2010 (8) TMI 1033 - HC - Income Tax

Jurisdiction of AO for service of notice u/s 143(2) - Facts of the case, Notice was duly served u/s 143 along with detailed questionnaire by the Dy. CIT, which was served upon the assessee on 21st April, 2006 when the jurisdiction stood transferred to him. Sec. 124(3) specifically provides for limitation of one month, inter alia, from the date of service of notice u/s 143(2). HELD THAT - In the present case, admittedly objection was not taken within one month. Therefore, for this reason, we are of opinion that the order of the Tribunal holding that the assessment proceeding for the block period was without jurisdiction is not correct. We, thus, decide the question in favour of the Revenue and against the assessee. As a result thereof, the impugned order passed by the Tribunal is set aside and the matter is remanded back to the Tribunal to decide the appeal on merits.

Summary

Issues:
1. Jurisdiction of the Assessing Officer under sections 158BD and 158BC of the Income Tax Act, 1961.

Analysis:
The High Court considered the substantial question of law regarding the correctness of the Tribunal's decision in holding that the Assessing Officer's order was without jurisdiction despite compliance with the procedure under sections 158BD and 158BC of the Income Tax Act, 1961. The case involved a search conducted at the premises of the assessee's father, leading to the issuance of a notice under section 158BD to the assessee. The Assessing Officer made an assessment for the block period, which the CIT(A) partly allowed. However, the Tribunal set aside the assessment solely on the grounds of jurisdiction. The issue revolved around the jurisdiction of the Assessing Officer at the time of issuing the notice under section 158BD.

The Court noted that initially, the Assessing Officer issuing the notice did not have jurisdiction over the assessee, as it vested with a different officer. The assessee's case was later transferred to the correct jurisdiction, but at the time of the notice issuance, the jurisdiction was incorrect. The assessee contended that the objection to jurisdiction was not raised within one month of receiving the notice, citing Section 124(3) of the Income Tax Act, 1961, which limits challenging jurisdiction under certain circumstances.

The Court agreed with the Revenue's argument that Section 124(3) imposes a limitation on challenging jurisdiction after one month from the notice's service. As the objection was not raised within the stipulated time, the Court held that the Tribunal's decision to set aside the assessment for lack of jurisdiction was incorrect. The assessment proceedings for the block period were deemed to be within jurisdiction, as per the provisions of Chapter XIV-B of the Act governing special procedures for assessment of search cases. Consequently, the Court set aside the Tribunal's order and remanded the matter for a decision on the appeal's merits.

In conclusion, the High Court decided in favor of the Revenue, holding that the Tribunal erred in finding the assessment proceedings without jurisdiction. The matter was remanded back to the Tribunal for a decision on the appeal's merits, emphasizing the importance of complying with the statutory provisions regarding jurisdiction in assessment proceedings under the Income Tax Act, 1961.