2023 (2) TMI 531 - HC - Income Tax

Invalid Jurisdiction: UK Company not subject to reassessment. Importance of legal basis in tax matters.

Vedanta Resources Ltd. Versus The Asst. Commissioner of Income Tax International Taxation, Bhubaneswar and Another

Vedanta Resources Ltd. Versus The Asst. Commissioner of Income Tax International Taxation, Bhubaneswar and Another - TMI Issues:Challenge to jurisdiction of Opposite Party No.1 to issue notices under Section 148 of the Income Tax Act for various Assessment Years.Analysis:1. The petitioner, a non-resident company incorporated in the UK, challenged the jurisdiction of Opposite Party No.1 to issue notices for reassessment for the AYs 2013-14 to 2017-18. The petitioner argued that its jurisdiction was assigned to the DCIT in New Delhi, not Bhubaneswar. 2. The petitioner contended that the reassessment was based on incorrect premises. The Department relied on Form 15CA filed by Vedanta Limited and an order related to Vedanta Limited's tax matters, which were under different jurisdictions than Bhubaneswar. This raised questions about the jurisdiction of Opposite Party No.1.3. The Department claimed jurisdiction over the petitioner based on an order proposing the transfer of jurisdiction from Delhi to Bhubaneswar. However, the petitioner denied having any business operations in Jharsuguda, Odisha, as claimed by the Department. The petitioner's activities were not based in Jharsuguda, and the reassessment was not related to any transactions in that location.4. The legal basis for Opposite Party No.1's jurisdiction was further challenged by the petitioner, highlighting the lack of a formal order transferring jurisdiction from Delhi to Bhubaneswar. The absence of such an order raised doubts about the validity of the notices issued by Opposite Party No.1.5. The Court analyzed the relevant legal provisions, including Section 127 of the Income Tax Act, which governs the transfer of cases between Assessing Officers. Without a proper order transferring jurisdiction, the Court found that Opposite Party No.1 did not have the legal authority to issue the notices for reassessment.6. Citing a similar case where notices were quashed due to jurisdictional issues, the Court concluded that the impugned notices were issued without jurisdiction. As a result, the Court quashed the notices and subsequent proceedings, allowing the Department to proceed lawfully in the future.7. The judgment highlighted the importance of jurisdictional clarity in tax matters to ensure fairness and adherence to legal procedures. The Court's decision emphasized the need for proper legal basis and jurisdictional authority when initiating reassessment proceedings.