2024 (5) TMI 507 - HC - Income Tax

Assessment Order Overturned: Fundamental Error Found Due to Discrepancies Between Notice and Order, Jurisdiction Valid in UP.

The HC set aside the assessment order dated 27.03.2024, citing a fundamental error due to discrepancies between the show cause notice and the assessment ... Faceless Assessment Center u/s 144-B - territorial jurisdiction - Determination of geographical location of the assessing authority - petitioner's PAN is mapped to ITO Ward 4(1)(1), Aligarh i.e. the jurisdictional assessing authority of the assessee - objection raised by revenue that the present petition may not be entertained by this Court as the assessee filed its return from outside the State of U.P. and the assessment order has been passed by the Faceless Assessment Center, is misconceived - HELD THAT:- In the scheme faceless assessment being implemented by the revenue under the Act, the concept of geographical location of the assessing authority has been rendered largely irrelevant for the purpose of determining the territorial jurisdiction of the High Court to which such assessing authority may abide. Faceless Assessment Center located at place 'A' may therefore remain simultaneously amenable to the writ jurisdiction of different High Courts exercising their territorial jurisdiction over different assessees residing within the territories of different States, whose assessment case may be handled by such Faceless Assessment Center. To determine the issue of territorial jurisdiction, the residence of an assessee in the PAN registration details may remain vital and decisive. Once it is not disputed to the revenue that the petitioner-assessee continues to be registered inside the State of U.P. on its PAN registration, the preliminary objection being raised as to territorial jurisdiction cannot be accepted. Vital part of the cause of action has arisen to the petitioner inside the U.P. upon service of assessment order etc. On merits, the petitioner would submit, the assessment order dated 27.03.2024 exceeds and thus departs from the show cause notice preceding the order, being notice dated 15.03.2024. The additions proposed in the notice dated 15.03.2024 do not match with the additions made. In fact, the additions exceed the enhancement proposed. In view of the above, we find, inadvertent mistake crept in the assessment order as may not allow the impugned order dated 27.03.2024 to be sustained. Accordingly, no useful purpose may be served in keeping the present petition pending or relegating the petitioner to the forum of alternative remedy, as submitted by revenue. Once the mistake cannot be disputed and it goes to the root of the matter, no fruitful purpose may ever arise in remitting such a matter to the forum of alternative remedy wherein in any case, power to remand to the assessing authority has been done away by virtue of the amendment made to Section 251 of the Act. Accordingly, the second preliminary objection as to availability of alternative remedy is also rejected. Issues involved:The issues involved in this case are the territorial jurisdiction of the High Court regarding the assessment order passed by the Faceless Assessment Center under Section 144-B of the Income Tax Act, 1961, and the discrepancy between the additions proposed in the show cause notice and the additions made in the assessment order.Territorial Jurisdiction:The High Court addressed the issue of territorial jurisdiction concerning the assessment order passed by the Faceless Assessment Center. The petitioner's PAN is mapped to a jurisdictional assessing authority in Uttar Pradesh, even though the return for the assessment year 2022-23 was filed from a different state. The Court emphasized that the geographical location of the assessing authority is not crucial under the faceless assessment scheme. It was ruled that the residence of the assessee in the PAN registration details is vital in determining territorial jurisdiction. The Court rejected the preliminary objection raised by the revenue regarding territorial jurisdiction, stating that a significant part of the cause of action had arisen in Uttar Pradesh.Discrepancy in Assessment Order:Regarding the discrepancy between the additions proposed in the show cause notice and those made in the assessment order, the Court found that the assessment order exceeded the show cause notice. The petitioner contended that the additions in the assessment order surpassed the proposed variations in the notice. The Court noted an inadvertent mistake in the assessment order, leading to the conclusion that it could not be sustained. Consequently, the assessment order dated 27.03.2024 was set aside, and the petitioner was granted the opportunity to provide a further reply within three weeks. The Court rejected the notion of an alternative remedy, considering the fundamental error in the assessment order.Conclusion:The High Court disposed of the petition, setting aside the assessment order and allowing the petitioner to address the adverse findings. The petitioner was instructed to submit a final reply within three weeks and attend a personal hearing before the assessing authority. The Court emphasized the importance of rectifying errors in the assessment process and providing the petitioner with an opportunity to present their case effectively.