Tribunal Invalidates Assessment due to Lack of Jurisdiction

Shri Banwari Lal Sharma Versus The ITO, Ward 2 (1), Jaipur AND The ITO, Ward 2 (1), Jaipur Versus Shri Vivek Gupta, Shri Ashish Gupta

Shri Banwari Lal Sharma Versus The ITO, Ward 2 (1), Jaipur AND The ITO, Ward 2 (1), Jaipur Versus Shri Vivek Gupta, Shri Ashish Gupta - TMI Issues Involved:
1. Validity of the order passed under section 163 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer in assessing the representative assessee.
3. Determination of the assessee as the agent of the non-resident under section 163(1) of the Income Tax Act, 1961.
4. Denial of fair opportunity and violation of principles of natural justice.
5. Efforts made to tax the real owner of the property.

Detailed Analysis:

1. Validity of the Order Passed Under Section 163:
The assessee contested the validity of the order passed under section 163, arguing that it was contrary to law and void-ab-initio. The CIT(A) upheld the order, but the Tribunal found that the jurisdiction for assessing non-residents lies with the authorities in Mumbai. The Tribunal noted that the Assessing Officer in Jaipur did not have the jurisdiction to assess the non-resident's representative, making the proceedings illegal and void-ab-initio. The Tribunal relied on the decision of the Calcutta High Court in the case of CESC Ltd. and Others Vs. DCIT, which held that only authorities in Mumbai have jurisdiction over non-residents.

2. Jurisdiction of the Assessing Officer:
The Tribunal observed that the jurisdiction for assessing non-residents is confined to Mumbai, especially when the non-resident has no local connection. In this case, the non-resident, Smt. Pamela Colleco, had a local connection through the power of attorney holder, Banwari Lal Sharma, who executed the sale deeds and received the sale consideration in India. The Tribunal found no evidence of the non-resident being assessed in Mumbai and noted that the Assessing Officer in Jaipur acted within his jurisdiction by treating the power of attorney holder as the representative assessee.

3. Determination of the Assessee as the Agent of the Non-Resident:
The Tribunal upheld the CIT(A)'s decision that Banwari Lal Sharma was the representative assessee of Smt. Pamela Colleco under section 163(1)(c) of the Income Tax Act, 1961. The Tribunal found that the power of attorney was valid and that Banwari Lal Sharma, as the power of attorney holder, executed the sale agreements and received the sale consideration on behalf of the non-resident. Therefore, he was rightly held as the agent of Smt. Pamela Colleco.

4. Denial of Fair Opportunity and Violation of Principles of Natural Justice:
The assessee argued that he was not given a fair opportunity to be heard before the order under section 163 was passed, violating the principles of natural justice. The Tribunal noted that the Assessing Officer did not provide sufficient opportunity to the assessee to present his case. However, the CIT(A) considered the submissions of the assessee and provided a detailed finding, thus curing the defect of lack of opportunity. The Tribunal found no merit in the assessee's argument and upheld the CIT(A)'s decision.

5. Efforts Made to Tax the Real Owner of the Property:
The Tribunal observed that the Assessing Officer made only a single attempt to contact the non-resident, Smt. Pamela Colleco, by issuing a notice under section 133(6) at her local address, which was duly served but not replied to. The Tribunal noted that the Assessing Officer should have made further inquiries to locate the non-resident. However, the Tribunal found that the assessee, as the power of attorney holder, could not absolve himself from the tax liability arising from the sale of the property. The Tribunal upheld the CIT(A)'s decision to treat Banwari Lal Sharma as the representative assessee.

Separate Judgments:
The Tribunal also dealt with appeals involving other assessees, Vivek Gupta and Ashish Gupta, who were held as agents of Smt. Pamela Colleco. The Tribunal followed its decision in the case of Banwari Lal Sharma and upheld the CIT(A)'s orders, holding that Vivek Gupta and Ashish Gupta could not be treated as agents of Smt. Pamela Colleco. The Tribunal dismissed the revenue's appeals in these cases.

Conclusion:
The Tribunal dismissed the appeal of the assessee, Banwari Lal Sharma, and upheld the CIT(A)'s decision to treat him as the representative assessee of Smt. Pamela Colleco. The Tribunal also dismissed the revenue's appeals in the cases of Vivek Gupta and Ashish Gupta, upholding the CIT(A)'s orders that they could not be treated as agents of Smt. Pamela Colleco.