TaxTMI 
TaxTMI 
2016 (3) TMI 174
X X X X Extracts X X X X
X X X X Extracts X X X X
....al jurisdiction whereas the jurisdictions/as with the Income-tax Officer-5(4), Kanpur and the assessment for the assessment year 2008-09 was completed by the Income-tax Officer-5(4), Kanpur. 3. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in annulling the assessment without appreciating the fact that the assessee did not raise any objection regarding the jurisdiction of case during the course of assessment proceedings. 4. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in annulling the assessment on the ground that the notice under section 148 was issued during the pendency of regular assessment proceedings and only notice under section 143(2) could have been issued and notice under section 148 is without jurisdiction ignoring the fact that the Act does not debar the Assessing Officer from taking recourse to provisions of section 147 of the Act even when time to issue notice under section 143(2) is available. 5. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in annulling the assessment without appreciating the judgments of the Supreme Court in Asst. CIT v. Rajesh Jhaveri Stock Broker....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deserves to be quashed. The learned Commissioner of Income-tax (Appeals) re-examined the claim of the assessee and being convinced with it, he was of the view that reopening was done by an officer having no jurisdiction over the assessee, therefore, the reopening was not valid and he accordingly annulled the assessment framed consequent to the bad reopening. 4. Aggrieved, the Revenue is in appeal before the Tribunal and placed heavy reliance upon the order of the Assessing Officer ; whereas learned counsel for the assessee, besides placing reliance upon the order of the learned Commissioner of Income-tax (Appeals), has contended that so long as the assessee had only salary income, the jurisdiction over the assessee lies with the Income-tax Officer-5(4), Kanpur and once he retired and was having income from other sources in addition to salary income, the jurisdiction was shifted to the Income-tax Officer-3(2), Kanpur and the assessee accordingly filed the return of income with the Income-tax Officer 3(2), Kanpur, as the Income-tax Officer-5(4), Kanpur refused to accept the same. The assessee has disclosed complete facts with the Income-tax Officer-3(2), Kanpur, therefore, the reope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the Income-tax Officer-3(2), Kanpur, therefore, notice under section 148 of the Act was issued by an Officer having no jurisdiction over the assessee. The learned Commissioner of Income-tax (Appeals) has examined this aspect in detail in the light of the detailed facts placed before him. We, therefore, reproduce the findings of the learned Commissioner of Income-tax (Appeals) as under : "I have considered the facts and circumstances of the case and have gone through the written submissions as filed by the authorised representative. The undisputed facts are that the assessment for the assessment year 2008-09 was framed under section 143(3) on August 12, 2010 by the Income-tax Officer-5(4), Kanpur by which time, the Income-tax returns for the assessment years 2009-10 and 2010-11 had already been filed on September 30, 2009 and September 30, 2010 with the Income-tax Officer-3(2), Kanpur. These returns came to be filed with the Income-tax Officer-3(2) for the reason that the returns contained income from other sources an excess of income from salary. On the basis of this factual aspect, the Income-tax Officer-5(4), having jurisdiction over salary cases declined to accept the returns....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... said case was with the Income-tax Officer- 5(4), Kanpur processed the return under section 143(1) of the Act 1961 and created a demand of Rs. 34,140. By processing the returns under section 143(1). The Income-tax Officer-3(2) accepted the return as filed by the assessee 'as a valid return'. The Income-tax Officer-5(4) while completing the assessment under section 143(3) for the assess ment year 2008-09 on August 12, 2010 was well aware of the fact that the returns for the assessment years 2009-10 and 2010-11 had been filed with the Income-tax Officer-3(2). Even then the Income-tax Officer-5(4) did not raise any objection to the processing of the return by the Income-tax Officer-3(2) by calling for the same from the Income-tax Officer-3(2) or requesting the Commissioner of Income- tax to cancel the processing of the return under section 263 of the Act 1961. Processing of the return by the Income-tax Officer-3(2), under section 143(1) has the effect of validating the return filed. It is well accepted proposition that even if a return has been filed with an Income-tax Officer who does not have jurisdiction over the assessee, but at the same time process the return so filed, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has not been filed within the time allowed as per section 139(1) whereas section 148 is invoked when the income has escaped assessment. Earlier there remained a controversy that the provisions of sections 142(1) and section 148 were in conflict with each other. The Delhi Special Bench in the case of Motorola Inc v. Deputy CIT [2005] 95 ITD 269 (Delhi) [SB], held that notice under section 142(1) could be issued any time before the end of the assessment year. In other words section 147/148 would come into play as soon as the relevant assessment year ended. To resolve this controversy the Finance Bill, 2006 made it specifically clear that the notice under section 142(1) could be issued any time up to the date of limitation for completion of assessment as laid down in section 153 of the Act. Notice under section 148 can be issued any time within four/six years from the end of the assessment year in which the income escaped assessment. In cases where the Assessing Officer is simply of the belief that the return as contemplated under section 139(1) has not been filed, notice under section 142(1) would be the correct course to call for the return. If the Assessing Officer issues notice ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vement, if any has to be considered and deducted from the estimated value/ actual consideration received. The Assessing Officer has taken the difference between the two, i.e., stamp duty value and the actual consideration received as the income escaped, without considering the initial cost of acquisition and also the cost of acquisition as per cost inflated index. The escapement of income can be said to have taken place only when the above exercise has been undertaken. Then again when the Income-tax Officer-5(4) has not seen the return of income filed by the assessee, the return was with the Income-tax Officer-3(2) how can he conclude that the assessee has failed to disclose income from capital gains on sale of agricultural land. In absence of the return before the Income-tax Officer-5(4), there could be no occasion for the Assessing Officer to believe or form reasons for any income escaping assessment. The reasons recorded lack belief as contemplated in section 147 and cannot be termed as valid reasons to initiate action under 147/148 of the Act. Again when the Income-tax Officer-3(2) has issued notice dated December 5, 2012 under section 221 to recover the outstanding demand for....