2020 (4) TMI 324 - AT - Income Tax

Tribunal quashes reassessment & PCIT's revision under Section 263 for lack of jurisdiction.

Girish Chand Agarwal Versus Income Tax Officer, Ward-46 (1), Kolkata

The Tribunal allowed the assessee's appeal, quashing both the reassessment proceedings for lack of jurisdiction and the PCIT's revision directions under ... Revision u/s 263 - validity of Reopening of assessment u/s 147 - jurisdiction of AO Jaipur to issue notice - It is submitted that, ITO Ward-3(2) Jaipur who had issued sec. 148 notice dated 23.03.2016 did not have territorial jurisdiction to assess the appellant / taxpayer. The latter assessing authority i.e., ITO Ward- 46(1) Kolkata who framed the assessment had never issued any sec. 148 notice at all. HELD THAT:- The fact remains undisputed is that ITO Ward-3(2) Jaipur who had issued sec. 148 notice dated 23.03.2016 did not have territorial jurisdiction to assess the appellant / taxpayer. The latter assessing authority i.e., ITO Ward- 46(1) Kolkata who framed the assessment had never issued any sec. 148 notice at all. We observe in these peculiar facts and circumstances that the relevant re-assessment framed in assessee’s case is not substantiate for want of a valid sec. 148 notice issued by the Assessing Officer having territorial jurisdiction. Hon'ble jurisdictional high court’s decision in Ramshila Enterprise Pvt.[2016 (5) TMI 17 - CALCUTTA HIGH COURT] holds that the proceedings without concerned authority having territorial jurisdiction are not upheld. We therefore hold that the re-assessment forming subject-matter of PCIT’s sec. 263 assumption of revision jurisdiction itself stands quashed. His revision directions under challenge are therefore non est to the limited extent being in the nature of collateral proceeding only. - Decided in favour of assessee. Issues Involved:1. Validity of PCIT's assumption of revision jurisdiction under Section 263 of the Income Tax Act, 1961.2. Validity of reassessment proceedings under Section 148 due to alleged lack of jurisdiction and non-issuance of notice.Detailed Analysis:1. Validity of PCIT's Assumption of Revision Jurisdiction under Section 263:The assessee's appeal challenges the Principal Commissioner of Income Tax (PCIT) for assuming revision jurisdiction under Section 263 of the Income Tax Act, 1961. The PCIT argued that the assessment order dated 30.12.2016 was erroneous and prejudicial to the interests of revenue because the Assessing Officer (AO) accepted the assessee's claim that the land sold was agricultural without proper verification. The AO relied on a certificate from a Patwari which was later found to be false. The PCIT noted that the land was within 5.7 km of the municipal limits, making it a capital asset under Section 2(14) and subject to capital gains tax. The PCIT issued a notice under Section 263, which the assessee contested, arguing that the AO had conducted adequate inquiries and that the PCIT was merely substituting his view for that of the AO. The Tribunal, however, upheld the PCIT's jurisdiction, citing inadequate inquiry as a valid ground for revision under Section 263, supported by precedents like the Kolkata High Court's decision in M/s Raj Mandir Estate Pvt. Ltd. and the Supreme Court's dismissal of SLP in DenieI Marchants (P) Ltd. vs. ITO.2. Validity of Reassessment Proceedings under Section 148:The assessee raised an additional ground challenging the validity of the reassessment proceedings on the basis that the AO did not issue a valid notice under Section 148. The Revenue opposed this on technical grounds, but the Tribunal admitted the additional ground, referencing the Supreme Court's decision in National Thermal Power Corporation Ltd. vs. CIT, which allows additional grounds to determine the correct taxable income if relevant facts are on record. The Tribunal found that the original AO in Jaipur, who issued the Section 148 notice, lacked territorial jurisdiction, and the subsequent AO in Kolkata did not issue a fresh Section 148 notice. This lack of jurisdiction rendered the reassessment proceedings invalid. The Tribunal cited the jurisdictional High Court's decision in Ramshila Enterprise Pvt. Ltd. vs. DCIT, which holds that proceedings without proper jurisdiction are not upheld. Consequently, the Tribunal quashed the reassessment and, by extension, the PCIT's revision directions under Section 263, as they were based on a non-est reassessment.Conclusion:The Tribunal allowed the assessee's appeal, quashing both the reassessment proceedings for lack of jurisdiction and the PCIT's revision directions under Section 263, as they were based on an invalid reassessment. The order was pronounced in the open court on 29/01/2020.