2012 (2) TMI 596 - AT - Income Tax

Summary

Issues Involved:
1. Legality of assumption of jurisdiction u/s 263 of the Act by the CIT.
2. Validity of the show-cause notice issued by the ITO (Technical).
3. Examination of the assessment order's errors and its prejudicial nature to the interest of the Revenue.

Summary:

1. Legality of Assumption of Jurisdiction u/s 263:
The assessee challenged the legality of the assumption of jurisdiction u/s 263 of the Act by the CIT, arguing that the show-cause notice dated 12.3.2010 was issued and signed by the ITO (Technical) and not by the CIT himself. The Tribunal noted that the powers of revisional jurisdiction lie with the Commissioner and not with the ITO (Technical). The satisfaction of the Commissioner is necessary before invoking revisional jurisdiction, and only the Commissioner is authorized by the Act to call for and examine the record of any proceedings. The Tribunal concluded that the jurisdiction was wrongly assumed by the CIT as the show-cause notice was issued by the ITO (Technical).

2. Validity of the Show-Cause Notice:
The Tribunal observed that the show-cause notice was issued by the ITO (Technical) and not by the CIT. The Tribunal referred to various judicial pronouncements, including Nandprakash & Co. vs. ITO, Satish Kumar Kesari vs. ITO, and Jheendu Ram vs. CIT, which supported the view that the assumption of jurisdiction was invalid if the notice was not issued by the Commissioner himself. The Tribunal held that the notice issued by the ITO (Technical) was invalid, and thus, the jurisdiction was wrongly assumed.

3. Examination of the Assessment Order's Errors:
The Tribunal noted that the assessment order was framed in a hurried manner without detailed discussion, and the Assessing Officer did not examine the issue of capital gain properly. However, since the Tribunal found the assumption of jurisdiction itself void-ab-initio, it refrained from dealing with the issue on merit. The Tribunal emphasized that the satisfaction of the Commissioner is necessary for invoking revisional jurisdiction u/s 263, and the Commissioner must state in what manner the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue.

Conclusion:
The Tribunal allowed the appeal of the assessee, concluding that the jurisdiction was wrongly assumed by the CIT as the show-cause notice was issued by the ITO (Technical) and not by the Commissioner himself. The Tribunal refrained from dealing with the merits of the case due to the invalid assumption of jurisdiction. The appeal of the assessee was allowed, and the order was pronounced in the open Court on 28.2.2012.