Reassessment Without Pecuniary Jurisdiction Renders Proceedings Void: ITAT Raipur in Amarjeet Singh Bhatia vs ACIT-3(1)
Overview of the Dispute
The Raipur Bench of the Income Tax Appellate Tribunal, in Amarjeet Singh Bhatia Vs ACIT-3(1) (ITAT Raipur), ITA No. 63/RPR/2018, rendered its decision on 07.07.2023 concerning Assessment Year 2007-08. At the heart of this case lay a fundamental question: can reassessment proceedings withstand legal scrutiny when initiated and completed by officers who demonstrably lacked pecuniary jurisdiction over the assessee at the relevant point in time?
The Tribunal's answer was an unequivocal no. It quashed the reassessment order dated 11.02.2015 passed under Section 147 read with Section 143(3) of the Income Tax Act, 1961, holding that both the officer who recorded reasons for reopening and the officer who ultimately framed the reassessment were bereft of the requisite pecuniary jurisdiction as mandated by binding CBDT instructions.
Background Facts
The assessee, Shri Amarjeet Singh Bhatia, was engaged in the retail liquor trading business and had filed his return of income for AY 2007-08 on 31.10.2007, declaring a total income of ₹5,22,820/. A regular assessment under Section 143(3) of the Income Tax Act, 1961 was duly completed on 24.12.2009, with assessed income determined at ₹6,15,800/.
Trigger for Reopening
During assessment proceedings pertaining to AY 2008-09, the department noticed that the assessee had furnished confirmations of accounts in the names of Merline Infrastructure and Smt. Kewar Bai Dheewar, reflecting opening balances as on 01.04.2007 — specifically ₹7,77,500/- in the name of Merline Infrastructure and ₹13,71,554/- in the name of Smt. Kewar Bai Dheewar. These balances, however, were allegedly absent from the balance sheet of the assessee as on 31.03.2007.
Treating the aggregate of ₹21,49,054/- as income escaping assessment, the Assessing Officer recorded reasons and proceeded to reopen the case under Section 147/Section 148 of the Income Tax Act, 1961.
Sequence of Reassessment Proceedings
- Reasons for reopening were recorded by DCIT-1(1), Raipur on 19.03.2014
- Approval under
Section 151was obtained on 20.03.2014 - Notice under
Section 148was issued on 21.03.2014 and served on 22.03.2014 - Due to restructuring and reallocation of jurisdiction, the matter was transferred to ACIT-3(1), Raipur
- Notice under
Section 142(1)along with a questionnaire was issued on 08.12.2014 and 09.12.2014 - The assessee furnished a written reply on 08.01.2015, denying any escaped income, but did not produce books of accounts or supporting documents
- The Assessing Officer, finding the explanation unsupported, added ₹21,49,054/- to the assessee's income, bringing total assessed income to ₹27,64,854/-
- The CIT(A)-I, Raipur dismissed the assessee's appeal vide order dated 02.01.2018
Grounds Before the ITAT
Before the Tribunal, the assessee filed revised and additional grounds of appeal. The two original revised grounds were not pressed by the learned Authorised Representative and were accordingly dismissed as not pressed.
The additional grounds that were pursued centred on:
Additional Ground No. 1 — That both DCIT-1(1), Raipur and ACIT-3(1), Raipur lacked pecuniary jurisdiction over the assessee at the time of recording reasons on 19.03.2014 and framing the assessment on 11.02.2015 respectively, since the returned income of ₹5,22,820/- was below the monetary threshold prescribed under CBDT Instruction No. 1/2011, dated 31.01.2011.
Additional Ground No. 2 — That no valid notice under
Section 143(2)was issued prior to completing the assessment underSection 147, rendering the reassessment order void.