1983 (11) TMI 144 - AT - Income Tax

Summary

Issues:
Jurisdiction of the assessing officer under section 263 of the Income-tax Act, 1961 for the assessment year 1980-81.

Detailed Analysis:

1. Jurisdiction Transfer and Lack of Enquiry:
The appeal was filed against the Commissioner's order under section 263 of the Income-tax Act, 1961 for the assessment year 1980-81. The assessee filed a return of income before the ITO, not aware that the case had been transferred to another ITO. The Commissioner issued a notice to cancel the assessment, citing lack of jurisdiction and failure to vet incriminating materials seized during a raid. The Commissioner canceled the assessment due to jurisdictional issues and lack of proper enquiry, leading to the appeal.

2. Transfer of Jurisdiction and Valid Order:
The Tribunal noted that the Commissioner had the authority to transfer a case under section 127 of the Act, and once transferred, the previous ITO loses jurisdiction. The order transferring jurisdiction was valid, even if not received by the assessee. The Tribunal upheld the cancellation of the assessment by the Commissioner due to lack of jurisdiction, stating that the assessment had no legal effect.

3. Seized Materials and Prima Facie Enquiry:
The Tribunal considered the relevance of seized materials post the accounting year and the need for an enquiry before accepting the return under section 143(1). The Commissioner's apprehension of prejudice to revenue due to lack of enquiry was deemed justified. The Tribunal agreed that non-enquiry in a warranted case constitutes prejudice, citing precedents from various High Courts. The order under section 263 was upheld based on the lack of proper enquiry and potential revenue prejudice.

Conclusion:
The Tribunal dismissed the appeal, affirming the Commissioner's order under section 263 to cancel the assessment due to jurisdictional issues and failure to conduct a necessary enquiry. The decision was based on the valid transfer of jurisdiction, lack of proper vetting of seized materials, and the necessity for a prima facie enquiry to prevent revenue prejudice.