2018 (8) TMI 1793 - AT - Income Tax

Challenge of jurisdiction u/s.120(4)(b) - limitation u/s.124(3) - transfer u/s.127(3) - transferring the jurisdiction from the ITO, Ward-1(1), Thanjavur to JCIT, Thanjavur Range, Thanjavur for framing the assessment - validity of notice u/s.148 issued by the JCIT, Thanjavur Range, Thanjavur - HELD THAT - Once the time limit for challenging jurisdiction has expired, the same cannot be challenged. Admittedly, the provisions of the section 292BB introduced by the Finance Act, 2008 would not apply insofar as the assessee is not challenging the notices or the service of the notices, but the assessee has challenged the very jurisdiction and the challenge to the jurisdiction has to be within the time provided u/s.124(3) of the Act. What is before the Tribunal is not the transfer of jurisdiction, but is a challenge to the jurisdiction u/s.120(4)(b). This challenge to the jurisdiction is completely different from the challenge to the transfer of jurisdiction, which has been made in the Writ Petition and which has been dismissed by the Hon ble jurisdictional High Court. Admittedly, no evidence of filing of writ appeal or pendency of the Writ Appeal or any orders passed by the Hon ble jurisdictional High Court in respect of the Writ Appeal has been produced before us. The challenge to the jurisdiction u/s.120(4)(b) has not been made within the prescribed time u/s.124(3) of the Act to the authority, whose jurisdiction is being challenged. Consequently, the issue of the challenge of the jurisdiction no more survives. Penalties levied u/s.272(A)(2)(e) - assessee has never filed its returns earlier Registration u/s.12AA - HELD THAT - Admittedly the assessee has submitted that the assessee was under the bona fide belief that the JCIT, Thanjavur Range, Thanjavur did not have jurisdiction. Admittedly, the assessee has never filed its returns hitherto earlier. This being so, the bona fide belief of the assessee cannot be disregarded. Further, perusal of the assessment order also shows that the AO has completed the assessment with the presumption that the assessee does not have registration u/s.12AA. The assessee has been granted registration u/s.12AA of the Act by an Order of the Tribunal, which has been given effect by the Commissioner of Income Tax-II, Trichy in his order dated 17.11.2011 granting the registration u/s.12AA of the Act with effect from 01.07.1973. This being so, the issues in the assessment orders passed by the AO would have to be re-adjudicated afresh after considering the registration granted to the assessee-trust u/s.12AA. In these circumstances, the issues in these appeals in respect of the merits are restored to the file of ld. Assessing Officer for re-adjudication after considering the registration u/s.12AA of the Act granted to the assessee by Commissioner of Income Tax . After considering that bona fide belief, as also the factum of the registration u/s.12AA grant to the assessee, we have restored the issues raised in the quantum appeals to the file of ld. Assessing Officer for re-adjudication. This, view of ours herein is also, on account of undertaking given by the Authorized Representative of assessee, is that the assessee would co-operate in the set-aside proceedings. This bona fide belief of the assessee has not been shown to be false. It is very much plausible belief, though it has not been upheld either by the Hon ble Jurisdictional High Court of Madras in the Writ Petition or by us in the quantum appeals. However, such refusal to accept the bona fide belief would not make the bona fide belief of the assessee to be false, or improbable or implausible. This being so, we accept the reasonable cause shown by the assessee and the penalties levied u/s.272(A)(2)(e) of the Act stand cancelled

Summary

Issues:
Challenging jurisdiction of assessing authority, confirmation of penalty u/s.272A(2)(e) of the Income-tax Act, 1961.

Analysis:
1. The appeals filed by the assessee challenged the common orders of the Commissioner of Income Tax (Appeals) regarding jurisdiction and penalty imposition. The quantum and penalty appeals were interlinked and disposed of together for convenience.

2. The assessee, represented by Mr. K. Meenakshisundaram, argued that the assessing authority lacked jurisdiction due to a survey and subsequent notices issued by the JCIT, Thanjavur Range. The assessee's trust had faced challenges regarding registration under section 12A of the Act. The AR.V. Sreenivasan, representing the Revenue, countered these arguments.

3. The AR argued that the assessee failed to challenge the jurisdiction within the prescribed time under section 124(3)(b) of the Act. The AR also highlighted the dismissal of a Writ Petition by the High Court. The jurisdictional issues were thoroughly discussed, including challenges to the JCIT's jurisdiction and the registration status of the assessee.

4. The DR contended that the assessee's actions delayed proceedings without legal basis, leading to costs imposed by the High Court. The arguments presented by both parties were considered by the tribunal.

5. The tribunal analyzed the jurisdictional challenges and the merits of the case. It was noted that the assessee did not challenge the jurisdiction within the specified time frame, leading to the confirmation of the JCIT's jurisdiction. However, the tribunal acknowledged the registration granted to the assessee under section 12AA of the Act.

5.1. The tribunal recognized the bona fide belief of the assessee regarding jurisdiction issues and directed a re-adjudication by the Assessing Officer considering the registration status. The tribunal also emphasized the need for cooperation in the reassessment process.

6. The quantum appeals were partly allowed for statistical purposes, and the penalty appeals were discussed separately.

7. The penalty appeals focused on the assessee's belief regarding jurisdiction and non-filing of returns. The tribunal considered the arguments presented by both parties.

8. After reviewing the materials, the tribunal accepted the assessee's bona fide belief and canceled the penalties imposed under section 272(A)(2)(e) of the Act.

9. In conclusion, the quantum appeals were partly allowed, and the penalty appeals were allowed, considering the reasonable cause shown by the assessee and the cooperation promised for the reassessment process.