2015 (5) TMI 268 - HC - Income Tax

Reopening of assessment - whether the Deputy Director of Income Tax, International Taxation-II, Ahmedabad, who has issued the impugned notices, has no jurisdiction? - Held that - Petitioner does not press the present Special Civil Applications with a liberty to make appropriate claim before the AO calling in question the jurisdiction of the AO. He has stated at the Bar that such claim and/or objection shall be raised before the AO within a period of 15 days from today. However, has requested to make suitable observation that the AO may be directed to consider and decide the claim made by the petitioner calling in question the jurisdiction of the AO in accordance with law and on merits and if he is not satisfied with the correctness of the claim, he may be directed to refer the matter for determination under sub-section (2) of section 124 of the IT Act before the assessment is made. Without further entering into the larger question on merits and/or without expressing anything on merits in favour of either parties, considering the request made by Shri Soparkar, learned Counsel appearing on behalf of the petitioner recorded herein above, both these petitions are dismissed as withdrawn with above liberty. If any claim is made by the petitioner before the AO calling in question the jurisdiction of the AO within the period of 15 days from today, the AO is directed to consider the same in accordance with law and on merits before the assessment is made. Both these petitions are dismissed as withdrawn with above liberty.

Summary

Issues:
Challenge to impugned notices under Sections 142(1) and 148 of the Income Tax Act, 1961 on the grounds of jurisdiction and non-observance of Section 127.

Analysis:
Issue 1: Jurisdiction of the Assessing Officer
The petitioner, Joy Global (UK) Ltd., challenged the impugned notices under Sections 142(1) and 148 of the Income Tax Act, 1961, for AY 2012-13 and 2013-14, primarily on the basis that the Deputy Director of Income Tax, International Taxation-II, Ahmedabad, lacked jurisdiction. The petitioner did not initially object to the jurisdiction but directly filed Special Civil Applications. Section 124 of the IT Act delineates the jurisdiction of Assessing Officers (AOs), stating that if an assessee questions the jurisdiction of an AO, the matter must be referred for determination before assessment. The petitioner did not raise any objection regarding jurisdiction before the AO. Consequently, the petitioner's counsel did not press the applications and sought liberty to raise jurisdictional objections before the AO within 15 days.

Issue 2: Dismissal of Petitions
The Court, considering the petitioner's request, dismissed the petitions as withdrawn with liberty for the petitioner to challenge the AO's jurisdiction within 15 days. The AO was directed to consider any such claim in accordance with the law and on merits. If the AO found the claim unsatisfactory, the matter was to be referred for determination under sub-section (2) of section 124 of the IT Act before assessment. The AO was mandated to complete this process within three months of receiving the petitioner's jurisdictional claim. The petitions were dismissed with liberty granted, and the notice was discharged.

This judgment highlights the importance of raising jurisdictional objections before the Assessing Officer and the subsequent procedure to be followed if such objections are made. The Court emphasized the need for proper adherence to statutory provisions and granted the petitioner an opportunity to challenge the jurisdiction of the AO within a specified timeframe.