2023 (10) TMI 1459 - AT - Income Tax

Validity of the jurisdiction of A.O i.e. ITO-1(2) Raipur for framing the impugned assessment u/s. 143(3) - Addition on account of short receipt shown in ITR - HELD THAT - As the facts and the issues based on which jurisdiction has been assumed by the A.O i.e. ITO-1(2) Raipur in the present case before me remains the same as were there before the Division bench in the case of Durga Manikanta Traders 2023 (1) TMI 1099 - ITAT RAIPUR we respectfully follow the same. We concur with the claim of the Ld. AR that as the A.O i.e. ITO-1(2) Raipur having jurisdiction over the case of the assessee had framed the assessment vide his order passed u/s. 143(3) without issuing notice u/s. 143(2) of the Act; therefore the same cannot be sustained and is liable to be quashed at the very threshold for want of valid assumption of jurisdiction for framing the said impugned assessment.

Summary

Issues Involved:

1. Validity of jurisdiction assumed by the Assessing Officer (A.O).
2. Sustainability of the addition of Rs. 20,82,777/- on account of short receipt shown in the Income Tax Return (ITR).

Detailed Analysis:

1. Validity of Jurisdiction Assumed by the Assessing Officer (A.O):

The primary issue in this case was whether the jurisdiction assumed by the A.O, ITO-1(2), Raipur, was valid. The assessee contended that the notice issued under Section 143(2) by ACIT-1(1), Raipur, was invalid as it was issued by an officer who did not have the pecuniary jurisdiction over the case. The CBDT Instruction No.1/2011 and No.6/2011 were cited, which specify that for non-corporate assessees with declared income up to Rs. 10 lacs in mofussil areas, the jurisdiction is with the ITOs. Since the assessee declared an income of Rs. 6,56,820/-, the jurisdiction should have been with ITO-1(3), Raipur. The Tribunal found merit in this argument, referencing several judicial precedents that supported the requirement for proper jurisdictional authority to issue notices. The Tribunal concluded that the assessment framed by ITO-1(2), Raipur, without a valid notice under Section 143(2) from the correct jurisdictional officer, was invalid. Consequently, the assessment order dated 28.11.2017 was quashed for want of valid assumption of jurisdiction.

2. Sustainability of the Addition of Rs. 20,82,777/-:

The assessee challenged the addition of Rs. 20,82,777/- made by the A.O on the grounds of short receipt shown in the ITR. The A.O had determined this amount as unaccounted based on discrepancies between the amounts received from Chhattisgarh Ware Housing Corporation (CGWHC) and the amounts reflected in the assessee's balance sheet and Form 26AS. However, since the Tribunal quashed the assessment order due to the invalid assumption of jurisdiction, it did not proceed to adjudicate the merits of this addition. The Tribunal left the issue of the sustainability of the addition open, as the primary issue of jurisdiction was dispositive of the appeal.

Conclusion:

The Tribunal allowed the appeal filed by the assessee, quashing the assessment order due to the invalid assumption of jurisdiction by the A.O, without addressing the merits of the addition made by the A.O. The decision underscores the importance of adhering to jurisdictional rules and the issuance of notices by the correct authority as per CBDT instructions.