2013 (5) TMI 194 - AT - Income Tax

Unexplained investment - Non-compliance of the notice issued by assessing officer u/s 142(1)(2) of the act - CIT (A) annulled the assessment order passed by the ITO Held that - However, since the learned CIT(A) had not decided the issue on merit, therefore, we in the interest of justice, deem it proper to restore the issue to his file for adjudicating the issue on merit. Needless to say, he shall give due opportunity of being heard to the assessee and decide the issue as per law.

Summary

Issues involved:
Jurisdiction of Assessing Officer | Compliance with notice u/s.142(1) | Annulling assessment order by CIT(A) | Grounds of appeal by Revenue | PAN Number not mentioned in AIR | Lack of cooperation by assessee | Assessment completed under section 144 | Admitting additional evidence | Violation of Rule 46A | Decision on merit by CIT(A) | Applicability of previous Tribunal decision

Jurisdiction of Assessing Officer:
The appeal concerned the jurisdiction of the Assessing Officer over the assessee for the Assessment Year 2005-06. The CIT(A) annulled the assessment order passed by the Assessing Officer, citing that the designated Assessing Officer did not have jurisdiction over the assessee as she was a regular filer with a PAN number. However, the Tribunal set aside this decision, noting that the PAN number was not mentioned in the Annual Information Return and the assessee did not inform the Assessing Officer of her regular filer status. Therefore, the Tribunal concluded that the Assessing Officer did have jurisdiction over the assessee and remanded the issue back to the CIT(A) for a decision on merit.

Compliance with notice u/s.142(1):
The assessee failed to comply with the notice u/s.142(1) issued by the Assessing Officer, which led to the completion of the assessment u/s.144. Despite multiple notices being duly served, the assessee did not respond or appear before the designated Assessing Officer, resulting in the assessment being completed based on the unexplained investment made by the assessee.

Annulling assessment order by CIT(A):
The CIT(A) annulled the assessment order passed by the Assessing Officer, stating that the Assessing Officer did not have jurisdiction over the assessee as she was a regular filer with a PAN number. The CIT(A) referred to an order issued by the CCIT, Pune, regarding jurisdictional Assessing Officers. However, the Tribunal set aside this decision and remanded the issue back to the CIT(A) for a decision on merit.

Grounds of appeal by Revenue:
The Revenue appealed the CIT(A) decision, arguing that the assessment annulment was contrary to law and the facts of the case. The Revenue contended that the Assessing Officer had jurisdiction based on the non-mention of the PAN number in the Annual Information Report and the lack of cooperation from the assessee during the assessment proceedings.

PAN Number not mentioned in AIR:
The PAN number of the assessee was not mentioned in the Annual Information Report, and the assessee did not provide the required details to the Assessing Officer to establish her regular filer status. This lack of information contributed to the dispute regarding the jurisdiction of the Assessing Officer over the assessee for the assessment.

Lack of cooperation by assessee:
The assessee did not cooperate with the assessment proceedings despite multiple notices being served. The failure to respond or appear before the designated Assessing Officer led to the completion of the assessment u/s.144 by treating the investment as unexplained.

Assessment completed under section 144:
Due to the non-compliance of the assessee with the notices issued u/s.142(1), the Assessing Officer completed the assessment u/s.144, determining the total income based on the unexplained investment made by the assessee in bonds/debentures during the relevant financial year.

Admitting additional evidence - Violation of Rule 46A:
The CIT(A) admitted additional evidence related to the PAN of the assessee and sources of investments without remanding the matter to the Assessing Officer, which was contested by the Revenue as a violation of Rule 46A of the Income Tax Rules 1962.

Decision on merit by CIT(A):
The CIT(A) did not decide the issue on merit but annulled the assessment order based on jurisdictional grounds. The Tribunal emphasized the importance of deciding the issue on merit and remanded the matter back to the CIT(A) for a comprehensive decision.

Applicability of previous Tribunal decision:
The Tribunal noted a previous decision by the Pune Bench in a similar case where the issue was decided on merit, unlike in the present case. The Tribunal highlighted the distinction and concluded that the previous decision was not entirely applicable to the facts of the current case.

In conclusion, the judgment addressed various issues related to the jurisdiction of the Assessing Officer, compliance with notices, assessment annulment, grounds of appeal by the Revenue, lack of cooperation by the assessee, assessment completion under section 144, admitting additional evidence, decision on merit by the CIT(A), and the applicability of a previous Tribunal decision. The Tribunal emphasized the importance of establishing jurisdiction, cooperation in assessment proceedings, and making decisions on merit while following procedural rules to ensure a fair and lawful assessment process.