2002 (6) TMI 153 - AT - Income Tax

Tribunal quashes assessment orders citing lack of jurisdiction, invalid notices, and improper service. Assessee appeals allowed.

All India Children Care & Educational Development Society. Versus Joint Commissioner Of Income-tax.

All India Children Care & Educational Development Society. Versus Joint Commissioner Of Income-tax. - ITD 087, 209, TTJ 081, 598, Issues Involved:1. Jurisdiction of the Joint Commissioner of Income-tax (Asstt.) over the assessee-society.2. Validity of reasons recorded for issuing notices under section 148.3. Proper issuance and service of notices under section 148.4. Completion of assessment proceedings twice on the same date.5. Entitlement of the assessee to exemption under section 10(22) of the Income-tax Act, 1961.6. Entitlement of the assessee to relief under section 11 of the Income-tax Act, 1961.Detailed Analysis:1. Jurisdiction of the Joint Commissioner of Income-tax (Asstt.) over the assessee-society:The Tribunal noted that despite multiple opportunities, the Department failed to produce an order of jurisdiction passed by the CIT, Varanasi, conferring jurisdiction on the Joint Commissioner of Income-tax (Asstt.), Varanasi. The Tribunal concluded that without such an order, the Joint Commissioner was not competent to exercise jurisdiction over the assessee-society. The assessment order dated 29-3-2000 was declared invalid due to the lack of jurisdiction.2. Validity of reasons recorded for issuing notices under section 148:The Tribunal found that the reasons recorded by the Assessing Officer for issuing notices under section 148 for the assessment years 1993-94, 1994-95, and 1995-96 were vague and based on assumptions rather than concrete facts and figures. The Tribunal emphasized that the reasons must have a rational connection or relevant bearing on the formation of the belief that income has escaped assessment. The Tribunal held that the reasons recorded did not meet this requirement, rendering the notices invalid.3. Proper issuance and service of notices under section 148:The Tribunal observed that the notices under section 148 were not properly issued and served. The name of the assessee-society was incorrectly mentioned as 'M/s. Manager, All India Children Care and Welfare Society, Railway Station, Azamgarh,' instead of the correct name 'All India Children Care and Educational Development Society.' The Tribunal held that this defect in the notices rendered them invalid.4. Completion of assessment proceedings twice on the same date:The Tribunal examined the entries on the Order Sheet dated 29-3-2000, which indicated that the Assessing Officer processed the return of income under section 143(1) and also passed an assessment order under section 143(3) on the same date. The Tribunal clarified that intimation under section 143(1) is not an assessment and does not act as a bar to making an assessment under section 143(3). Therefore, this preliminary objection was decided against the assessee and in favor of the Revenue.5. Entitlement of the assessee to exemption under section 10(22) of the Income-tax Act, 1961:The Tribunal considered the arguments and materials presented by both parties. It noted that the assessee-society was running educational institutions and that the surplus of income over expenditure was utilized for educational purposes. However, since the assessment orders were already quashed on preliminary issues, the Tribunal did not provide a definitive finding on the assessee's entitlement to exemption under section 10(22).6. Entitlement of the assessee to relief under section 11 of the Income-tax Act, 1961:Similarly, the Tribunal did not provide a definitive finding on the assessee's entitlement to relief under section 11, as the assessment orders were quashed on preliminary issues. The Tribunal noted that the Assessing Officer had denied exemption under section 11 on the grounds that the name of the society in the registration certificate did not match the name used by the assessee and that the returns of income were not filed in accordance with section 139(4A).Conclusion:The Tribunal quashed the assessment orders for the assessment years 1993-94, 1994-95, 1995-96, and 1997-98 on the grounds of lack of jurisdiction, invalid reasons for issuing notices under section 148, and improper issuance and service of notices. The appeals of the assessee were allowed on these preliminary grounds, and the Tribunal did not provide definitive findings on the merits of the case regarding exemptions under sections 10(22) and 11.