2022 (9) TMI 89 - HC - Income Tax

Reopening of assessment u/s 147 - AO jurisdiction in issuing notice - only submission of the petitioner is that the impugned notice u/s 148 issued by the respondent No.1 ITO-2(1) is without jurisdiction inasmuch as the ITO Ward 2(1) is not the jurisdictional assessing officer for the AY 2017-18 - HELD THAT - Under sub-section (1) of Section 124 of the Act, 1961 the AO who has been vested with jurisdiction over any area, shall have jurisdiction within the limits of such area. Sub-section (5) of Section 124 starts with a non-obstante clause and provides that every AO shall have all the powers conferred by or under the Act,1961 on an AO in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120. AO vested with jurisdiction by virtue of direction of subsection (1) and (2) of Section 120 shall have all powers conferred by or under the Act, 1961 on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction. As admitted before us that respondent no.1 i.e the ITO-2(1), Moradabad has the territorial jurisdiction over the petitioner, but only objection to the jurisdiction has been raised merely on the ground that on account of pecuniary limit, the proceedings ought to have been initiated by ACIT-2, Moradabad. Once the territorial jurisdiction of respondent no.1 is admitted by the petitioner, there existed no occasion for the Assessing Officer to refer the matter for determination under sub-section (2) of Section 124 before the assessment was made. The facts and legal position as discussed above leave no manner of doubt that the respondent no.1 is the Assessing Officer having territorial jurisdiction over the petitioner. Merely because some pecuniary limit has been fixed for purpose of distribution of work between officers, it would not mean that there shall be inherent lack of jurisdiction of respondent no.1. Therefore, it cannot be said that respondent no.1 lacked inherent jurisdiction while issuing the impugned notice under Section 148 of the Act, 1961.

Issues Involved:
1. Jurisdiction of the Income Tax Officer (ITO) to issue notice under Section 148 of the Income Tax Act, 1961.
2. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
3. Rejection of the petitioner's objections to the notice under Section 148.

Detailed Analysis:

1. Jurisdiction of the Income Tax Officer (ITO) to issue notice under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the jurisdiction of the ITO Ward-2(1), Moradabad, arguing that the correct jurisdictional officer for the Assessment Year (A.Y.) 2017-18 was the Assistant Commissioner of Income Tax (ACIT), Range-2, Moradabad, due to the monetary limit of the income declared. The petitioner contended that since the income declared exceeded Rs. 15 lakhs, the ACIT should have issued the notice under Section 148, not the ITO.

The court examined the relevant provisions of the Act, particularly Sections 2(7A), 120, and 124, which define the jurisdiction and powers of the Assessing Officers. Section 2(7A) defines the "Assessing Officer" to include various officers vested with jurisdiction by directions or orders under Section 120. Section 120(1) empowers the Board to issue directions for the exercise of powers and performance of functions by income-tax authorities, while Section 120(3) provides criteria for issuing such directions, including territorial area and classes of income. Section 124(1) and (5) further clarify the jurisdiction of Assessing Officers based on territorial area and income.

The court noted that the ITO Ward-2(1), Moradabad, had territorial jurisdiction over the petitioner, and the monetary limit for assessment distribution was an administrative matter. The court concluded that the ITO had the legal authority to issue the notice under Section 148, despite the monetary limit, as the territorial jurisdiction was undisputed.

2. Validity of the notice issued under Section 148 of the Income Tax Act, 1961:

The petitioner sought to quash the notice dated 31.03.2021 issued under Section 148 for A.Y. 2017-18. The court found that the ITO Ward-2(1), Moradabad, issued the notice based on information received from the DDIT (Investigation), which revealed an unreported accommodation purchase entry of Rs. 20,32,46,098/-. The court emphasized that the ITO had the jurisdiction to issue the notice as per the provisions of the Act and the directions issued by the Board.

The court referred to the Delhi High Court's judgment in the case of Abhishek Jain vs. Income Tax Officer, Ward-55(1), New Delhi, which supported the view that concurrent jurisdiction by multiple Assessing Officers is permissible under the Act. The court held that the issuance of the notice under Section 148 by the ITO Ward-2(1) was valid and within his jurisdiction.

3. Rejection of the petitioner's objections to the notice under Section 148:

The petitioner also challenged the order dated 13.09.2021, which rejected their objections to the notice under Section 148. The court reiterated that the ITO Ward-2(1), Moradabad, had the jurisdiction to issue the notice and reject the objections. The court found no merit in the petitioner's argument that only the ACIT-2, Moradabad, could have issued the notice due to the monetary limit.

The court concluded that the ITO Ward-2(1) had the legal authority to issue the notice and reject the objections, as he had territorial jurisdiction over the petitioner. The court dismissed the writ petition, upholding the validity of the notice and the rejection of the objections.

Conclusion:

The court dismissed the writ petition, affirming that the ITO Ward-2(1), Moradabad, had the jurisdiction to issue the notice under Section 148 for A.Y. 2017-18 and to reject the petitioner's objections. The court emphasized that the monetary limit for assessment distribution was an administrative matter and did not affect the ITO's inherent jurisdiction.

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