2023 (6) TMI 1076 - SCH - Income Tax

Validity of assessment order - Jurisdiction to AO to adjudicate the assessment u/s 143(3) - While quashing the notice, High Court has granted the liberty to the department to initiate proceedings afresh as per law - Revenue contended that assessee is precluded from challenging the jurisdiction beyond the period of 30 days of the receipt of notice u/s 142(1) - HELD THAT - As records also reveals that the assessee had participated pursuant to the notice issued u/s 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice u/s 142 (1). In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority to issue appropriate notice. AO is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee.

Summary

Issues involved: Jurisdiction of assessing officer, Assessment Year 2014-2015

The Supreme Court set aside the assessment for Assessment Year (AY) 2014-2015 due to a change in jurisdictional officer after the returns were filed. However, the assessee participated in the assessment process without questioning the jurisdiction of the assessing officer within the stipulated time frame as per Section 124(3)(a) of the Income Tax Act. The High Court's order was deemed unwarranted as the facts did not support it. The High Court granted the authority the liberty to issue appropriate notice, allowing the assessing officer to complete the assessment within the next 60 days without raising any limitation issues from the assessee's side.

Jurisdictional Challenge and Assessment Process

The impugned order in this case pertained to the assessment for AY 2014-2015, which was set aside due to a change in the jurisdictional officer post the filing of returns. Despite participating in the assessment process following a notice under Section 142(1), the assessee did not contest the jurisdiction of the assessing officer within the specified 30-day period as mandated by Section 124(3)(a) of the Income Tax Act. The High Court's decision was found to be unfounded based on the facts of the case, leading to the Supreme Court's intervention.

Court's Clarification and Directions

The Supreme Court clarified that the assessing officer is now at liberty to finalize the assessment within the next 60 days, provided that the assessment order has not been issued yet. In such a scenario, the assessee is barred from raising any limitation concerns. The special leave petition was allowed by the Supreme Court, and any pending applications were disposed of accordingly.