2012 (7) TMI 130 - AT - Income Tax

Quashing the re-assessment proceedings u/s. 148 by CIT(A) - lack of jurisdiction with the Assessing Officer - canceling the penalties u/s. 271(1)(c) - Held that - CIT-II while passing the jurisdictional order u/s. 120 assigned concurrent jurisdiction in favour of ACIT, who has issued notice u/s. 148 in the case of assessee in respect of the cases falling in the jurisdiction of AO, Circle 4(1), Agra to which circle, the case of the assessee also falls. He was assigned this power and jurisdiction in addition to the work already allotted to him. The assessee has not brought anything on record to show that the concurrent jurisdiction vested in ACIT was withdrawn by CIT concerned on the date of issue of notice u/s. 148. Therefore, ACIT having been authorized to deal with the subject matter was vested with the jurisdiction to deal with the matter in issue. Since he found that income escaped assessment for the assessment year under appeals while scrutinizing the return of assessee for subsequent assessment year 2001-02, therefore, he has rightly exercised jurisdiction u/s. 148 for reopening of assessment u/s. 148 - before issuing notice u/s. 148, ACIT had obtained approval of Addl. CIT, Range IV, Agra, otherwise if he had no jurisdiction over the case of the assessee on the date of approval, the ld. Addl. CIT, Range, would not have granted him approval - as the issue of jurisdiction in favour of the Revenue, therefore, the orders on penalties are also set aside and the penalty appeals are restored to the file of ld. CIT(A)to decided afresh - in favour of revenue.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) under Section 148 of the Income Tax Act.
2. Validity of reassessment proceedings.
3. Cancellation of penalties under Section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO) under Section 148 of the Income Tax Act:
The primary issue was whether the ACIT, Agra, who issued the notice under Section 148, had the proper jurisdiction. The CIT-II, Agra, had issued an order on 21.01.2004, conferring concurrent jurisdiction to Shri Sampoornanand, ACIT, over cases falling under the jurisdiction of AO Circle 4(1), Agra. The Addl. CIT, Range-IV, Agra, further assigned specific scrutiny cases, including the assessee's case for AY 2001-02, to Shri Sampoornanand. The Tribunal found that the CIT-II's order provided concurrent jurisdiction to Shri Sampoornanand over all cases in Circle 4(1), Agra, not limited to a specific assessment year. Thus, the Tribunal concluded that Shri Sampoornanand had the jurisdiction to issue the notice under Section 148 for the assessment years in question.

2. Validity of Reassessment Proceedings:
The reassessment proceedings were challenged based on the jurisdictional issue. The CIT(A) had annulled the reassessment orders on the grounds that the notices under Section 148 were issued by an officer who did not hold valid jurisdiction for the concerned assessment years. However, the Tribunal disagreed, interpreting the jurisdictional orders to mean that Shri Sampoornanand had concurrent jurisdiction over all cases in Circle 4(1), Agra. The Tribunal emphasized that the jurisdictional orders were effective until further notice and that no evidence was presented to show that this concurrent jurisdiction was withdrawn. Consequently, the Tribunal set aside the CIT(A)'s annulment of the reassessment proceedings, reinstating the validity of the notices issued under Section 148.

3. Cancellation of Penalties under Section 271(1)(c) of the Income Tax Act:
The penalties under Section 271(1)(c) were canceled by the CIT(A) because the reassessment orders were annulled. Since the Tribunal reinstated the reassessment proceedings by validating the jurisdiction of Shri Sampoornanand, it also set aside the CIT(A)'s order canceling the penalties. The Tribunal directed the CIT(A) to decide the penalty appeals on merits, considering the restored reassessment proceedings.

Conclusion:
The Tribunal concluded that Shri Sampoornanand, ACIT, had the proper jurisdiction to issue notices under Section 148 for the assessment years in question due to the concurrent jurisdiction conferred by the CIT-II, Agra. The reassessment proceedings were thus valid, and the penalties under Section 271(1)(c) were to be reconsidered on merits by the CIT(A). The Tribunal set aside the CIT(A)'s orders and restored the appeals for a decision on merits, providing both the assessee and the AO with an opportunity to be heard.