2016 (11) TMI 124 - HC - Income Tax

Jurisdiction to make the assessment - validity of assessment - Held that - From a bare reading of the relevant part of the notification, dated 22nd October, 2014, aforementioned, it becomes abundantly clear that it is the Commissioner of Income Tax (Exemption), Patna, who has been vested with the jurisdiction to make assessment under various provisions of the Income Tax Act including Section 11 thereof, which relates to income from property held for charitable or religious purposes. Considering the fact that impugned order of assessment has been made by Income Tax Officer (Exemptions), Muzaffarpur, who, in the light of the Notification, dated 22nd October, 2014, has not been vested with the jurisdiction to deal with the Trust, which do not claim exemption from payment of taxes, the Income Tax Officer (Exemptions), Muzaffarpur, could not have, apparently, made any assessment of tax in the case of the present petitioner.Because of the fact that the assessment, has impugned in the present case, has been made by an authority, which had no jurisdiction to make assessment inasmuch as the authority to make assessment stood vested in the Commissioner of Income-Tax (Exemption), Patna, the impugned assessment, so made, is void ab initio and cannot be regarded as a mere irregularity.

Summary

Issues:
Jurisdiction of Income Tax Officer (Exemptions) in making assessment under Section 143(3) of the Income-tax Act, 1961 without being registered under Section 12AA or claiming exemption under Section 11.

Analysis:
The petitioner, a non-profitable educational trust, challenged the assessment and demand notice issued by the Income Tax Officer (Exemptions), Muzaffarpur, for the assessment year 2013-14 under Section 143(3) of the Income-tax Act, 1961. The petitioner contended that the assessment was without jurisdiction and in violation of Notification No.52/14, dated 22.10.2014, issued by the CBDT. The petitioner sought a writ of certiorari to quash the order and a direction to restrain the respondent from executing the impugned order. The petitioner argued that as it was neither registered under Section 12AA nor claimed exemption under Section 11, the Assessing Officer had no jurisdiction to assess under Section 143(3).

The High Court examined the background facts, noting that the petitioner trust was established in 2007 and had filed returns for the assessment years 2012-13 and 2013-14 after a notice was issued under Section 148 of the Act. Subsequently, a proceeding for scrutiny and assessment was initiated, which led to the issuance of the impugned assessment and demand notice by the Income Tax Officer (Exemptions), Muzaffarpur. The petitioner raised objections citing jurisdictional errors and non-registration under Section 12AA or exemption under Section 11.

The Court analyzed the Notification dated 22nd October, 2014, issued by the CBDT, which specified the Commissioners of Income Tax authorized to deal with cases of persons claiming exemption under various sections of the Income Tax Act. The Schedule in the Notification designated the Commissioner of Income Tax (Exemption), Patna, to handle cases of persons claiming exemptions under specific sections. The Court emphasized that the impugned assessment made by the Income Tax Officer (Exemptions), Muzaffarpur, was void ab initio as it lacked jurisdiction conferred upon the Commissioner of Income Tax (Exemption), Patna.

Consequently, the Court set aside and quashed the impugned assessment and demand notice issued by the Income Tax Officer (Exemptions), Muzaffarpur. The Court granted liberty to the Revenue to reassess the petitioner's case in accordance with the law and the Notification dated 22nd October, 2014. The writ petition was allowed with no order as to costs, ensuring justice was served in light of the jurisdictional discrepancies identified in the assessment process.