2016 (3) TMI 287 - HC - Income Tax

Court affirms ITAT ruling in tax appeal for AY 2009-10, rejects defective Revenue appeal lacking jurisdiction challenge.

The High Court upheld the ITAT's decision in a tax appeal case for Assessment Year 2009-10. The Court found the Revenue's appeal defective as it did not ... Revise return - jurisdiction of AO to ignore the revised return and proceed on the basis of original return - CIT(A) held that AO had no jurisdiction to proceed with the original assessment.AO did not have jurisdiction in view of the revised return in which the disclosed income was shown as ₹ 41,31,510/- which was more than ₹ 10 lakhs, the monetary limit placed by the Central Board of Direct Taxes ('CBDT'). Held that:- Revenue's Appeal was defective since the finding of the CIT(A) on the lack of jurisdiction was not challenged by it. Issues:Jurisdiction of the Assessing Officer to proceed on the basis of the original return instead of the revised return.Analysis:The case involved an appeal filed by the Revenue against the order passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2009-10. The Assessee, a resident of Mumbai, initially filed a return of income declaring an amount. Later, realizing a mistake, she filed a revised return declaring a higher income and claiming a refund. The Assessing Officer (AO) issued a notice under Section 143(2) of the Income Tax Act but proceeded to pass an assessment order based on the original return, making significant additions to the income declared. The matter was taken to the Commissioner of Income Tax (Appeals) (CIT(A)), who held that the AO had no jurisdiction to proceed with the original return and that even on merits, the additions made were unjustified.The Revenue appealed to the ITAT, challenging the admission of additional evidence and the merits of the additions, but did not contest the CIT(A)'s finding on the lack of jurisdiction of the AO to proceed with the original assessment. The ITAT, upon the Assessee's pointing out of this omission, held that the Revenue's appeal was defective due to the unchallenged finding on jurisdiction. The High Court, comprising S. Muralidhar and Vibhu Bakhru, JJ., upheld the ITAT's decision, finding no error in concluding that the Revenue's appeal was flawed due to the unchallenged jurisdictional issue. The Court ruled that no substantial question of law arose, ultimately dismissing the appeal.