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2017 (2) TMI 1253 - HC - Income TaxACIT assuming jurisdiction - Interpretation of provisions of Section 124(3)(a) - ITAT holding that the ACIT could not have completed the assessment by virtue of Section 120(4)(b)? - notification was issued under Section 120(2), conferring powers upon ACIT - Held that - First, to deal with the issue of jurisdiction under Section 120 by virtue of Section 2(7A), it is not in dispute that the AO includes a DCIT. If so, the notice issued on 15.10.2007, was by a competent officer who always had jurisdiction to do so. At first instance, the assessee could have raised the objection within a month having regard to the notification which existed on 01.08.2007. Secondly, even if for some reason, the assessee were unaware of the notification, it became aware that the ACIT was exercising jurisdiction when it received notice from that official in August 2008. Since that was in continuation of the proceeding by the DCIT it could well have been urged by the assessee within the stipulated time that the said officer, ACIT did not possess jurisdiction. Its failure to do so within the stipulated time, i.e. one month after receipt of notice which was in fact a condition of Section 143(2) proceeding and was treated as such by the assessee precluded it from urging lack of jurisdiction. The assessee, however, contended its omission by not urging this ground before the CIT(A) in the first ground but urging belatedly before the ITAT; precisely the situation which the provision seeks to eliminate. As far as the issue of Section 127 goes, we are of the opinion that having regard to the findings rendered, that question does not arise. The parties are directed to appear before the ITAT for further hearing on the merits on 27.03.2017. - Decided in favour of assessee.
Issues:
Interpretation of provisions of Section 124(3)(a) regarding jurisdiction of Assessing Officers. Analysis: The case involved a dispute over the jurisdiction of the Assessing Officer (AO) in completing the assessment. The appellant questioned whether the Income Tax Appellate Tribunal (ITAT) erred in its interpretation of Section 124(3)(a) and holding that the Additional Commissioner of Income Tax (ACIT) could not have completed the assessment due to Section 120(4)(b). The facts revealed that the ACIT assumed jurisdiction in August 2008 and completed the assessment in December 2008. The appellant raised objections regarding the ACIT's jurisdiction for the first time before the ITAT, arguing that the ACIT lacked the authority to act as an AO. However, the ITAT remitted the matter to the CIT(A) for decision on merits. The CIT(A) rejected the jurisdictional objection based on the appellant's interpretation of Section 120(4)(b). The ITAT, while considering the notification under Section 120(2), held that the ACIT could not act as an AO without specific authorization under Section 120(4)(b). The Revenue argued that the DCIT always possessed jurisdiction under Section 120(1) and 120(2), and the notification conferred additional jurisdiction upon the ACIT without affecting the DCIT's authority. It was contended that the appellant failed to challenge the ACIT's jurisdiction within the stipulated time, precluding them from raising the objection later. On the other hand, the appellant contended that the ACIT's jurisdiction was invalid without specific authorization under Section 120(4)(b), emphasizing that the notice issued by the DCIT in 2007 was unauthorized. The Court analyzed the submissions and highlighted the appellant's argument that the ACIT lacked jurisdiction due to the absence of a specific notification under Section 120(4)(b). However, the Court found that the absence of reference to a specific provision did not invalidate the authority conferred under Section 120(2). Furthermore, the Court emphasized Section 124(3)(a), which bars questioning the AO's jurisdiction after the completion of assessment or one month after receiving notice. The appellant's failure to raise objections within the stipulated time, despite being aware of the ACIT's jurisdiction, was deemed fatal to their case. Ultimately, the Court ruled in favor of the Revenue, allowing the appeal and directing the parties to appear before the ITAT for further proceedings. The judgment underscored the importance of timely raising jurisdictional objections and the application of relevant statutory provisions in determining the validity of assessments.
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