1983 (7) TMI 91 - AT - Income Tax

Tribunal overturns CIT's assessment cancellation due to lack of jurisdictional facts

The Tribunal allowed the appeal, ruling that the CIT's cancellation of the assessment was invalid as it lacked proper jurisdictional facts and was based ... - Issues:Jurisdiction of CIT under section 263 of the IT Act, 1961 without having jurisdictional facts, compliance with advance-tax provisions under section 209A, CIT's authority to cancel assessment and direct fresh assessment, merging of ITO's order with CIT(A)'s order, imposition of interest under section 217 and penalty under section 273, relevance of appellate authority's decision on assessment, legal implications of technical defaults in assessment orders.Analysis:The appeal before the Appellate Tribunal ITAT Chandigarh challenged the CIT's order under section 263 of the IT Act, 1961, pertaining to the assessment year 1979-80. The grievance was that the CIT assumed jurisdiction without proper jurisdictional facts. The relevant facts revealed that the assessee, a firm named M/s Harsaran Dass Sita Ram, had filed its return of income and undergone assessment proceedings. The CIT found the ITO's assessment erroneous for not charging interest under section 217 and not initiating penalty proceedings under section 273(1)(b). The CIT directed the ITO to cancel the assessment and conduct a fresh assessment, citing non-compliance with advance-tax provisions. The assessee contended that there was no default and challenged the CIT's jurisdiction to cancel the assessment entirely.The Tribunal analyzed the legal precedents cited by both parties, emphasizing the principle that where an appeal has been filed against an assessment and a decision has been made by an appellate authority, the ITO's order merges with that of the appellate authority to that extent. Referring to the Full Bench judgment of the Madhya Pradesh High Court, the Tribunal held that the CIT cannot set aside the entire assessment if it was the subject matter of appeal. In this case, the CIT's order canceling the entire assessment was deemed invalid under the law.Further, the Tribunal discussed various court judgments highlighting that minor omissions or mistakes in an assessment order do not warrant wholesale cancellation unless there is a fundamental error. The Tribunal found that the assessee had complied with tax provisions but failed to file a formal statement, leading the CIT to cancel the assessment entirely, which was considered unwarranted. The Tribunal concluded that the CIT's assumption of jurisdiction based on technical defaults was unjustified, and therefore, the CIT's order was declared invalid, restoring the ITO's assessment order.In conclusion, the Tribunal allowed the appeal, emphasizing the importance of legal compliance and the necessity for proper jurisdictional facts before invoking provisions under the IT Act, 1961. The judgment underscored the significance of legal principles in assessment proceedings and the limits of the CIT's authority to cancel assessments based on technical defaults.