2024 (10) TMI 1485 - HC - Income Tax

Notice u/s 143(2) - Jurisdiction of AO to issue notices - Authority to issue notices u/s 143(2) - notice u/s 143 (2) of the Act has been issued by the ACIT/ DCIT (International Taxation), Circle-1(1)(1), Delhi HELD THAT - A plain reading of Section 143 (2) of the Act clearly indicates that either of the two authorities either the AO or the prescribed income-tax authority can issue a notice u/s 143 (2) of the Act. The expression as the case may be also indicates the same. Revenue also referred to Section 12E of the Income-Tax Rules, 1962 (hereafter the Rules) which expressly provides that the Central Board of Direct Taxes (hereafter the CBDT) can authorise an Income-tax Officer to act as a prescribed authority under Section 143 (2) of the Act. In the present case, the CBDT had issued a notification dated 12.05.2022 and 28.05.2022, in exercise of powers under Rule 12E of the Rules, and had authorised the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1) Delhi to act as the prescribed income-tax authority for the purpose of issuance of notice u/s 143 (2) of the Act. In the present case, the impugned notice under Section 143 (2) of the Act has been issued by the ACIT/ DCIT(International Taxation), Circle-1(1)(1), Delhi. In view of the above, the contention that the said Income Tax Officer did not have the jurisdiction to issue a notice u/s 143 (2) of the Act, is devoid of any merit. The contention that other than the Assessing Officer, only the authorised Income Tax Officers of the National Faceless Assessment Centre (NaFAC) can issue a notice under Section 143 (2) of the Act as the same would be in furtherance of automation of such process, is also unmerited. This proposition is not supported by the plain language of Section 143 (2) of the Act or Rule 12E of the Rules. Rule 12E of the Rules does not confine the power of the CBDT to authorise only the Income Tax Officers of the NaFAC as the prescribed authority for the purposes of Section 142 (1) of the Act. The contention that the prescribed income tax authority can only serve a notice under Section 143 (2) of the Act but cannot issue it, is insubstantial. We are unable to accept that the AO did not have the jurisdiction to issue the impugned notices dated 10.07.2024 and 06.09.2024 under Section 142 (1) of the Act or that the same are beyond the period of limitation. Once it is accepted that the AO has the jurisdiction to issue a notice under Section 143 (2) of the Act which is also the contention of the petitioner in this case the AO cannot be faulted for proceeding to complete the assessment.

Summary

Issues:
Jurisdiction of the officer issuing notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged the notices dated 23.06.2024, 10.07.2024, and 06.09.2024 issued under Sections 143(2) and 142(1) of the Income Tax Act, claiming they were issued without jurisdiction. The petitioner contended that the officer issuing the notice under Section 143(2) was not a prescribed income-tax authority and lacked the jurisdiction to issue the notice. Additionally, the petitioner argued that the notice under Section 142(1) was beyond the period of limitation as it was based on the invalid notice under Section 143(2) issued by an officer without jurisdiction.

The High Court analyzed the provisions of Section 143(2) of the Act, which allows either the Assessing Officer or the prescribed income-tax authority to issue a notice. The court rejected the petitioner's argument that only the Assessing Officer could issue the notice in cases where jurisdiction vested with them, clarifying that the prescribed income-tax authority could also issue such notices. The court referred to Rule 12E of the Income-Tax Rules, which authorizes the Central Board of Direct Taxes to designate Income-tax Officers as prescribed authorities under Section 143(2).

In this case, the CBDT had authorized the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation) to act as the prescribed income-tax authority for issuing notices under Section 143(2). The court concluded that the Income Tax Officer who issued the impugned notice had the necessary jurisdiction based on the CBDT's authorization. The court dismissed the petitioner's contention that only authorized Income Tax Officers of the National Faceless Assessment Centre could issue such notices, emphasizing that Rule 12E did not restrict the CBDT's power to designate only NaFAC officers as prescribed authorities.

The court also rejected the argument that the prescribed income tax authority could only serve but not issue a notice under Section 143(2), deeming it insubstantial. Ultimately, the court held that the Assessing Officer had the jurisdiction to issue the impugned notices under Section 142(1) and that they were not beyond the period of limitation. The court dismissed the petition, stating that once it was established that the Assessing Officer had jurisdiction to issue the notice under Section 143(2), they were not at fault for proceeding with the assessment. The court declined to address the issue of jurisdiction under Section 144B raised by the petitioner as it was not part of the petition's grounds.