Reopening of assessment under the Income Tax Act requires proper jurisdiction; notices issued after jurisdiction transfer are invalid.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr.B.S.Soparkar for the petitioner and learned Senior Standing Counsel Mr.Karan G. Sanghani for the respondents.

2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr.Karan Sanghani waives service of notice of rule for and on behalf of the respondents.

3. Having regard to the controversy in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.

4. The petitioner has challenged the notice for re-opening under Section 148 of the INCOME TAX ACT , 1961 (for short ‘the Act’) as well as the notice under Section 148 A(b) of the Act and order under Section 148 A(d) of the Act for the Assessment Year 2018-19.

5. The petitioner has also challenged the reference to Valuation Officer by the Assessing Officer by order dated 24th June, 2023 to determine the Fair Market Value of tangible assets added during the year by the petitioner on the ground that such reference to Departmental Valuation Officer was made only with a view to extend the period of limitation to frame the assessment.

6. The brief facts of the case are under:

6.1. The petitioner filed the return of income for Assessment Year 2018-19 on 22nd October, 2018 showing NIL income. The Assessment Order under Section 143(3) of the Act was passed on 26th February, 2021 accepting the return of income showing NIL income.

6.2. Thereafter, on 22nd September, 2021, a survey/search action under Section 132 /133A of the Act was carried out at M/s.Ratnakala Exports Private Limited and note book, registers and loose papers were found during the survey proceedings and the survey proceedings were converted to search proceedings under Section 132 of the Act on 24th September, 2021 at the premises of the petitioner.

6.3. The order under Section 127 (2) of the Act was passed on 29th November, 2021 to transfer the jurisdiction of the Assessing Officer of the petitioner from ACIT Circle 1(1), Rajkot to DCIT CC-2, Surat.

6.4. Prior to the passing of the order under Section 127 of the Act, a show-cause notice dated 16.11.2021 was issued and the petitioner filed reply raising objections on 23rd November, 2021.

6.5. The petitioner filed an application under Section 154 of the Act on 14.12.2021 to rectify the order of transfer of jurisdiction from Rajkot to Surat, however, the same was rejected by the Principal Commissioner of Income Tax, Rajkot-1 vide order dated 17th March, 2022.

6.6. It is the case of the petitioner that inspite of change of jurisdiction of the Assessing Officer from respondent No.1-ACIT, Rajkot to respondent No.2-ACIT, Central Circle-2, Surat, the respondent No.1 issued the notice under Section 148 A(b) of the Act on 21st March, 2022 and thereafter, the impugned order dated 30th March, 2022 under Section 148 A(d) of the Act was passed and notice was also issued on the same day under Section 148 of the Act by the respondent No.1-ACIT, Rajkot.

6.7. Thereafter, on 25th April, 2022, the DDIT/ADIT-Surat issued a letter proposing to centralise the case of the petitioner at Mumbai and called upon the petitioner to submit the objections, if any, against such proposal.

6.8. The petitioner filed a detailed reply on 28th April, 2022 objecting to transfer the jurisdiction to Mumbai and requested to transfer the jurisdiction to Rajkot. However, no response was received against the objection letter. Thereafter, the assessment proceedings were initiated by the respondent No.2-ACIT, Surat and various notices were issued from time to time which were replied by the petitioner as under :

6.9. The respondent No.2 issued show-cause notices on 17th June, 2023 and 20th June, 2023. By Email dated 21st June, 2023, the respondent No.2 also informed the petition