2013 (8) TMI 694 - AT - Income Tax

Notice issued u/s 148 - Transfer of a case - Jurisdiction to issue notice u/s 148 with AO Delhi or AO Kolkata - Validity of reopening of assessment - CIT sustained notice of reassessment - Held that - After going through the provisions of sections 120, 124 and 127 of the Act, the plenary powers regarding conferment of jurisdiction has been vested, by delegation by the statute, on the Commissioner having jurisdiction in respect of assessment of the case. This power, in the absence of any prohibition or restriction, empowers the Commissioner of Income-tax to effect realignment of jurisdiction. The Commissioner of Income-tax by order or direction, while divesting these authorities of the power in respect of performance of their duties under the Act conferred earlier, may confer such jurisdiction to other authorities under the Act, as he may direct. As soon as such order or direction is made completely divesting the jurisdiction of the authorities so long so empowered, all proceedings including those which might arise thereafter, before them as also proceedings pending before them, come within the jurisdiction of the newly conferred authorities unless any specific provision is made in respect of any pending proceedings. Such consequence is inevitable when there is withdrawal of jurisdiction, which means automatic extinction of jurisdiction of one authority with simultaneous conferment of jurisdiction on another authority under the Act in respect of all pending and future proceedings. Explanation to section 127 of the Act makes it clear that the word case in relation to any person whose name is specified in the order of transfer means all proceedings under the Act in respect of any year which may be pending on the date of the transfer, and also includes all proceedings under the Act which may be commenced after the date of transfer in respect of any year. The word case is thus used in a comprehensive sense of including both pending proceedings and proceedings to be instituted in the future. Consequently, an order of transfer can be validly made even if there be no proceedings pending for assessment of tax and the purpose of the transfer may simply be that all future proceedings are to take place before the officer to whom the case of the assessee is transferred. The order passed by CIT-1, Delhi, transferring jurisdiction from ITO, Ward-3(3), New Delhi on 04-01-2010, subsequent action of the AO i.e. ITO, Ward-3(3), New Delhi issuing notice u/s. 148 of the Act dated 25-03-2010 is invalid because the jurisdiction from ITO, Ward-3(3), New Delhi by CIT-1, Delhi to ITO, Ward-6(1), Kolkata. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening of assessment under Section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer (AO) under Sections 124 and 127 of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of Reopening of Assessment under Section 148:
The assessee challenged the reopening of the assessment under Section 148 of the Income-tax Act, 1961, arguing that the notice was invalid as it was issued by an AO who did not have jurisdiction over the case. The CIT(A) held that the reopening was valid under Section 292BB of the Act, but the assessee contended that Section 292BB did not apply to the assessment year under consideration. The assessee further argued that the AO in Delhi had ceased to have jurisdiction over the case following an order under Section 127 of the Act, which transferred the case to Kolkata.

2. Jurisdiction of the Assessing Officer:
The assessee filed its return of income in Delhi, but the jurisdiction was transferred to Kolkata by an order under Section 127 of the Act. Despite this transfer, the AO in Delhi issued a notice under Section 148 after obtaining approval from the Additional CIT, Range-3, Delhi. The CIT(A) noted that the assessee did not object to the jurisdiction during the assessment proceedings and held that the jurisdiction was not automatically transferred until the records were physically transferred to the new AO. The CIT(A) dismissed the assessee's objections, citing Section 124(3) of the Act, which requires jurisdictional challenges to be raised within one month of the notice.

Findings and Conclusion:
The Tribunal examined the chronology of events and noted that the order under Section 127 was passed on 04-01-2010, transferring the case from Delhi to Kolkata. However, the notice under Section 148 was issued by the Delhi AO on 25-03-2010. The Tribunal held that once the jurisdiction was transferred by the CIT, all future proceedings should be conducted by the new AO in Kolkata. The Tribunal rejected the CIT(A)'s reasoning that the jurisdiction was not transferred until the physical transfer of records, emphasizing that the statutory transfer of jurisdiction under Section 127 was sufficient.

The Tribunal concluded that the notice issued under Section 148 by the Delhi AO was invalid as the jurisdiction had already been transferred to Kolkata. Consequently, the reopening of the assessment was quashed, and the appeal of the assessee was allowed.

Order:
The Tribunal allowed the appeal of the assessee, quashing the notice issued under Section 148 of the Income-tax Act, 1961, by the Delhi AO as invalid due to the transfer of jurisdiction to Kolkata. The order was pronounced in the open court on 14/05/2013.