1996 (8) TMI 138 - AT - Income Tax

Tribunal nullifies assessment order due to jurisdictional errors, favors assessee

The Tribunal annulled the assessment order, holding that the AO, Calcutta, lacked jurisdiction and failed to follow the legal procedures outlined in ... Assessing Officer, Assessment Order, Assessment Year, Natural Justice Issues Involved:1. Jurisdiction of the Assessing Officer (AO)2. Validity of assessment under section 144/2513. Consideration of objections by the assessee regarding jurisdiction4. Double assessments for the same assessment year5. Compliance with section 124 of the Income Tax Act, 1961Issue-wise Detailed Analysis:1. Jurisdiction of the Assessing Officer (AO):The primary issue contested by the assessee was whether the AO in Calcutta had the jurisdiction to assess the company. The assessee argued that the return was erroneously filed in Calcutta, as the company had shifted its business to Kanpur. The CIT(A) upheld the jurisdiction of the AO, Calcutta, based on the company's registered office being in Calcutta. The Tribunal found that the AO, Calcutta, ignored the directions of the CIT(A) to consider the assessment already completed by the ITO, Kanpur, and failed to act upon the assessee's objections.2. Validity of Assessment under Section 144/251:The original assessment under section 144 was set aside by the CIT(A) with a direction to re-do the assessment considering the assessee's claim of filing a return in Kanpur. The Tribunal concluded that the AO, Calcutta, did not follow the legal procedure laid down in section 124 and completed the assessment without addressing the jurisdictional objections raised by the assessee. Consequently, the assessment was deemed null and void.3. Consideration of Objections by the Assessee Regarding Jurisdiction:The assessee raised objections within the prescribed time under section 124(5), questioning the jurisdiction of the AO, Calcutta. The AO failed to consider these objections and did not refer the matter to the Commissioner as required by section 124(6). The Tribunal held that the AO's failure to address the objections and refer the matter for determination invalidated the assessment.4. Double Assessments for the Same Assessment Year:The Tribunal noted that two assessments were made for the same assessment year, one by the ITO, Kanpur, and another by the ITO, Calcutta. The assessment by the ITO, Kanpur, was completed first and was not set aside by the CIT, Kanpur. The second assessment by the AO, Calcutta, was therefore considered to be in violation of the principles of natural justice and was declared null and void.5. Compliance with Section 124 of the Income Tax Act, 1961:The Tribunal emphasized that the AO, Calcutta, did not comply with the mandatory provisions of section 124. The AO did not reject the assessee's objections or refer the matter to the Commissioner, as required. The Tribunal concluded that the assessment was made without jurisdiction and was therefore invalid.Conclusion:The Tribunal annulled the assessment order, holding that the AO, Calcutta, lacked jurisdiction and failed to follow the legal procedures outlined in section 124. The Tribunal vacated the order of the CIT(A) and allowed the appeal in favor of the assessee. The assessment was declared null and void due to the lack of jurisdiction and the presence of double assessments.