2016 (9) TMI 1572 - AT - Income Tax

Jurisdiction of ITO to frame the assessment - as per the return of income filed by the assessee in pursuance to notice u/s 142 (1) the assessee declared total income - HELD THAT - In the facts of the present case the judgment of KAPIL JAIN 2010 (8) TMI 1033 - DELHI HIGH COURT cited by the ld. DR of the revenue is not applicable. Regarding this contention that this circular is applicable only in those cases where return is filed u/s 139 (1) and it is not applicable where return is filed u/s 142 (1) after survey We feel that there is no merit in this contention because there is no such restriction in the circular and otherwise also if ITO is not considered to be competent to frame an assessment where return is filed u/s 139 (1) declaring income in excess of a specified limit then how the ITO can be competent to assesss similar return but filed after survey u/sc 142 (1). Hence this contention is rejected. We hold that the assessment order passed by the ITO in the present case is not a valid assessment order and hence we set aside the same and restore the matter back for framing a de-novo assessment by a competent Officer being ACIT or DCIT. In view of our decision other grounds raised by the assessee in its appeal and the appeal of the revenue do not require any separate adjudication at this stage. Appeal of the assessee is allowed for statistical purposes and the appeal of the revenue is dismissed.

Summary

Issues:
Cross-appeals filed against CIT(A) order for assessment year 2009-10.

Analysis:
1. The first issue raised in the appeal relates to the jurisdiction of the Assessing Officer (AO) in passing the assessment order. The appellant argued that the AO, an Income Tax Officer (ITO), did not have the authority to assess the income declared by the assessee, which exceeded the limit specified in CBDT Instruction No.1/2011. The appellant contended that as per the Board's instructions, assessments in metro cities with income over ?30 lakhs should be framed by Deputy Commissioner of Income Tax (DCIT) or Assistant Commissioner of Income Tax (ACIT). However, the AO passed the assessment order. The appellant relied on the instructions issued under section 119 of the IT Act, 1961, to support their argument. The Revenue, on the other hand, cited a judgment of the Delhi High Court to assert that objections to jurisdiction should have been raised within one month after assessment completion. The Revenue also argued that the CBDT instructions applied only to returns filed under section 139(1), not those filed after a survey under section 133A. The Tribunal found that the AO's assessment order was irregular but not illegal, and decided to remand the matter for a de-novo assessment by a competent officer, either an ACIT or DCIT.

2. The second issue involved a comparison with a judgment of the Delhi High Court in the case of Kapil Jain. The Tribunal distinguished the facts of that case, where objections to jurisdiction were raised after the expiration of the one-month period following the notice served under section 143(2) of the IT Act. The Tribunal noted that the restriction on raising objections about jurisdiction under section 124(3) pertained to territorial jurisdiction, not the competence of the assessing officer. In the present case, the question was whether the ITO had the competence to assess income exceeding the specified limit, which, according to the CBDT instructions, required assessment by an ACIT or DCIT. The Tribunal rejected the Revenue's contention that the circular applied only to returns filed under section 139(1) and not after a survey under section 142(1). The Tribunal held that the ITO was not competent to assess returns exceeding the specified limit, regardless of the filing section. Therefore, the Tribunal set aside the assessment order and directed a de-novo assessment by a competent officer.

3. In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal. The Tribunal found the assessment order by the ITO to be invalid due to lack of jurisdiction and ordered a fresh assessment by a competent officer. Other grounds raised by the parties did not require separate adjudication in light of the decision on jurisdictional issues.