2023 (1) TMI 956 - AT - Income Tax

Validity of assessment made by the AO in the wrong hands - HELD THAT - Assessment was made by the AO in the wrong hands, as the assessee was power of attorney holder of Sh. Sukhdev Singh who was the owner of the disputed land, as per reasons recorded u/s 147 and as per A.O s order. It is seen that assessee received the power of attorney from Sh. Sukhdev Singh English translation and that the appellant sold the land as mentioned in the reasons recorded on behalf of Sh. Sukhdev Singh. Copy of the sale deed is placed on record - It is trite law that no addition can be made in the hands of power of attorney holder and further revenue has not brought on record any material evidence indicating that ownership of the said land belongs to appellant assessee. Therefore, we hold that the assessment order is passed without jurisdiction. We hold that the assessment order is passed by the Assessing Officer without assuming jurisdiction on the assesse and hence such assessment order is held void ab initio and bad-in-law. Appeal of the assessee is allowed.

Issues Involved:
1. Assessment of capital gain in the wrong hands.
2. Rejection of additional evidence.
3. Validity of assessment jurisdiction.
4. Correctness of the assessment order.

Analysis:

1. Assessment of Capital Gain in the Wrong Hands:
The appellant challenged the assessment of capital gain in their hands as the power of attorney holder of the landowner. The appellant argued that neither the Assessing Officer (AO) nor the Commissioner of Income Tax (Appeals) provided evidence proving the ownership of the land belonged to the appellant. The appellant contended that the assessment order was void ab initio and bad-in-law as it lacked jurisdiction. The Revenue did not dispute that the assessment was made in the wrong hands, acknowledging the error in assessing the appellant instead of the actual landowner.

2. Rejection of Additional Evidence:
The appellant raised amended grounds of appeal, citing the rejection of additional evidence under Rule 46-A by the Commissioner of Income Tax (Appeals). The appellant argued that the assessment completed on an ex-parte basis by the AO warranted the consideration of additional evidence. The appellant contended that the rejection of additional evidence and ignorance of procedural requirements under relevant sections rendered the order bad-in-law and on facts. The Tribunal admitted the additional ground on the validity of assessment in the wrong hands, emphasizing its importance in the matter.

3. Validity of Assessment Jurisdiction:
The Tribunal examined the issue of assessment jurisdiction, emphasizing that no material evidence was presented to establish the ownership of the land in the appellant's name. Referring to the power of attorney received from the landowner and the sale deed, the Tribunal concluded that the assessment order lacked jurisdiction. Citing legal precedents, including a decision by the ITAT Jaipur Bench and the Supreme Court, the Tribunal held that assessments made without assuming jurisdiction over the assessee are void ab initio and bad-in-law.

4. Correctness of the Assessment Order:
The Tribunal ultimately ruled in favor of the appellant, allowing the appeal based on the finding that the assessment order was passed without jurisdiction. By determining that the assessment was void ab initio and bad-in-law due to being made in the wrong hands, the Tribunal set aside the original order. The decision highlighted the importance of proper jurisdiction in assessments and the consequences of assessing the wrong entity.

In conclusion, the Tribunal's judgment in the present appeal centered on the incorrect assessment of capital gain, the rejection of additional evidence, the jurisdictional validity of the assessment, and the correctness of the assessment order. The ruling emphasized the necessity of establishing ownership for accurate assessments and highlighted the legal implications of assessments made without proper jurisdiction.

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