IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA No. 1556/Del/2019 Assessment Year: 2010-11 Nishi Kapoor vs ITO H.No. 835, Sector-17, Ward 2(1) Faridabad, Haryana. Faridabad. PAN No. AFLPK2022C APPELLANT RESPONDENT Assessee by Shri K.C. Singhal, Advocate Shri Amit Gupta, Advocate Revenue by Shri S.L. Anuragi, Sr. DR Date of Hearing 21.08.2019 Date of Pronouncement 02.09.2019 ORDER This appeal by assessee has been directed against order of Ld. CIT(Appeals)-Faridabad dated 21.01.2019 for AY 2010-11. 2. Briefly facts of case are that return of income was filed by assessee on 29.07.2010 declaring total income of Rs. 2,87,800/-. There was AIR Information that assessee sold immovable property for Rs. 78,51,000/- during assessment year under appeal. ITO, Ward 2(3), Noida issued letter requiring to verify financial transaction. However, no plausible explanation was furnished by assessee. As per information provided by Sub Registrar assessee had sold Plot no. 230, Block-B, Sector- 2 ITA No. 1556/Del/2019 71, Noida for Rs. 75,21,000/-, value for stamp purposes Rs. 78,51,000/- on 06.03.2010. AO initiated reassessment proceedings u/s 147 of Act to assess income of assessee in this regard which escaped assessment. assessee filed letter stating therein that return filed originally may be treated as return filed in response to notice u/s 148 of Act. AO noted that on change of incumbent proceedings have been continued from stage as per section 129 of Act. AO completed assessment and computed long term capital gains of Rs. 35,47,079/- and made addition of this amount accordingly. reassessment order u/s 143(3)/147 of Act was passed on 22.12.2017 by ITO, Ward 2(1), Faridabad. assessee challenged reassessment proceedings and above addition before Ld. CIT(A). Ld. CIT(A), however, dismissed appeal of assessee. 3. Ld. Counsel for assessee referred to PB 4, which are reasons for reopening of assessment which reads as under: AIR Information regarding sale of immovable property amounting to Rs. 78,51,000/- has been received from CIB for examining of non-pan financial transactions. Therefore, to ascertain assessment particulars of assessee and to verify transaction, query letters were issued to assessee to furnish assessment particulars of assessee and to furnish copy of ITR for AY 2010-11 along with computation of capital gain on this transaction. Simultaneously information was called for from Sub-Registrar. As per information given by Sub Registrar assessee had sold Plot no. 230, Block-B, Sector-71, Noida for Rs. 75,21,000/- (Value for stamp purpose Rs. 78,51,000/-) on 06.03.2010. However, in 3 ITA No. 1556/Del/2019 response to query letters, no plausible explanation has been furnished by assessee. Thus, capital gain arises on this transaction entered into by assessee during FY 2009-10 i.e. relevant to AY 2010-11 has escaped assessment. In view of above facts, on basis of information in my possession, I have reason to believe that income under head capital gain arises on of Rs. 78,51,000/- chargeable to tax has escaped assessment within meaning of section 147 of I.T. Act, 1961. Dated: 10.03.2017 Sd/- (R.K. SHARMA) Income Tax Officer, ITO, Ward 2(3), Noida 4. He has submitted that these reasons are recorded by ITO, Ward 2(3), Noida and thereafter, he has written letter dated 07.09.2017 PB 10 to Assessing Officer (ITO, Ward 2(1), Faridabad) stating therein that notice u/s 148 of Act was issued on 30.03.2017. As per acknowledgement of return for assessment year submitted by assessee on 07.09.2017, assessee comes under jurisdiction of ITO, Ward 2(1), Faridabad. ITO, Ward 2(3), Noida therefore, transferred this case to ITO, Ward 2(1), Faridabad. Ld. Counsel for assessee submitted that ITO, Ward 2(3), Noida who has recorded reasons for reopening of assessment was not having jurisdiction over case of assessee and that ITO, Ward 2(1), Faridabad who has further issued notice u/s 148 and 142(1) of Act and completed reassessment order who was having jurisdiction over case of assessee did not record reasons for reopening of assessment. Therefore, initiations of 4 ITA No. 1556/Del/2019 reassessment proceedings are illegal, bad in law and liable to be quashed. In support of which contention he has relied upon order of ITAT Agra Bench in case of S.N. Bhargawa vs. ITO 147 ITD 306 in which it was held as under: IT: Where Assessing Officer, Agra initiated reassessment proceedings against assessee and subsequently he transferred case to Assessing Officer, Mathura, who was having jurisdiction over assessee, and thereupon Assessing Officer, Mathura without recording fresh reasons and on basis of reasons recorded by Assessing Officer, Agra issued on assessee fresh notice u/s 148. Assessing Officer, Mathura had not validity assumed jurisdiction to initiate reassessment proceedings against assessee. 5. On other hand, Ld. DR relied upon orders of authorities below. Vide order sheet dated 26.08.2019 Ld. DR was directly to intimate, if any, other reasons u/s 148 have been recorded by ITO, Ward 2(1), Faridabad. Ld. DR produced assessment record and submitted that no separate reasons u/s 148 have been recorded by ITO, Ward 2(1), Faridabad. Ld. DR, however, submitted that AO was having jurisdiction to proceed with matter on transfer of case from ITO, Noida. 6. I have considered rival submissions. It is not in dispute that reasons for reopening of assessment have been recorded in this case by ITO, Ward 2(3), Noida, who was having no jurisdiction over case of assessee. When assessee filed letter before ITO, Ward 2(3), Noida on 07.09.2017 stating therein that return filed originally may be treated as return having filed in 5 ITA No. 1556/Del/2019 response to notice u/s 148 of Act and is also supported by copy of acknowledgment of return filed originally, ITO, Ward 2(3), Noida transferred this case to ITO, Ward 2(1), Faridabad, vide letter dated 07.09.2017 (PB 10). AO while completing assessment in this case has taken shelter of provisions of section 129 of Act. However, said provision is not applicable because it is matter of assumption of valid jurisdiction in matter or to validly initiate reassessment proceedings against assessee. It is not case of succession to exercise jurisdiction by one ITO to another ITO. Since, reasons have been recorded for reopening of assessment by ITO, Noida who was not authorized to do so, therefore, mere recording of reasons for reopening of assessment by him is of no consequence and has no value under law. AO who has jurisdiction over case of assessee i.e. ITO, Faridabad admittedly did not record any reasons for reopening of assessment. Therefore, issue is covered in favour of assessee by order of ITAT Agra Bench in case of S N Bhargawa (supra). It is, therefore, clear that assumption of jurisdiction by AO is illegal and bad in law. AO at Faridabad had not validly assumed jurisdiction to initiate reassessment proceedings against assessee. This view is further supported by judgment of Hon ble Gujarat High Court in case of Hynoup Food & Oil Industries Ltd. vs. ACIT (2008) 307 ITR 115 in which it is observed that AO recorded reasons for reassessment and AO issued notice u/s 148 must be same person. Successor AO cannot issue 6 ITA No. 1556/Del/2019 notice u/s 148 on basis of reasons recorded by predecessor AO. Hon ble Gujarat High Court held as under: Held, (i) that so far as assessment years 1990-91 and 1991-92 were concerned, officer who had issued notice under section 148 of Act, was different from officer who had recorded reasons and hence, notices for both these years were invalid and deserved to be quashed on this ground alone. 7. In view of above discussion, I am of view that assumption of jurisdiction u/s 147/148 of Act is illegal and bad in law and, as such, liable to be quashed. I, accordingly, set aside orders of authorities below and quash reopening of assessment u/s 147/148 of Act. Resultantly entire addition stands deleted. 8. In result, appeal of assessee is allowed. Order pronounced in open Court. Sd/- (BHAVNESH SAINI) JUDICIAL MEMBER Dated: 02/09/2019 *Kavita Arora 7 ITA No. 1556/Del/2019 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 28.08.2019 Date on which typed draft is placed before dictating 02.09.2019 Member Date on which typed draft is placed before Other Member 02.09.2019 Date on which approved draft comes to Sr. PS/PS 02.09.2019 Date on which fair order is placed before Dictating Member 02.09.2019 for pronouncement Date on which fair order comes back to Sr. PS/PS 02.09.2019 Date on which final order is uploaded on website of ITAT 02.09.2019 Date on which file goes to Bench Clerk 02.09.2019 Date on which file goes to Head Clerk date on which file goes to Assistant Registrar for signature on order Date of dispatch of Order Nishi Kapoor v. ITO, Ward 2(1), Faridabad