2017 (3) TMI 1805 - HC - Income Tax

No notice u/s 143(2) was issued by competent authority - jurisdiction transferred to the DCIT - HELD THAT - Income Tax Officer for the reason he had jurisdiction up to 5, 00, 000/- and PAN also. Since return was filed without showing any income therefore notice was issued by Income Tax Officer but subsequently jurisdiction was transferred to the DCIT. We inquired from learned counsel for appellant as to how jurisdiction was transferred to the DCIT and what happened in the meantime which caused change of jurisdiction from Income Tax Officer to the DCIT to which he replied that there was no change at all and Income Tax Officer on its own forwarded assessment record to DCIT mentioning the reason as change of jurisdiction in its letter dated 09.11.2010. He admitted that there was no change of jurisdiction between 30.09.2010 and 09.11.2010. That being so it is evident that even on 30.09.2010 when notice under Section 143(2) was issued by Income Tax Officer he had no jurisdiction in the matter. The issue answered in favour of Assessee and against Revenue.

Summary

Issues Involved:
Jurisdiction of the Income Tax Appellate Tribunal in setting aside the assessment order and deleting additions made by the assessing officer based on technical grounds, statutory provisions, and judgments.

Analysis:
The appeal arose from a judgment passed by the Income Tax Appellate Tribunal, Lucknow, where the substantial questions of law focused on the Tribunal's justification for setting aside the assessment order and deleting additions made by the assessing officer. The questions revolved around the Tribunal's actions regarding technical grounds, statutory provisions of the Income Tax Act, 1961, and the consideration of relevant judgments.

The primary issue raised during the argument was the legality and jurisdiction of the notice issued under Section 143(2) of the Income Tax Act, 1961. The respondent contended that the notice was illegal and without jurisdiction as it was issued by an authority who did not have the requisite jurisdiction. This issue was crucial as it went to the root of the matter, leading to the framing of a substantial question of law to be decided first before addressing other questions.

The counsel for the appellant argued that the notice was issued by the Income Tax Officer based on the jurisdiction limit and PAN details. However, it was revealed that there was no actual transfer of jurisdiction to the Deputy Commissioner of Income Tax (DCIT) as claimed. The Income Tax Officer forwarded the assessment record to the DCIT on its own, citing a change of jurisdiction, but no such change had occurred between the relevant dates. Consequently, it was established that the Income Tax Officer had no jurisdiction when issuing the notice under Section 143(2).

The court concluded that the notice under Section 143(2) was indeed issued without jurisdiction by the Income Tax Officer, rendering the subsequent proceedings null and void. As a result, the Tribunal's decision to set aside the assessment order and delete the additions made by the assessing officer was upheld. The judgment confirmed the Tribunal's decision and dismissed the appeal in favor of the assessee, highlighting the critical importance of jurisdictional issues in tax matters.