The Chennai Bench of Income Tax Appellate Tribunal (ITAT) upheld the decision of Commissioner of Income Tax (Appeals) where the action of the Assessing Officer (AO) in assuming jurisdiction and in reopening the assessment and the consequent reassessment made under Section 144 read with Section 147 of the Income Tax Act, 1961 was held to be without valid jurisdiction and thus annulled.
The assessee M/s. Thulasi & Others being resident firm was assessed in scrutiny assessment under Section 143(3) of the Income Tax Act. The case was reopened on the ground that the assessee firm was taken over by M/s Thulasi Mohan Construction Private Limited. The assessee received sale consideration of Rs.2995.60 Lakhs and the transaction did not fall within the purview of Section 47(xiii) of the Income Tax Act. Since the assessee did not admit any capital gains, the case was reopened and notice under Section 148 of the Income Tax Act issued.
In the absence of any return of income or any response from the assessee, the AO assessed short term capital gains for Rs.568.71 Lakhs and completed the assessment on best judgment basis under Section 144 of the Income Tax Act.
Aggrieved by the order the assessee filed an appeal before the CIT (A) and objected to reopening and assailed the jurisdiction of AO.
The CIT (A) observed that the jurisdiction of the assessee vests with Income Tax Officer (ITO), Business Ward XV (4), Chennai as the address of the assessee was Alwarpet, Chennai. Subsequently, present AO received information from Assistant Commissioner of Income Tax (ACIT), Corporate Circle 3(1) and issued notice under Section 148 of the Income Tax Act at Porur address as against the fact that in assessment order under Section 143(3) of the Income Tax Act, the address of the assessee was mentioned as Alwarpet, Chennai.
Thus, even the basic details were not verified by AO before issuing notice under Section 148 of the Income Tax Act and the reopening was merely on the basis of information received from ACIT. As per records, the jurisdiction of the assessee vest only with ITO, NCW 3(4), Chennai and Deputy Commissioner of Income Tax (DCIT), NCC 8(1) had no jurisdiction over the assessee.
Therefore according to CIT(A) the action of the A.O in assuming jurisdiction and in reopening the assessment and the consequent reassessment made under Section 144 read with Section 147 of the Income Tax Act was held to be without valid jurisdiction and thus annulled.
Aggrieved by the order, the revenue filed an appeal before the Tribunal.
The Departmental Representative (DR) has referred to the decision of High Court of Delhi in the case of Abhishek Jain vs. ITO which held that in terms of Section 124(3)(b)of the Income Tax Act, the assessee could not call in question the jurisdiction of an Assessing Officer after expiry of one month from date of service of reassessment notice.
The Two Member Bench comprising of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that in the present case, the reassessment notice has been issued at old address and the assessment order is an ex-parte order.
Further it was noted that reopening has been done merely at the behest of communication received from ACIT to reopen the case of the present assessee to tax short term capital gains while he had already reopened the assessment of payer assessee.
The Tribunal observed that the AO has wrongly invoked the provision of clause (a) of Explanation 2 of Section 147 of the Income Tax Act, which applies only where no return of income has been furnished by the assessee. However, in the case of the assessee, the return of income was filed and the scrutiny assessment under Section 143(3) of the Income Tax Act was completed by the jurisdictional AO accepting the returned Income of the assessee.
Thus considering the facts and circumstances of the case the Tribunal found no reason to interfere in the impugned order of the CIT(A).
Hence, the revenue’s appeal was dismissed.
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