2012 (5) TMI 588 - AT - Income Tax

Reopening of assessment - jurisdiction to issue notice - Held that - ITO Kapurthala has no jurisdiction to issue notice on the present assessees which in fact should have been served upon Sh. Jarnail Singh the power of attorney holder to whom the notices by the Department had been issued by ITO Ward 2(6) Jalandhar/ITO Ward IV(2) Jalandhar. Sh. Jarnail Singh the special power of attorney holder who had signed the return of income. As mentioned hereinabove he is the special power of attorney holder in the return of income itself. The department has not held the return of the assessee as invalid return which has been signed by Sh. Jarnail Singh special power of attorney available at PB-9. In the facts and circumstances of the present cases having not served the notices on Sh. Jarnail Singh at vill. Dhina (Jalnadhar) and in view of the Review Note mentioned hereinabove and order of the CIT u/s 264 and arguments made by both the parties and paper books available on record we are of the view that the notice issued by the Income Tax Department on Sh. Jasbir Singh and other assesses at vill. Noorpur Dona/Mansoorwal Dona Distt. Kapurthala is bad in law and assessments so made are quashed

Issues Involved:
1. Misreading of CIT's directions.
2. Jurisdiction of ITO, Kapurthala-1.
3. Service of notice under section 148.
4. Service of notice under section 143(2).
5. Jurisdiction of ITO Ward 2(6), Jalandhar.
6. Assumption of jurisdiction under section 148.
7. Proviso to section 147 and expiry of four years.
8. Applicability of section 149(3).
9. Validity of assessment under section 143(3).
10. Cross-examination of Sh. Chanan Singh.
11. Admission of evidence regarding residence.
12. Agricultural land as a capital asset under section 2(14).
13. Applicability of CIT vs. Satinder Pal Singh decision.
14. Lawfulness of orders.

Detailed Analysis:

1. Misreading of CIT's Directions:
The appellant contended that the CIT(A) misread the directions of the CIT under section 264 and rejected various material contentions of the assessee. The Tribunal found that the CIT(A) did not appropriately consider the directions and thus, the assessment needed to be revisited.

2. Jurisdiction of ITO, Kapurthala-1:
The appellant argued that the CIT(A) wrongly upheld the jurisdiction of ITO, Kapurthala-1, despite valid objections under section 124(3). The Tribunal noted that the jurisdictional issue was not adequately addressed and required proper consideration.

3. Service of Notice under Section 148:
The appellant claimed that the notice under section 148 was not served, rendering the assessment invalid. The Tribunal found that the notice was indeed not served properly, as confirmed by the CIT's review note, and thus, the assessment was quashed.

4. Service of Notice under Section 143(2):
The appellant argued that the notice under section 143(2) was not served after compliance with section 148. The Tribunal agreed, noting that the lack of proper service invalidated the assessment.

5. Jurisdiction of ITO Ward 2(6), Jalandhar:
The appellant contended that ITO Ward 2(6), Jalandhar, had jurisdiction, and the notice issued by ITO, Kapurthala, was invalid. The Tribunal found that the jurisdictional issues were not properly addressed and required further inquiry.

6. Assumption of Jurisdiction under Section 148:
The appellant argued that the subsequent assumption of jurisdiction under section 148 amounted to an invalid review. The Tribunal agreed, referencing the Supreme Court decision in CIT vs. Kelvinator India Ltd., and quashed the assessment.

7. Proviso to Section 147 and Expiry of Four Years:
The appellant contended that the ITO, Kapurthala, was estopped from assuming jurisdiction after four years. The Tribunal found merit in this argument and noted that the assessment was time-barred.

8. Applicability of Section 149(3):
The appellant argued that the notice under section 148 was barred by time under section 149(3). The Tribunal agreed, finding the assessment invalid due to the time-barred notice.

9. Validity of Assessment under Section 143(3):
The appellant claimed that the assessment under section 143(3) was invalid as it was based on an invalid return. The Tribunal found the assessment self-contradictory and invalid.

10. Cross-examination of Sh. Chanan Singh:
The appellant argued that the CIT(A) erred by not allowing cross-examination of Sh. Chanan Singh. The Tribunal noted that this procedural lapse affected the fairness of the assessment.

11. Admission of Evidence Regarding Residence:
The appellant contended that evidence proving residence at Jalandhar was not admitted. The Tribunal found that this evidence was crucial and should have been considered.

12. Agricultural Land as a Capital Asset under Section 2(14):
The appellant argued that the agricultural land did not qualify as a capital asset under section 2(14). The Tribunal admitted additional evidence supporting this claim and found the CIT(A)'s contrary finding erroneous.

13. Applicability of CIT vs. Satinder Pal Singh Decision:
The appellant contended that the CIT(A)'s finding was opposed to the jurisdictional High Court decision in CIT vs. Satinder Pal Singh. The Tribunal agreed, noting that the distance of agricultural land must be measured by road, not straight line.

14. Lawfulness of Orders:
The appellant argued that the orders were against law and facts. The Tribunal found multiple procedural and jurisdictional errors, quashing the assessments.

Conclusion:
The Tribunal quashed the assessments due to improper service of notices, jurisdictional errors, and procedural lapses. The additional evidence was admitted, and the legal grounds of the appellants were allowed. The appeals were allowed, and the assessments were declared invalid.

← Previous Next →