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2019 (10) TMI 713 - AT - Income TaxValidity of reassessment order passed by the AO for want of jurisdiction - Jurisdiction of ITO for issuing notice - assessment of long term capital gain arising from the sale of land - HELD THAT - Mere participation by the party in the proceedings without jurisdiction will not bestow/confer jurisdiction on the authority. In the case in hand, it is clear that the ITO Ward 7(2) Jaipur was not having jurisdiction over the assessee when the return was already filed and processed by the ITO Ward -1 Hanumangarh. Accordingly, the initiation of proceedings u/s 147/148 as well as passing the reassessment order by the ITO Ward 7(2) Jaipur is bad in law for want of jurisdiction and thus the impugned order is quashed. Since the impugned reassessment order is quashed for want of jurisdiction, therefore, I do not propose to go into the other issues raised by the assessee in respect of the additions made by the AO. - Appeal of the assessee is allowed.
Issues Involved:
1. Validity of reassessment order for want of jurisdiction. 2. Disallowance of brokerage expenses. 3. Disallowance of deduction under Section 54F. 4. Addition under Section 68 for undisclosed income. Issue-wise Detailed Analysis: 1. Validity of Reassessment Order for Want of Jurisdiction: The primary issue raised by the assessee was the validity of the reassessment order passed by the AO, arguing it was without jurisdiction. The assessee contended that the jurisdiction over his case lay with the Income Tax Officer (ITO), Ward-1, Hanumangarh, and not with ITO, Ward 7(2), Jaipur, who issued the reassessment order. The reassessment proceedings were initiated under Section 147/148 by ITO, Ward 7(2), Jaipur, without any order under Section 127/124 transferring jurisdiction from ITO, Ward-1, Hanumangarh. The assessee relied on the decisions of the Hon’ble Bombay High Court, which held that jurisdictional issues could be raised at any stage and mere participation in proceedings does not bestow jurisdiction. The Tribunal found merit in the assessee's argument, noting that the original return was filed and processed by ITO, Ward-1, Hanumangarh, and no order was passed to transfer jurisdiction. Therefore, the reassessment order was quashed for want of jurisdiction. 2. Disallowance of Brokerage Expenses: The assessee challenged the addition of ?74,796/- made by the AO by disallowing brokerage expenses paid on the sale/purchase of land. The CIT (A) upheld the addition, stating that the broker was not produced before the AO despite the assessee submitting confirmation and ID proof of the broker. The assessee argued that a request was made to summon the broker under Section 131/133(6), which was ignored. However, since the reassessment order was quashed for lack of jurisdiction, this issue was not further examined by the Tribunal. 3. Disallowance of Deduction under Section 54F: The assessee claimed a deduction under Section 54F, which was disallowed by the AO on the grounds that the construction of the residential property was not completed by the stipulated date. The CIT (A) upheld this disallowance, disregarding the Valuation Report that indicated the construction was completed in March 2006. This issue was also not further examined by the Tribunal due to the quashing of the reassessment order. 4. Addition under Section 68 for Undisclosed Income: The AO made an addition of ?22,50,161/- under Section 68, treating the deposits in the assessee's bank account as undisclosed income. The CIT (A) confirmed this addition, ignoring the evidence and explanations provided by the assessee regarding the source of these deposits. Like the other issues, this was not further examined by the Tribunal due to the quashing of the reassessment order. Conclusion: The Tribunal quashed the reassessment order for want of jurisdiction, as the ITO, Ward 7(2), Jaipur, did not have jurisdiction over the assessee. Consequently, the Tribunal did not delve into the other issues raised by the assessee regarding the additions made by the AO. The appeal was allowed, and the reassessment order was declared invalid. Order Pronounced: The order was pronounced in the open court on 17/09/2019.
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