Reassessment Without Jurisdiction: ITAT Quashes ITO Order, Rs. 38.34 Lakh Addition Nullified [Read Order]
The tribunal emphasised the necessity of following proper procedural provisions, including the valid issuance of notices and the lawful transfer of cases under Section 127. The ruling underscores the strict adherence required to procedural and jurisdictional norms in reassessment proceedings.
![Reassessment Without Jurisdiction: ITAT Quashes ITO Order, Rs. 38.34 Lakh Addition Nullified [Read Order]](https://images.taxscan.in/h-upload/2025/11/12/2104485-reassessment-jurisdiction-itat-ito-taxscan.webp "Reassessment Without Jurisdiction: ITAT Quashes ITO Order, Rs. 38.34 Lakh Addition Nullified [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Delhi, has quashed a reassessment order passed by the ITO, involving a registered society and madarsa, after finding serious jurisdictional lapses. The addition of Rs. 38.34 lakh on account of unexplained cash deposits was nullified, without the ITAT examining the merits of the addition itself.
The appellant, Jamiya Arabiya Nafe Uloom Education Society, is a registered society operating as a madarsa, and was the subject of reassessment proceedings following a Non-PAN AIR report that recorded cash deposits of Rs. 38,34,097/- in its Allahabad Bank, Kolkata branch account for the financial year 2010-11.
The Income Tax Officer (ITO), Ward 3(2), Bulandshahar, recorded reasons for reopening the case and, after approval by the PCIT, issued a notice under Section 148 of the Income Tax Act dated 26.03.2018.
However, before issuing this notice, the ITO, Ward 3(2), Bulandshahar, had transferred the case records to the ITO, Ward-Exemption, Ghaziabad, without complying with the procedural requirements of Section 127 for lawful case transfer.
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Subsequently, the ITO, Ward-Exemption, Ghaziabad, completed the assessment under Section 144 read with Section 147 on 25.10.2018, adding Rs. 38,34,097/- as unexplained cash deposits.
Aggrieved by the reassessment, the assessee approached the Commissioner of Income Tax (Appeals)/NFAC, which confirmed the addition.
The assessee then filed an appeal before the ITAT, Delhi, raising multiple grounds, including lack of jurisdiction, improper issuance of notice, failure to follow Section 127, arbitrary and excessive addition, non-consideration of documentary evidence, and violation of natural justice by passing the order before the scheduled hearing.
The Tribunal carefully examined the sequence of events and the submissions of the assessee. It noted that the notice under Section 148 had been issued by the ITO Bulandshahar after the case had already been transferred to Ghaziabad, and there was no valid Section 127 order facilitating the transfer.
The tribunal observed that the revenue failed to establish that the ITO Ward 3(2), Bulandshahar, had jurisdiction over the assessee to issue the notice.
The tribunal concluded that the reassessment proceedings were initiated and completed without proper jurisdiction, rendering the entire assessment invalid. Consequently, the addition of Rs. 38,34,097/- as unexplained cash deposits was nullified, as it was dependent on the reassessment order.
The two-member bench comprising Madhumitha Roy (Judicial Member) and Naveen Chandra (Accountant Member) allowed all grounds of appeal filed by the assessee and quashed the reassessment order passed by the ITO, Ward-Exemption, Ghaziabad.
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