2012 (11) TMI 457 - HC - Income Tax

Reassessment proceedings - question of jurisdiction raised by assessee - Held that - The petitioner had changed his registered office w.e.f. 4th November, 1989 from first floor 6376 Naya Bans Delhi to Y-192, Loha Mandi, Naraina, New Delhi, and thereafter w.ef. 3rd October, 2000 from Y-92 Loha Mandi, Naraina, Delhi to Room No.9, Y-3C, Loha Mandi, Naraina, Delhi. The principal place of business is at Agra, where he has a floor mill. In his affidavit filed in the High Court, Shri Ashok Kumar Agrawal has described himself to be working as Director of the petitioner company and has given his address as 6/26, Bhai Gali, Belanganj, Agra. He has not annexed the acknowledgment of return or assessment order of the year 1999-2000, with which we are concerned in the present case. It was in the search and seizure operations carried out in Ganga Ram Agrawal Group of cases, a report was sent by Addl. CIT (Inv), Agra on 10.12.2003 reporting the debts of the assessee in the books of accounts of the Agrawal Groups of persons in respect of assessee from which it was derived and on which reasons were recorded by Addl. Commissioner of Income Tax, Range-4, Agra in the notice under Section 148 that the income of Rs. 1,32,45,426/- of the assessee for the year 1999-2000 has escaped assessment. The limitation will expire on 31.12.2006. The respondent no.1 took extreme caution and care before assuming jurisdiction, which was concurrently vested in her. The petitioner admittedly has a branch office and principal place of business at Agra. The respondent no.1, as A.O., send the matter firstly to DCIT, Circle-5 (1), New Delhi and thereafter DCIT, Circle-3 (1), New Delhi which was very surprising as to why these officers at Delhi did not take over the jurisdiction. They simply returned the papers back to respondent no.1, firstly by advising her to pass order in view of G.K.N. Driveshafts (India) Ltd. s case (2002 (11) TMI 7 - SUPREME COURT) and thereafter returning the papers on the ground that the assessment order of the year 1999-2000, was not accompanied with the letter. It appears that the Assessing Officer at Delhi were either trying to avoid or had some reasons not to assume jurisdiction over the matter. The respondent no.1, before proceedings with the matter, requested for permission of the Commissioner of Income Tax-II, Agra to proceed with the matter who was directed to frame protective assessment orders, so that there is no loss of revenue. The order dated 1.12.2006 giving such direction to her was sufficient to allow her to assume jurisdiction for making assessment. Thus no error of jurisdiction committed by the respondent no.1 in proceedings with the assessment of the income under Section 147/148 which had escaped from the assessment of the petitioner-assessee in the assessment year 1999-2000 - against assessee.

Summary

Issues Involved:
1. Jurisdiction of the Income Tax Officer (ITO) to issue reassessment notice.
2. Validity of the reassessment order under Section 147/148.
3. Compliance with procedural requirements for reassessment.
4. Timeliness of the reassessment notice.
5. Transfer of jurisdiction between different Income Tax Officers.

Issue-wise Analysis:

1. Jurisdiction of the Income Tax Officer (ITO) to issue reassessment notice:
The petitioner contended that the ITO, Agra did not have jurisdiction to issue the reassessment notice as the company was assessed in New Delhi. The court examined Section 124 of the Income Tax Act, which deals with the jurisdiction of Assessing Officers. It was noted that the petitioner had its principal place of business at Agra and also maintained a branch office there. The court found that the ITO, Agra had concurrent jurisdiction and was authorized to issue the reassessment notice. The court also noted that the petitioner did not raise the jurisdictional issue within the stipulated time frame as required under Section 124(3).

2. Validity of the reassessment order under Section 147/148:
The petitioner challenged the reassessment order on the grounds that it was based on incorrect jurisdiction and was issued after the statutory period. The court referred to the search and seizure operations carried out in the Ganga Ram Agrawal group of cases, which revealed that the loans taken by the petitioner were bogus and represented undisclosed income. The court held that the reassessment order was valid as it was based on substantial evidence of escaped income.

3. Compliance with procedural requirements for reassessment:
The petitioner argued that the reassessment proceedings did not comply with the procedural requirements, including the issuance of notice under Section 143(2) and the disposal of objections. The court observed that the ITO, Agra had taken extreme caution and care before assuming jurisdiction and had followed the necessary procedures. The court also noted that the ITO, Agra had sought permission from the Commissioner of Income Tax-II, Agra and had received directions to frame protective assessment orders to prevent loss of revenue.

4. Timeliness of the reassessment notice:
The petitioner contended that the reassessment notice was issued after the expiry of six years from the end of the relevant assessment year, making it time-barred. The court examined the timeline of events and found that the notice under Section 148 was issued within the statutory period. The court also noted that the reassessment proceedings were initiated based on information received during the search and seizure operations, which justified the issuance of the notice within the extended time frame.

5. Transfer of jurisdiction between different Income Tax Officers:
The petitioner raised concerns about the transfer of jurisdiction between different Income Tax Officers in Agra and New Delhi. The court reviewed the correspondence between the ITO, Agra, and the officers in New Delhi. It was found that the officers in New Delhi had returned the case papers to the ITO, Agra, advising her to proceed with the reassessment. The court concluded that the ITO, Agra had acted within her jurisdiction and had followed the necessary procedures for transferring the case, if required.

Conclusion:
The court dismissed the writ petition, upholding the jurisdiction of the ITO, Agra, and the validity of the reassessment order. The interim order staying the recovery proceedings was discharged. The court emphasized that the reassessment was based on substantial evidence of escaped income and that the procedural requirements were duly followed by the ITO, Agra.