2016 (1) TMI 138 - HC - Income Tax

Reopening of assessment - jurisdiction of AO to issue notice - Held that - In the instant case, admittedly, the Assessing Officer for the relevant year as well as for the previous assessment years was the Income Tax Officer, Range-I, Agra and not the Assistant Commissioner of Income Tax-I, Agra. Consequently, in our opinion notice for reassessment and the reasons to believe to be recorded can only be done by the Assessing Officer, namely, the Income Tax Officer, Range-I, Agra. Since the same was not done, the notice for reassessment issued under Section 148 of the Act by the Assistant Commissioner of Income Tax-I, Agra was without jurisdiction. We are also of the view that so long as the file of the assessee is not transferred under Section 127 of the Act, all assessment and reassessment can only be done by the Assessing Officer. Consequently, the proceedings initiated by the said authority were without jurisdiction and cannot be sustained. - Decided in favour of assessee

Summary

Issues: Jurisdiction of Assistant Commissioner to issue notice under Section 148 of the Income Tax Act.

Analysis:
The deceased taxpayer filed his return for the assessment year 2007-08 before the Income Tax Officer, Range-I, Agra. The Assistant Commissioner of Income Tax-I, Agra issued a notice under Section 148 of the Income Tax Act, indicating that income had escaped assessment for that year. The petitioner objected to the jurisdiction of the Assistant Commissioner to issue the notice, citing the Supreme Court decision in G.K.N. Driveshafts (India) Ltd. Vs. Income Tax Officer. The Assistant Commissioner rejected the objection and proceeded with the notice. The petitioner filed a writ petition seeking to quash the notice, arguing that the Assistant Commissioner lacked jurisdiction to issue it.

The respondents admitted that the Assistant Commissioner was not the Assessing Officer of the deceased taxpayer but argued that since the escaped income was above Rs. 10 lakhs, the Assistant Commissioner had jurisdiction to issue the notice. However, the High Court held that the pecuniary jurisdiction should not be considered at the notice issuance stage. It emphasized that a reassessment notice can only be issued by the Assessing Officer who has reasons to believe that income escaped assessment.

In this case, the Assessing Officer for the relevant year and previous assessment years was the Income Tax Officer, Range-I, Agra, not the Assistant Commissioner. Therefore, the High Court concluded that the notice for reassessment and the reasons to believe should have been done by the Assessing Officer, making the notice issued by the Assistant Commissioner without jurisdiction. The court also highlighted that until the assessee's file is transferred under Section 127 of the Act, all assessments and reassessments must be done by the Assessing Officer. Citing a decision by the Punjab and Haryana High Court, the High Court further supported its view that the proceedings initiated by the Assistant Commissioner were without jurisdiction.

Consequently, the High Court quashed the impugned reassessment notice dated 18th August 2011 for the assessment year 2007-08, ruling in favor of the petitioner and allowing the writ petition.