2016 (11) TMI 124 - HC - Income Tax

Invalid assessment notice quashed by High Court for lack of jurisdiction, granting liberty for reassessment.

The High Court declared the assessment and demand notice issued by the Income Tax Officer (Exemptions), Muzaffarpur, for the assessment year 2013-14 under ... Assessment under Section 143(3) - jurisdictional allocation by CBDT notification - binding effect of administrative directions - territorial allocation of assessing authority - absence of Section 12AA registration and no claim under Section 11 - void ab initioJurisdictional allocation by CBDT notification - territorial allocation of assessing authority - binding effect of administrative directions - assessment under Section 143(3) - void ab initio - Validity of assessment and demand notice dated 31.03.2016 issued by Income Tax Officer (Exemptions), Muzaffarpur, in light of CBDT Notification No.52/2014 conferring jurisdiction on the Commissioner of Income-tax (Exemption), Patna. - HELD THAT: - The CBDT notification of 22.10.2014 allocates, by territorial area and class of cases, jurisdiction to specified Commissioners (including the Commissioner of Income-tax (Exemption), Patna) to exercise powers and perform functions in respect of cases claiming specified exemptions. The impugned assessment for the assessment year 2013-14 was made by the Income Tax Officer (Exemptions), Muzaffarpur, who, on a plain reading of the notification, was not vested with jurisdiction to assess the petitioner trust which had neither been registered under Section 12AA nor claimed exemption under Section 11. The notification's directions are binding on the assessing authorities and, therefore, an assessment made by an authority lacking the jurisdiction specifically allocated by the CBDT cannot be treated as a mere irregularity. Because the authority to make the assessment stood vested elsewhere by the notification, the assessment is without jurisdiction and void ab initio. The Revenue is, however, afforded liberty to proceed in accordance with law and the notification. [Paras 11, 12, 13, 14, 15]Impugned assessment and demand notice dated 31.03.2016 quashed as void ab initio; Revenue granted liberty to proceed in accordance with law and the CBDT notification.Final Conclusion: Writ petition allowed; the assessment and demand notice dated 31.03.2016 issued by the Income Tax Officer (Exemptions), Muzaffarpur, is set aside as made by an authority without jurisdiction; Revenue may reassess in accordance with law and the CBDT notification; no order as to costs. Issues:Jurisdiction of Income Tax Officer (Exemptions) in making assessment under Section 143(3) of the Income-tax Act, 1961 without being registered under Section 12AA or claiming exemption under Section 11.Analysis:The petitioner, a non-profitable educational trust, challenged the assessment and demand notice issued by the Income Tax Officer (Exemptions), Muzaffarpur, for the assessment year 2013-14 under Section 143(3) of the Income-tax Act, 1961. The petitioner contended that the assessment was without jurisdiction and in violation of Notification No.52/14, dated 22.10.2014, issued by the CBDT. The petitioner sought a writ of certiorari to quash the order and a direction to restrain the respondent from executing the impugned order. The petitioner argued that as it was neither registered under Section 12AA nor claimed exemption under Section 11, the Assessing Officer had no jurisdiction to assess under Section 143(3).The High Court examined the background facts, noting that the petitioner trust was established in 2007 and had filed returns for the assessment years 2012-13 and 2013-14 after a notice was issued under Section 148 of the Act. Subsequently, a proceeding for scrutiny and assessment was initiated, which led to the issuance of the impugned assessment and demand notice by the Income Tax Officer (Exemptions), Muzaffarpur. The petitioner raised objections citing jurisdictional errors and non-registration under Section 12AA or exemption under Section 11.The Court analyzed the Notification dated 22nd October, 2014, issued by the CBDT, which specified the Commissioners of Income Tax authorized to deal with cases of persons claiming exemption under various sections of the Income Tax Act. The Schedule in the Notification designated the Commissioner of Income Tax (Exemption), Patna, to handle cases of persons claiming exemptions under specific sections. The Court emphasized that the impugned assessment made by the Income Tax Officer (Exemptions), Muzaffarpur, was void ab initio as it lacked jurisdiction conferred upon the Commissioner of Income Tax (Exemption), Patna.Consequently, the Court set aside and quashed the impugned assessment and demand notice issued by the Income Tax Officer (Exemptions), Muzaffarpur. The Court granted liberty to the Revenue to reassess the petitioner's case in accordance with the law and the Notification dated 22nd October, 2014. The writ petition was allowed with no order as to costs, ensuring justice was served in light of the jurisdictional discrepancies identified in the assessment process.