1994 (4) TMI 94 - AT - Income Tax

Tribunal Invalidates CIT's Order Due to Lack of Jurisdiction

The Tribunal held that the CIT's order under section 263 of the IT Act was invalid as the order under section 143(1) was not served on the assessee, ... Assessing Officer, Assessment Order, Assessment Year, Orders Prejudicial To Interests Issues:Appeal against order under section 263 of the IT Act, 1961.Detailed Analysis:The appeal was filed by the assessee against the order dated 10-3-1993 passed by the CIT, Jalandhar under section 263 of the IT Act, 1961. The grounds of appeal included contentions that the order under section 263 was illegal and lacked proper opportunity for the appellant. It was argued that the CIT assumed jurisdiction based on an alleged order under section 143(1) that was never served on the appellant. The appellant also contended that no income had escaped assessment as supported by the books of account, and the CIT misinterpreted certain legal precedents and circulars. The appellant sought leave to amend the grounds of appeal at the time of hearing.The representative of the assessee submitted that the order under section 263 was illegal as the alleged order under section 143(1) was not served on the assessee, rendering the assumption of jurisdiction by the CIT incorrect. It was argued that there was no income escapement as the trading results were backed by audited books of accounts. The representative challenged the CIT's reliance on specific legal decisions and highlighted that the assessment was framed under section 143(1) without requiring detailed records of raw material consumption. Additionally, a refund due to the assessee was also raised as a point of contention.The legal representative further argued that the Assessing Officer's acceptance of the return under section 143(1) was in line with Board instructions, and the CIT's cancellation of the order under section 263 was unwarranted. The representative cited a decision from the ITAT, Calcutta Bench to support this argument. The Departmental Representative supported the CIT's order, emphasizing that the assessment order was erroneous and prejudicial to revenue due to low declared profits compared to contract receipts.The Tribunal considered the submissions and referred to a case law precedent regarding the necessity of serving orders to parties concerned for their validity. It was noted that the order under section 143(1) was not served on the assessee, leading to the conclusion that the CIT's assumption of jurisdiction under section 263 was without legal basis. As a result, the Tribunal held the CIT's order invalid and allowed the appeal, without delving into the merits of the case.In conclusion, the Tribunal found the CIT's order under section 263 to be without jurisdiction due to the lack of service of the order under section 143(1) on the assessee, rendering the entire proceedings invalid. The appeal was allowed based on this legal ground, and the merits of the case were not further examined.