2022 (7) TMI 1311 - HC - Income Tax

Change of jurisdiction u/s 127 - whether ITAT has erred in not appreciating that the PAN of the Assessee is lying at Kolkata and for the last six years the returns were being processed at Kolkata and during the period the assessee had never raised any objection to the jurisdiction? - HELD THAT - Tribunal has found that the acknowledgment receipt of the return of income shows that the respondent assessee had been filing its returns since inception i.e. AY 2005-06 at the address mentioned at New Delhi. It is pertinent to mention that in the Assessment Year 2012-13 when the assessee s case was selected for scrutiny, the assessee had within a month filed its objection to the jurisdiction of the ITO, Ward-10(2), Kolkata stating that the assessee s jurisdiction lies with Assessing Officer, Range-18, New Delhi. This Court is in agreement with the view of the Tribunal that as the assessee had raised objection within the time provided under Section 124(3) Assessing Officer, if not, satisfied with the correctness of the claim should have referred the matter for determination before the assessment was made to the PCIT. As in the present case, the Assessing Officer rejected the objection regarding the jurisdiction and referred the matter to the PCIT to decide the issue after sixteen months. Further, the PCIT instead of deciding the issue of jurisdiction ordered that the issue of transfer of the jurisdiction will be decided after the completion of assessment. This Court is of the view that the approach adopted by both the Assessing Officers i.e. ITO, Ward-10(2), Kolkata as well as PCIT, Kolkata was contrary to the mandate of law, in particular, Section 124(4) of the Act.

Summary

Issues:
Jurisdictional error in Income Tax Assessment for Assessment Year 2012-13.

Analysis:
The appellant challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the assessment order for the Assessment Year 2012-13. The counsel for the Appellant argued that the ITAT erred in quashing the assessment order passed by the Assessing Officer in Kolkata, emphasizing that the PAN of the assessee-company was under the jurisdiction of the Assessing Officer in Kolkata. The counsel contended that the ITAT failed to consider that the assessee had not requested a change of jurisdiction under Section 127 of the Income Tax Act between the relevant assessment years. However, upon reviewing the acknowledgment receipt of the return of income, it was found that the assessee had been filing returns since the inception at the address in New Delhi. When the assessee's case was selected for scrutiny in the Assessment Year 2012-13, the assessee objected to the jurisdiction of the ITO in Kolkata, asserting that the jurisdiction lies with the Assessing Officer in New Delhi.

The High Court concurred with the Tribunal's view that since the assessee raised the objection within the stipulated time under Section 124(3) of the Act, the Assessing Officer should have referred the matter for determination before making the assessment. However, the Assessing Officer rejected the objection and referred the matter to the PCIT after a significant delay. The PCIT, instead of deciding the jurisdiction issue, postponed it until after the completion of the assessment. The High Court found that the actions of both the Assessing Officers were contrary to the law, specifically Section 124(4) of the Act, which mandates a different approach. Consequently, the High Court held that no substantial question of law arose for consideration in the appeal, leading to the dismissal of the appeal.

This judgment highlights the importance of adhering to jurisdictional requirements in income tax assessments, emphasizing the need for timely consideration and resolution of jurisdictional disputes to ensure compliance with the legal framework set out in the Income Tax Act.