Assessment order under Section 143(3) challenged on territorial jurisdiction grounds leads to case remand for verification

ITAT Raipur allowed the assessee's appeal on jurisdictional grounds. The assessee challenged the validity of an assessment order u/s 143(3) passed by ITO Ward-1(3), Raipur, contending that territorial jurisdiction was vested with ITO Ward-2(3), Raipur at the relevant time. The Tribunal found substance in the assessee's claim based on documentary evidence including municipal receipts, sale deed, and partner's affidavit. Since contradictory claims existed regarding jurisdiction as on the notice date, the matter was restored to the AO for verification of territorial jurisdiction. If jurisdiction was not vested with ITO Ward-1(3), the assessment order dated 30.03.2015 would stand vacated.

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Issues Involved:
1. Validity of jurisdiction assumed by the Assessing Officer (A.O) due to the issuance of notice under Section 143(2) of the Income-tax Act, 1961.
2. Disallowance of expenses related to raw materials, wages, garden, and gifts.
3. Addition related to the deduction under Section 80IB(10).

Issue-wise Detailed Analysis:

1. Validity of Jurisdiction:
The primary issue revolves around the validity of the jurisdiction assumed by the A.O due to the issuance of notice under Section 143(2) by an officer who allegedly did not have jurisdiction over the assessee at the relevant time. The assessee contended that the notice issued by ITO, Ward-1(3), Raipur, was invalid as the jurisdiction at the time was vested with ITO, Ward-2(3), Raipur. The Tribunal acknowledged the importance of a valid notice under Section 143(2) for a lawful assessment under Section 143(3). The Tribunal highlighted that an assessment order passed without a valid notice is considered bad in law, supported by precedents such as ACIT & Anr. Vs. Hotel Blue Moon and CIT v. Laxman Das Khandelwal. The Tribunal noted that the issue of jurisdiction was deliberated in the case of Dr. Hari Singh Chandel Vs. Income Tax Officer, where it was established that an assessment order based on a notice from an officer without jurisdiction is null and void. The Tribunal decided to remand the matter to the A.O for verification of jurisdictional facts, emphasizing that if the jurisdiction was not with ITO, Ward-1(3) at the time of notice issuance, the assessment would be vacated.

2. Disallowance of Expenses:
The assessee challenged the disallowance of expenses related to raw materials, wages, garden, and gifts. The CIT(Appeals) had sustained the disallowance of Rs. 1,75,000/- out of raw material expenses, Rs. 30,000/- out of wages and garden expenses, and reduced the disallowance of gift expenses from Rs. 1,10,000/- to Rs. 50,000/-. However, the Tribunal noted that the assessee's representative did not press these grounds during the appeal hearing, leading to their dismissal as not pressed.

3. Addition Related to Deduction under Section 80IB(10):
The assessee also contested the addition of Rs. 21,97,992/- related to the disallowance of the deduction under Section 80IB(10). However, the Tribunal observed that no contentions were advanced by the assessee's representative on this ground during the appeal hearing. Consequently, the Tribunal refrained from adjudicating this issue, leaving the CIT(Appeals)'s decision on this matter unaltered.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, focusing primarily on the jurisdictional issue. The matter was remanded to the A.O for verification of jurisdictional facts, with the Tribunal emphasizing that the assessment would be vacated if it was found that the jurisdiction was not with ITO, Ward-1(3) at the time of the notice issuance. The other grounds related to disallowance of expenses and the deduction under Section 80IB(10) were not pressed or addressed, leading to their dismissal or non-adjudication.

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