2022 (10) TMI 106 - AT - Income Tax

Tribunal overturns tax assessment for 2007-08 due to jurisdictional error by AO

The Tribunal set aside the assessment order under section 144 of the Income Tax Act for the Assessment Year 2007-08, ruling in favor of the assessee on ... Revision u/s 263 - jurisdiction of the AO over the assessee whether it was with the Mumbai office or Rajkot office - HELD THAT:- There is no dispute to the fact that the intimation for the change of the address was duly communicated by the assessee to the AO of Mumbai and therefore the AO Mumbai made all correspondences including the notice issued u/s 143(2) of the Act at the address of Rajkot. Thus it is transpired that for all practical purposes the address of the assessee was shifted from Mumbai to Rajkot and this fact has also not been controverted by the revenue. No ambiguity to the fact that jurisdiction over the assessee was vested with the income tax office of Rajkot and therefore the AO Mumbai has exceeded his jurisdiction by framing the assessment u/s 144 - At the time of hearing the DR has not brought anything on record contrary to the arguments advanced by the learned AR for the assessee. As such no other judgment favouring the revenue was brought to our notice by the learned DR at the time of hearing. We hold that the assessment has been framed by the AO having no jurisdiction over the assessee and therefore such assessment is not sustainable. Accordingly, we quash the same. Hence, the technical issue raised by the assessee is allowed. Issues involved:1. Challenge to the validity of assessment under section 144 of the Income Tax Act, 1961.2. Jurisdictional issue regarding the assessment jurisdiction over the assessee.3. Disallowance of interest on building loan and depreciation.4. Dismissal of request for additional evidences under Rule 46A of IT Rules, 1962.Detailed Analysis:1. The appellant challenged the assessment order under section 144 of the Income Tax Act, 1961, for the Assessment Year 2007-08, on various grounds including lack of jurisdiction and procedural irregularities. The appellant contended that the assessment order was passed without issuing a show cause notice for alleged additions and without proper jurisdiction. The appellant also raised objections regarding disallowance of interest on building loan and depreciation. Additionally, the appellant contested the dismissal of the request for additional evidences under Rule 46A of IT Rules, 1962 by the CIT(A)-1, Rajkot.2. The main issue revolved around the jurisdictional matter concerning the assessment jurisdiction over the assessee. The appellant argued that the Assessing Officer (AO) in Mumbai had no jurisdiction over the assessee during the relevant period as the assessee had shifted from Mumbai to Rajkot. The appellant submitted evidence of communication regarding the change of address to the AO and highlighted that all notices were served at the Rajkot address. The appellant challenged the validity of the assessment under section 144 of the Act on jurisdictional grounds, which was rejected by the CIT(A). The Tribunal, after considering the submissions, held in favor of the assessee, citing a similar judgment by the Allahabad High Court in a comparable case.3. The Tribunal found that the AO in Mumbai exceeded jurisdiction by framing the assessment under section 144 of the Act when the jurisdiction was with the income tax office in Rajkot. The Tribunal referred to a relevant judgment supporting the assessee's claim of jurisdictional error. Consequently, the assessment was deemed unsustainable, and the Tribunal quashed it. As the issue was decided in favor of the assessee on technical grounds, the Tribunal did not delve into the merits of the other grounds raised by the appellant regarding disallowance of interest on building loan and depreciation. The grounds raised on merit were dismissed as infructuous.4. The Tribunal acknowledged the delay in filing the appeal by the assessee but condoned it due to the circumstances during the Covid-19 period. The order was pronounced partly allowing the appeal of the assessee on the jurisdictional issue, thereby setting aside the assessment order under section 144 of the Act for the Assessment Year 2007-08.This detailed analysis covers the various issues raised in the legal judgment delivered by the Appellate Tribunal ITAT Rajkot.