2024 (8) TMI 121 - HC - Income Tax

Interpretation of Section 124(3)(a) - assessment framed by the ACIT, Central Circle 2(1), Kolkata is without jurisdiction as it violates the instructions given by the CBDT in CBDT Instruction no.1-2011 - revenue is in appeal before this Court contending that the assessee is precluded from raising such a point in the light of the embargo under Section 124(3)(a) of the Act - HELD THAT - The facts of the case are that the assessee filed its return on 19th November, 2014. Thereafter, the AO has issued the notice u/s 142(1), dated 31st August, 2014 calling upon the assessee to produce before him the points and/or the documents which have been specified in the notice. The question would be whether the assessee is entitled to raise jurisdiction of the AO to complete the assessment after the expiry of 30 days from the date on which the notice u/s 142(1) of the Act had been served on the assessee. This question needs to be considered and answered and therefore, the appeal is admitted on the following substantial questions of law. a) Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law to quash the assessment order passed under Section 143(3) on the ground that the valid notice under Section 143(2) of the Act was not issued in accordance with law despite the fact that the assessee had participated in the assessment proceeding pursuant to the said statutory notices and had never called in question the jurisdictional issue in terms of Section 124(3) of the Income Tax Act, 1961 ? b) Whether on the facts and in the circumstances of the case the order of the Learned Income Tax Appellate Tribunal suffer from perversity as it has ignored the facts emanating from record that the assessee had participated in the assessment proceeding pursuant to the said statutory notices and had never called in question the jurisdictional issue within one month from the date of service of notice or after completion of assessment whichever is earlier, as specified in Section 124(3)(a) of the Income Tax Act, 1961 ? c) Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law to quash the assessment order passed under Section 143(3) of the Act without appreciating the ratio laid down in the case DCIT (Exemption) Vs. Kalinga Institute of Industrial Technology 2023 (6) TMI 1076 - SC ORDER by Hon ble Apex Court wherein while dealing with the question of jurisdiction it has been held inter alia that section 124(3) of the Act precludes the assessee from questioning the jurisdiction of the Assessing Officer, if the same is not invoked within 30 days of receipt of notice issued under Section 143(2) or 142(1) of the said Act ? The appellant shall file requisite number of informal paper book prepared out of Court including therein all relevant papers and documents within 10(ten) weeks from date by serving copies thereof on the learned Advocate for the respondent. Settlement of index and all other formalities are dispensed with. Since the respondent is represented by their learned Advocates, service of notice of this appeal on them is waived.

Summary

Issues: Interpretation of Section 124(3)(a) of the Income Tax Act, 1961

Analysis:

The judgment by the High Court of Calcutta involves the interpretation of Section 124(3)(a) of the Income Tax Act, 1961. The Tribunal allowed the assessee's appeal, contending that the assessment by the ACIT was without jurisdiction, citing violation of CBDT instructions. The revenue appealed, arguing that the assessee cannot raise this point due to the embargo under Section 124(3)(a) of the Act. The standing Counsel relied on the decision in Deputy Commissioner of Income-tax vs. Kalinga Institute of Industrial Technology, while the senior Counsel cited the decision in Principal Commissioner of Income Tax-2, Kolkata Vs. M/s. Cosmat Traders Pvt. Ltd. and another case for their respective positions.

The key question in this case revolves around whether the assessee can challenge the jurisdiction of the Assessing Officer after the expiry of 30 days from the service of the notice under Section 142(1) of the Act. The Court admitted the appeal to consider substantial questions of law, including whether the Tribunal was justified in quashing the assessment order under Section 143(3) on the ground of a defective notice under Section 143(2). The Court also questioned whether the Tribunal's decision ignored the fact that the assessee participated in the assessment proceedings without raising the jurisdictional issue within the specified time frame under Section 124(3)(a).

Furthermore, the Court examined whether the Tribunal erred in quashing the assessment order without considering the precedent set by the Supreme Court in DCIT (Exemption) Vs. Kalinga Institute of Industrial Technology, which emphasized the preclusion of the assessee from questioning the Assessing Officer's jurisdiction if not raised within the stipulated period. The Court directed the appellant to file necessary documents within a specified timeline and waived the service of notice on the respondent's Advocates, with liberty to request a hearing after the completion of filing the paper book. The stay application was closed as well.