9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 1510 - AT - Income TaxReopening of assessment u/s 147 - jurisdictional error issue of the ITO, Ward, Kurukshetra to reopen the assessment - HELD THAT - ITO, ward-3, Kurukshetra was duly informed by the assessee that he was in Spain from the period June 2004 to October 2008 and it was bought to the knowledge of the ITO, Kurukshetra that the status of the assessee during the assessment year under consideration was that of a NRI and, therefore, jurisdiction to reopen the assessment and frame the assessment u/s 147 of the Act lied with DCIT (International Taxation), Gurgaon. However, the ITO, Ward-3, Kurukshetra having no jurisdiction to reopen the assessment proceeded to issue notice u/s 148 of the Act and, thereby, reopened the assessment and continued with the assessment proceedings till the case was transferred by him to DCIT (International Taxation)Gurgaon on the directions of the JCIT, Kurukshetra. The concerned AO, who was having jurisdiction to frame the assessment, apparently, did not record reasons of having belief of escapement of income and also did not issue any notice u/s 148 of the Income Tax Act and, therefore, the assessment framed by him without assuming a valid jurisdiction to reopen the assessee, was bad in law. We hold that the notice issued u/s 148 of the Act for reopening of the assessment by the ITO, Kurukshetra was without jurisdiction, therefore, the reopening of the assessment was bad in law and the consequent assessment framed by the DCIT (International Taxation) is not sustainable in the eyes of law and the same is hereby quashed. Decided in favour of assessee.
Issues Involved:
1. Validity of the jurisdiction of the Income Tax Officer (ITO), Ward-3, Kurukshetra in issuing notice under Section 148 of the Income Tax Act. 2. Legality of the reassessment proceedings initiated under Section 147 of the Income Tax Act. 3. Consideration of the appellant's Non-Resident Indian (NRI) status during the relevant assessment year. 4. Validity of the assessment framed by the Deputy Commissioner of Income Tax (DCIT), International Taxation, Gurgaon. 5. Adherence to procedural requirements for issuing notices under Sections 148, 142(1), and 143(2) of the Income Tax Act. 6. Justification for the addition of Rs. 70,03,000/- as income under Sections 68/69A of the Income Tax Act. Detailed Analysis: 1. Validity of Jurisdiction and Issuance of Notice under Section 148: The primary issue raised by the assessee was the jurisdiction of the ITO, Ward-3, Kurukshetra, to issue a notice under Section 148 of the Income Tax Act for reopening the assessment. The assessee argued that the ITO, Kurukshetra, lacked jurisdiction due to the appellant's NRI status during the relevant period. The Tribunal noted that the assessee had duly informed the ITO, Kurukshetra, about his NRI status through various communications. Despite this, the ITO proceeded to issue the notice, which was deemed without jurisdiction. The Tribunal concluded that the notice issued by an officer lacking jurisdiction is invalid, and thus, the reassessment proceedings based on such a notice are void ab initio. 2. Legality of Reassessment Proceedings under Section 147: The reassessment proceedings initiated under Section 147 were contested on the grounds that they were void ab initio due to the lack of jurisdiction by the ITO, Kurukshetra. The Tribunal emphasized that the reassessment proceedings must be initiated by an officer with the proper jurisdiction. Since the initial notice under Section 148 was invalid, the entire reassessment process was deemed unlawful and unsustainable in law. 3. Consideration of NRI Status: The appellant's NRI status was a critical factor in determining jurisdiction. The Tribunal acknowledged that the appellant had provided sufficient evidence, including letters and a passport, to establish his NRI status during the relevant assessment year. This status implied that the jurisdiction lay with the DCIT (International Taxation), Gurgaon, rather than the ITO, Kurukshetra. The failure to recognize this status led to the improper issuance of the notice under Section 148. 4. Validity of Assessment by DCIT, International Taxation, Gurgaon: The DCIT (International Taxation), Gurgaon, continued the proceedings from the stage they were transferred by the ITO, Kurukshetra. However, the DCIT did not issue a fresh notice under Section 148 or record reasons for the belief of income escapement. The Tribunal highlighted that without a valid notice and recorded reasons, the assessment framed by the DCIT was also invalid. The assessment was deemed unsustainable as it was based on an invalid transfer of jurisdiction. 5. Procedural Requirements for Issuing Notices: The appellant contended that the assessment was framed without proper service of notices under Sections 148, 142(1), and 143(2). The Tribunal found merit in this argument, noting that the procedural lapses further invalidated the assessment process. The absence of a valid notice under Section 148 was particularly crucial, rendering the entire reassessment process void. 6. Justification for Addition under Sections 68/69A: The addition of Rs. 70,03,000/- as income under Sections 68/69A was challenged by the appellant. The Tribunal, having found the reassessment proceedings invalid, did not delve into the merits of this addition. The invalidity of the proceedings meant that the addition itself was unsustainable in law. In conclusion, the Tribunal quashed the reassessment proceedings and the consequent assessment order, allowing the appeal in favor of the assessee. The judgment underscored the importance of jurisdictional validity and adherence to procedural requirements in reassessment proceedings.
|
