2016 (8) TMI 114 - HC - Income Tax

Reopening of assessment - Assistant Commissioner jurisdiction to issue notice - Held that - Assistant Commissioner, Circle 5(2) had no jurisdiction to assess the petitioner. She could not have issued notice for reassessment. This is not a mere irregularity or a defect which can be cured, but question of jurisdiction of the authority to reopen the assessment. In administrative or quasi judicial matters, where exercise of powers are well regulated and segregated through rules and regulations or administrative instructions, no authority or officer who is not vested with the jurisdiction of the particular nature can exercise such powers which would be purely a case of lack of authority failing which there would be a total anarchy and any officer positioned at any place may choose to exercise jurisdiction over any assessee. Reference to section 292BB of the Act by the counsel of the revenue would need summary rejection. The said provision guards against any objection to service of notice particularly when an assessee has despite any defective service of notice participated in the proceedings. Such is not the facts in the present case. The present case is where the issuance of notice itself is bad issued by the authority who was not competent. This is a case of defect in issuance of notice and not service of notice. - Decided in favour of assessee

Summary

Issues:
Challenge to notice for reopening assessment due to jurisdictional issue.

Analysis:
The petitioner challenged a notice issued by the Assistant Commissioner of Income Tax Circle-5(2), Ahmedabad, seeking to reopen the assessment for the assessment year 2008-2009. The petitioner, an individual, had filed a return of income declaring total income of ?20.59 lakhs for that year, which was processed under section 143(1) of the Income Tax Act, without any scrutiny assessment. The reasons for issuing the notice included the claim of exemption of capital gain arising from the sale of immovable properties, where a portion of the land was classified as waste land. The Assessing Officer believed that income of ?7,19,712 had escaped taxation due to the omission of material facts by the petitioner. The petitioner's counsel raised the jurisdictional issue, arguing that the Assistant Commissioner of Circle 5(2) had no authority over the petitioner's assessment, which was historically under circle-9, Ahmedabad, and now reorganized under circle 4(2), Ahmedabad.

The Revenue responded by stating that the notice was issued based on information received from the income tax officer, ward 8, Vapi, and transferred to the Deputy Commissioner of Income Tax, circle 5(2), Ahmedabad, due to the address mentioned in the conveyance document. The department acknowledged that the petitioner's assessment should be under circle 4(2), Ahmedabad, but the notice was issued by the Assistant Commissioner of circle 5(2) based on the petitioner being described as an agriculturist in the sale deed. However, the petitioner's regular assessment history and the restructuring of jurisdiction indicated that the Assistant Commissioner, Circle 5(2), lacked jurisdiction over the petitioner's assessment. The court emphasized that this was not a mere irregularity but a question of jurisdiction, crucial in administrative or quasi-judicial matters.

The court rejected the department's reliance on section 292BB of the Act, which deals with objections to service of notice, as the present case involved a defect in the issuance of notice by an incompetent authority rather than a service issue. Consequently, the court quashed the notice solely on the ground of lack of jurisdiction, disposing of the petition in favor of the petitioner.