2015 (12) TMI 1113 - AT - Income Tax

Assessee prevails in jurisdictional challenge under Income-tax Act

Asst. Commissioner of Income-tax, Circle 3 (1) (1), Bangalore Versus M/s. iGate Infrastructre Management Services Ltd.

The ITAT upheld the CIT(A)'s decision, ruling in favor of the assessee in a jurisdictional challenge under section 147 of the Income-tax Act, 1961. It was ... Reopening of assessment - Whether DCIT, Circle 11(1), New Delhi had no jurisdiction to issue notice u/s 147 of the Act? - Held that:- Revenue has not disputed the finding of CIT(A) that assessee had informed change in registered office from New Delhi to Bangalore on 20/10/2005. It is also not disputed that assessments for assessment years 2005-06 and 2006-07 were done by ACIT, Circle 11(4), Bangalore on 6/12/2007 and 29/9/2008 prior to the impugned assessment done by the DCIT, Circle 11(1), New Delhi on 5/12/2008 for assessment year 2003-04. It was also pointed out before AO at New Delhi that its registered office having been shifted, jurisdiction over it vests with the Bangalore income-tax office. Ld.AO, if he was not in agreement with the assessee, ought to have made a determination of the issue of jurisdiction, when assessee had questioned it, in the manner laid down in section 124(4) of the Act, which apparently was not done. This being the factual position, we are of the opinion that DCIT, Circle- 11(1), New Delhi had no jurisdiction on 5/12/2008 to pass reassessment on assessee. We uphold the order of the CIT(A) in this regard. Issues: Jurisdictional challenge regarding reassessment under section 147 of the Income-tax Act, 1961Analysis:1. The appeal and cross objections were against the order dated 27/05/2015 of Pr.CIT(A), Bangalore-3. The revenue's grounds included a challenge to the jurisdiction of the AO and the validity of the CIT(A)'s order.2. The assessee declared a loss in the return of income for the assessment year, which was accepted in the initial assessment. A notice under section 148 was issued later by the DCIT, Circle 11(1), New Delhi, resulting in a reassessment with a significant addition.3. The main contention raised by the assessee was that the DCIT, New Delhi had no jurisdiction to issue the notice under section 147 as the case had been transferred to Bangalore. The assessee provided evidence of the change in registered office and jurisdiction, which was not considered by the AO.4. The CIT(A) found in favor of the assessee, stating that the DCIT, New Delhi lacked jurisdiction to assess the assessee. The CIT(A) highlighted the failure of the AO to address the change in jurisdiction properly.5. The ITAT upheld the CIT(A)'s decision, emphasizing that the DCIT, New Delhi had no jurisdiction to pass the reassessment order due to the change in the assessee's registered office to Bangalore. The ITAT noted the assessments for subsequent years were already done by the Bangalore office.6. The cross objections filed by the assessee challenging the addition and reopening under section 147 were deemed infructuous due to the jurisdictional issue being decided in favor of the assessee.7. Consequently, both the revenue's appeal and the assessee's cross objections were dismissed by the ITAT.This detailed analysis of the judgment showcases the jurisdictional challenge faced by the assessee regarding the reassessment under section 147 of the Income-tax Act, 1961, and the subsequent decisions by the CIT(A) and the ITAT in favor of the assessee based on the lack of jurisdiction of the DCIT, New Delhi.