2013 (8) TMI 286 - HC - Income Tax

Notice u/s 148 - Notice issued after search u/s 132 - Return file before the wrong officer - Held that - On the basis of the returns filed by the petitioner, and the intimation sent by the Department under section 143(1) of the Act, the assessee discharged his tax liabilities. The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. When the assessee filed his returns before his ordinary Assessing Officer, primarily the Assessing Officer concerned could have either refused to accept such returns or could have transferred them before the competent authority. He not having done so, after a long period of time, it would not be open for the Department to ignore such returns contending that the same were filed before the officer who had no jurisdiction and therefore, such returns were non est. Any such attempt on the part of the Department would lead to abnormal and incongruent situation. The returns accepted by the Assessing Officer, with or without scrutiny and the assessment framed thereon would stand in eye of law. The reasons recorded for reopening assessment are not valid. The sole ground on which the assessment is sought to be reopened under section 147 of the Act, is not sustainable. - Decided in favour of assessee.

Issues Involved:
1. Validity of reopening assessments under section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to assess the income of the petitioner.
3. Proper filing of returns and the implications of filing before an incorrect officer.
4. Departmental notifications and their communication to the assessee.

Detailed Analysis:

1. Validity of Reopening Assessments under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notices dated 2.5.2001, issued by the Assessing Officer under section 148, seeking to reopen assessments for the assessment year 1997-98. The Assessing Officer recorded reasons for reopening, stating that the returns were filed with a different ward with mala fide intention, and hence, the income escaped assessment. The court found that the sole ground for reopening was that returns were filed before a wrong officer, which was not a valid reason. The court quashed the notices, stating that the reasons recorded for reopening the assessment were not sustainable.

2. Jurisdiction of the Assessing Officer to Assess the Income of the Petitioner:
The Department argued that after the search operations, the proper officer with jurisdiction was the A.C.I.T. (Investigation), Rajkot. The petitioner, however, filed returns before the Income Tax Officer, Ward 1(2), Rajkot. The court noted that the petitioner was ordinarily assessed by the Income Tax Officer, Ward 1(2), Rajkot, and that the Department had not clearly communicated the change in jurisdiction to the petitioner. The court held that the Department could not take a stand that the returns were non est due to being filed before an officer without jurisdiction.

3. Proper Filing of Returns and the Implications of Filing Before an Incorrect Officer:
The petitioner contended that the returns were filed before the proper officer, and the Department could not later claim that these were invalid. The court agreed, noting that the Department had accepted the returns and processed them under section 143(1) without raising any issues at the time. The court emphasized that the burden of identifying the correct Assessing Officer should not be on the assessee, especially when the Department itself was unclear about the jurisdictional notifications.

4. Departmental Notifications and Their Communication to the Assessee:
The court discussed the notifications issued by the C.B.D.T. under section 120 of the Act, which transferred jurisdiction to the A.C.I.T. (Investigation), Rajkot. However, it was noted that the Department had not effectively communicated these changes to the petitioner. The court highlighted that even the Department was not clear on the jurisdictional basis, making it unreasonable to expect the petitioner to be aware of such notifications. The court concluded that the Department could not ignore the returns filed and accepted by the original Assessing Officer.

Conclusion:
The court allowed the petitions, quashing the notices issued under section 148. It held that the sole ground for reopening the assessments, i.e., filing returns before a wrong officer, was not valid. The court emphasized the need for clear communication from the Department regarding jurisdictional changes and held that the burden of identifying the correct officer should not be on the assessee. The Department's acceptance of the returns and the taxes paid under those returns could not be disregarded after a significant period.

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