1985 (7) TMI 146 - AT - Income Tax

Summary

Issues:
Validity of proceedings under s. 147(b) of the IT Act challenged by the assessee.

Analysis:
The appeal challenged the order of the AAC upholding the validity of the proceedings under s. 147(b) of the IT Act and the consequent assessment order. The assessee disputed the findings supporting the initiation of proceedings under s. 147(b).

The issue revolved around the jurisdiction over the assessee's case, which was transferred from ITO Special Survey Circle I, Ludhiana to ITO Central Circle V, Ludhiana. The ITO Special Survey Circle I, Ludhiana completed an ex-parte assessment under s. 144 after the transfer but without transferring the records. The AAC annulled this assessment due to lack of jurisdiction. Subsequently, the ITO Central Circle V, Ludhiana issued a notice under s. 148 r/w s. 147(b) for escaped income assessment. The assessee contended that the conditions for invoking jurisdiction under s. 147(b) were not met, as no new information was available post-original assessment. The ITO, however, maintained that jurisdiction was validly assumed, citing legal precedents.

The Tribunal analyzed the situation where jurisdiction was transferred from one ITO to another after the original return filing. It held that the original return filing with the ITO of competent jurisdiction rendered the return valid. The failure to transfer records did not invalidate the return. Referring to legal precedents, the Tribunal concluded that the ITO's inaction in making the assessment allowed the income to escape assessment, justifying proceedings under s. 147(b).

The Tribunal disagreed with the AAC's rejection of the appeal without delving into the merits of the case. It remanded the determination of grounds of appeal regarding quantum to the AAC for a decision after providing both parties an opportunity. The appeal was partly allowed, upholding the validity of the proceedings under s. 147(b) and allowing further review on the quantum issue.