2020 (2) TMI 94 - HC - Income Tax

Reopening of assessment of a non-resident Indian - Jurisdiction of Assessing Officers - period of stay in India Madurai - assessment of the petitioner would be transferred either to International Taxation, Bangalore or the Assessing Officer at Shimoga based on the status of the petitioner in the relevant financial year - HELD THAT - In the present case the petitioner has, no doubt obtained a PAN from the Assessing Officer at Madurai, wherein the dress of the assessee is stated to be in Madurai. However, no assessments have been completed by the officials at Madurai, till date. For AY 2012-2013 to 2015-2016 the petitioner has filed returns of income electronically, stipulating his jurisdictional officer as the Income tax officer, Shimoga, Karnataka. These returns of income have been processed and intimations issued by the CPC wherein the address of the petitioner is stated to be Shimoga. The appropriate officer to assess the petitioner is thus the officer at Shimoga. No doubt, the provisions of Section 124(5) provide for the vesting of jurisdiction concurrently upon two officers if the situation and circumstances so warrant the same, such as if the assessee in question has business interests or assets as well as income arising there from spread over various parts of the country, Concurrent jurisdiction is, no doubt, a principle enshrined as part of the procedure for finalizing assessments, the thumb rule being that the same income not be assessed twice. However, if at all such jurisdiction were to vest concurrently by way of transfer to the respondent officer as well, it was incumbent upon the officials to have followed the methodology set out in terms of Section 127 for change of jurisdiction by way of a determination by a superior officer. The provisions of sub-section (5) that vest concurrent jurisdiction in more than one officer, will have to be seen and read with Section 124(4) only and do not constitute a standalone provision. In fact, it is only to decide the appropriate officer for exercise of concurrent jurisdiction vested in 124(5), that sub-section (4) provides for a reference of the matter to a superior officer by an Assessing Officer In the present case, though the petitioner/assessee has specifically sought such determination, the Assessing Authority has not bothered to refer the matter to the superior officer. In my view, this is a patent error that vitiates the assumption of jurisdiction of the respondent in full. In the light of the discussion as above, this writ petition is allowed and the impugned proceedings for re-assessment quashed.

Issues Involved:
1. Validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the assessing officer.
3. Compliance with Section 127 of the Income Tax Act for transfer of jurisdiction.
4. Application of concurrent jurisdiction under Section 124(5) of the Income Tax Act.

Detailed Analysis:

1. Validity of the Notice under Section 148:
The petitioner challenged a notice under Section 148 dated 30.03.2015 and an order of re-assessment dated 22.03.2016. The petitioner, a non-resident Indian, argued that he was assessable under the jurisdiction of the Income Tax Officer, Shimoga, and had not filed any return of income during his stay in Madurai as he had no taxable income. The petitioner had shifted to Shimoga from AY 2010-11 onwards and filed returns there. The notice for AY 2008-09 was received on 04.04.2015, and the petitioner initially disputed the date of dispatch and service but later dropped this argument.

2. Jurisdiction of the Assessing Officer:
The petitioner contended that his principal place of business was in Shimoga, and thus, the jurisdiction for assessment lay with the officer at Shimoga, as per Section 124 of the Act. The respondent, however, maintained that since the PAN address was in Madurai, the jurisdiction was with the Deputy Commissioner of International Taxation, Madurai. The petitioner objected to this, citing that any change in jurisdiction should follow the procedure under Section 127 of the Act, which requires a transfer order from a superior officer after recording reasons and giving the assessee a chance to be heard.

3. Compliance with Section 127 for Transfer of Jurisdiction:
The court noted that if jurisdiction vested with the Income Tax Officer at Shimoga, any alternate assessing authority assuming jurisdiction could only do so by a transfer of the file. This transfer of jurisdiction should be executed by the Director General or Chief Commissioner or Commissioner, with recorded reasons and after hearing the assessee. No such transfer order was produced in this case. Instead, a notification dated 15.11.2014 was cited, which was deemed insufficient to validate the assumption of jurisdiction by the respondent.

4. Application of Concurrent Jurisdiction under Section 124(5):
The respondent argued that Section 124(5) allowed for concurrent jurisdiction. The court examined precedents, including decisions from the Allahabad and Delhi High Courts, which discussed concurrent jurisdiction and the necessity of a clear determination to avoid multiple assessments for the same income. The court found that the petitioner had raised timely objections and sought a determination by a superior officer, which was ignored by the department. The court emphasized that concurrent jurisdiction requires specific determination to ensure the same income is not taxed twice.

Conclusion:
The court concluded that the assumption of jurisdiction by the respondent was invalid due to the lack of a proper transfer order under Section 127 and the failure to address the petitioner's objections and request for a determination under Section 124(4). The proceedings for re-assessment were quashed, and the writ petition was allowed. The court highlighted the importance of following procedural requirements to ensure the correct jurisdiction is determined and to prevent double taxation.

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