2021 (5) TMI 214 - AT - Income Tax

Reopening of assessment u/s 147 - which Officer having jurisdiction over the assessee? - HELD THAT - We find that undisputedly, the re-assessment proceedings were initiated by the ITO Ward 5(3), while the assessment was completed by ITO Ward 11(4). It is also undisputed fact that the ITO Ward 11(4) is the Officer having jurisdiction over the assessee and the assessee had filed her return of income giving her correct address. Therefore, the ITO Ward 5(3) who issued notice u/s 148 had no jurisdiction over the assessee. When this fact was brought to the notice of ITO Ward 5(3), by the assessee, the assessment record was transferred to the ITO Ward 11(4). But even at that point of time, the ITO Ward 11(4) did not choose to record the reasons for reopening or issue notice u/s 148 of the Act to the assessee on her correct address. He chose to proceed from the stage at which ITO Ward 5(3), had transferred the files to him. Therefore, it is clearly without any jurisdiction. AO gets jurisdiction to reopen the assessment only after he records the reasons for reopening and thereafter, issues notice u/s 148 within the prescribed time and only on fulfilment of the conditions prescribed therein. None of these conditions have been fulfilled by the AO. No hesitation in holding that the re-assessment proceedings were not initiated validly and therefore, the re-assessment order is set aside. Decided in favour of assessee.

Summary

Issues:
Validity of reassessment order due to jurisdictional concerns and notice service.

Analysis:
1. The appeal was filed against the CIT (A)'s order for the A.Y 2009-10. The AO observed that the assessee had sold an immovable property, triggering a reassessment under section 147 of the Act due to the alleged escape of income. The notice u/s 148 was issued, but the assessee contested its validity based on jurisdictional grounds.

2. The AO computed the capital gains at a higher value than declared by the assessee, leading to additions in the assessment. The assessee challenged the reopening of assessment and additions made before the CIT (A). The CIT (A) upheld the validity of the reassessment, stating that the notice issued by the initiating officer was valid based on the original residence's jurisdiction.

3. The assessee contended that the reassessment proceedings were invalid as the initiating officer did not have jurisdiction over her. The counsel argued that the reassessment lacked a valid basis as the initiating officer failed to serve the notice u/s 148 at the correct address. The counsel relied on various case laws to support their argument.

4. The Tribunal found that the reassessment proceedings were initiated by an officer without jurisdiction over the assessee, despite the assessment being completed by the correct jurisdictional officer. As the conditions for valid reassessment were not met, the Tribunal set aside the reassessment order dated 30.12.2016. Consequently, other grounds of appeal were not addressed, and the appeal was partly allowed.

5. The Tribunal's decision highlighted the importance of jurisdiction in reassessment proceedings and emphasized the necessity for compliance with procedural requirements. The case serves as a reminder of the significance of following due process in tax assessments to ensure the validity and legality of the proceedings.