2003 (6) TMI 180 - AT - Income Tax

Summary

Issues:
1. Jurisdiction of the Assessing Officer in reopening the assessment.
2. Validity of the assessment proceedings and agreement for addition.

Jurisdiction of the Assessing Officer in Reopening the Assessment:
The case involved an appeal by the Revenue against the order of CIT(A), Chandigarh, regarding the assessment for the assessment year 1993-94. The Assessing Officer (AO) had received information about a residential house constructed by the assessee, with a significant disparity in the cost of construction as reported by the Directorate of Income-tax (Inv.) and as declared by the assessee. The AO reopened the case under section 148 of the Income Tax Act. The assessee contended that the AO lacked jurisdiction as the assessee was a regular assessee in Delhi, running a taxi business, and filing returns with the ITO, Ward 15(1), New Delhi. Despite objections raised by the assessee regarding jurisdiction, the AO proceeded with the assessment, leading to an agreed addition of Rs. 2,25,000. The CIT(A) annulled the assessment proceedings, declaring them ab initio void due to lack of jurisdiction on the part of the AO.

Validity of the Assessment Proceedings and Agreement for Addition:
The CIT(A) based her decision on the grounds that the AO did not have jurisdiction over the case, as the assessee was regularly assessed in Delhi and had not filed any returns in Chandigarh. The CIT(A) observed that the AO proceeded with the assessment without proper jurisdiction, even though the assessee had repeatedly highlighted his permanent residence and regular assessment in Delhi. The CIT(A) concluded that the assessment proceedings were void from the beginning due to lack of jurisdiction. The Revenue contended that the annulment was incorrect since the assessee had agreed to the addition. However, the Tribunal upheld the CIT(A)'s decision, emphasizing that the AO lacked jurisdiction over the case, rendering the assessment proceedings and the agreement for addition invalid.

In conclusion, the Tribunal dismissed the appeal by the Revenue, affirming the CIT(A)'s decision to annul the assessment proceedings due to lack of jurisdiction on the part of the Assessing Officer.