and the notices which, according to her, are consequential, principally on the ground that as there was no order of transfer of assessment records of the petitioner from Kolkata to New Delhi under section 127 of the Act the said respondent had no jurisdiction and authority to assume jurisdiction over the petitioner.

2. The facts, as it appears from the petition, are that during the previous year relevant to the assessment year, the petitioner carried on activity of an investor in shares and earned long-term capital gains, speculation profit, dividend and interest income. During the said previous year, the income and gains were invested in repayment of loans and for purchase of a residential flat at New Delhi. On October 13, 1999, the petitioner filed the income-tax return for the assessment year 1999-2000 before the Income-tax Officer, Ward-18(4), Kolkata, who at the relevant point of time, had jurisdiction over her. The said Income-tax Officer for the said assessment year did not issue notice either under section 142(1) or under section 143(2) of the Act. Since August, 2001, after effecting structural changes in the Income-tax Department at Kolkata, the Income-tax Officer, Ward-29(2), Kolkata, respondent No. 3, has been having jurisdiction over the petitioner. Respondent No. 3 too neither issued any notice nor any assessment was done on the return for the said assessment year. Therefore, the said return is pending. During the pendency of the assessment of the return for the said assessment year, the petitioner received the impugned notice under section 148 dated March 28, 2006, wherein it has been alleged that the said respondent had reasons to believe that the income of the petitioner chargeable to tax for the said assessment year had escaped assessment within the meaning of section 147 of the Act. Therefore, the said respondent proposed to “assess” the same and directed the petitioner to file return for the said assessment year.

3. By a letter furnished on March 31, 2006, before the said respondent at New Delhi, the petitioner acknowledged receipt of the impugned notice under section 148 and intimated that she is assessed at Kolkata. Along with the said letter, a copy of the income-tax return for the assessment year 1999-2000 was enclosed. Thereafter, the petitioner received a letter dated November 13, 2006 from respondent No. 3 at Kolkata intimating that she had failed to file the return in response to the notice issued under section 148 and it was assumed that she wanted to make the Department to treat the original return filed by her as the return filed under section 148. The petitioner was requested to file the written submission by November 17, 2006, failing which, it was intimated, original return filed by her would be treated as the return filed under section 148. In response, the petitioner by letter dated November 16, 2006, intimated respondent No. 3 to treat the original return filed by her as the return filed under section 148, a copy of which was submitted along with the said letter. Thereafter, respondent No. 3 in connection with the assessment for the said assessment year issued a notice under section 142 dated November 20, 2006, whereby the petitioner was directed to produce accounts and/or documents, a list of which was appended thereto. It appears from the list of documents that she was intimated that the return of income in response to the notice under section 148 was yet to be filed. Pursuant to the said notice under section 142, the petitioner by a letter dated November 27, 2006, intimated respondent No. 3 that as no order under the Act was passed by any of the authorities transferring her assessment records either from Kolkata to New Delhi or from New Delhi to Kolkata, the notice under section 148 was without jurisdiction and illegal and a request was made to drop the assessment proceedings. Thereafter, respondent No. 3 along with the letter dated December 7, 2006, furnished a copy of the recorded reasons dated March 28, 2006, issued by the said respondent and the notice under section 143(2) dated March 7, 2006, directing the petitioner to attend hearing on December 12, 2006, regarding the return of income for the said assessment year submitted on November 16, 2006.

4. According to the petitioner, since no order was passed under section 127 of the Act transferring her assessment records either from Kolkata to New Delhi or from New Delhi to Kolkata, the impugned notice under section 148 and all subsequent notices pursuant thereto are arbitrary, without jurisdiction and illegal. Moreover, since return was submitted on October 13, 1999, in view of the second proviso to the section 143(2), the notice under section 143(2), assuming the same is independent of section 148, is time-barred. That apart, in view of section 153(1), the notice under section 143(2) is beyond the period of limitation.

5. The question is whether the impugned notice under section 148 of the Act issued by the Income-tax Officer, Ward-29(3), the said respondent, was in accordance with law. If not, whether the subsequent notices can be construed to be independent of the proceedings under section 148 of the Act.

6. It is evident that the Department in its affidavit-in-opposition has not denied the fact that all along the petitioner was assessed at Kolkata. That apart, there is nothing on record to show that pursuant to an order under section 127 of the Act, the assessment records of the petitioner were transferred either from Kolkata to New Delhi or from New Delhi to Kolkata. Therefore, unless records were validly transferred from Kolkata to New Delhi, the said respondent had no jurisdiction to issue notice under section 148 for the assessment year in question. Hence, the impugned notice dated March 28, 2006, under section 148 issued by respondent No. 2 is arbitrary, without jurisdiction and illegal. So far as the other impugned notices are concerned, since it is evident from the notice dated November 13, 2006, issued by respondent No. 3, that it was pursuant to the notice under section 148, the same is also without jurisdiction and illegal. The notice under section 142 of the Act dated November 20, 2006, issued by respondent No. 3, is also without jurisdiction and illegal as evidently it was consequent to the notice under section 148, it being obvious from the “Requisitions” appended to the said notice that the petitioner was intimated that “in response to the notice under section 148, you have not yet filed your return of income”. So far as the notice under section 143(2) dated December 7, 2006, issued by respondent No. 3 is concerned, since it was enclosed along with the notice dated December 7, 2006, with regard to the assessment proceedings under section 147 initiated by respondent No. 2 for the said assessment year, that too, is arbitrary and illegal. Therefore, the notices dated November 13, 2006, November 20, 2006, December 7, 2006, and the other notice dated December 7, 2006, all issued by respondent No. 3 are set aside and quashed. Hence, the writ petition is allowed.

7. No order as to costs.

[Citation : 339 ITR 37]

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