The Income Tax Appellate Tribunal (ITAT) of Pune bench while allowing the appeal filed by the assessee held that territorial jurisdiction of the AO is determined on the basis of place where the assessee resides and/or carries on his business or profession.
The assessee, Jeeri Keerthana Reddy filed return of income electronically .Thereafter the case was selected for limited scrutiny to verify (i) deduction towards Capital Gains, and (ii) investment in immovable property.
Accordingly, a notice under Section 143(2) of the Income Tax Act was issued and which was duly served on the assessee. It may be mentioned that the assessee, inter alia, raised an issue about the territorial jurisdiction of the Assessing Officer, namely the Income Tax Office, Mumbai on the ground that the assessee was a resident and was carrying on business/profession at Bengaluru, Karnataka.
As per provisions of Section 120 r.w.s 124 of the Act,the assessee claimed that the AO in this case would lack territorial jurisdiction.Without considering the submission AO completed the assessment.
Aggrieved by the order the assessee filed an appeal before the CIT(A) who partly allowed the appeal directing the AO to allow exemption under Section 54 of the Act for one residential house and recalculate the taxable income accordingly. Hence the assessee filed another appeal before the tribunal.
During the adjudication Vijay Mehta, the counsel for assessee submitted that notice issued by the AO under Section 143(2) of the Act and the consequent assessment order passed under Section 143(3) of the Act are without jurisdiction as per the provisions of Section 120 r.w.s. 124 of the Income Tax Act.
Further argued that the assessee is a resident of Bengaluru where she is carrying on her profession.Hence the notice under Section 143(2) of the Act, address of the assessee is shown at Bengaluru and once the aspect about the residence of assessee was pointed out and a ground about lack of territorial jurisdiction was raised, it was required to be appropriately addressed to and decided, which has not been done.
Vranda U. Matkari, Counsel for Revenue argued that the PAN of the assessee was transferred/migrated to Bangalore on 26.02.2021 and current jurisdiction over the assessee lies with ITO Ward (2)(2)(5) at Bangalore.
Hence AO had intimated appellant that proposal for migration of her PAN has been forwarded to the Principal Commissioner of Income Tax and the PAN could be migrated only after an order is passed by the Pr. CIT, which has been done on 26.02.2021.
On contrary to the contention of revenue the assessee counsel argued that strictly the migration of PAN and/or change of address in the record has no relevance to the territorial jurisdiction of AO, which is governed by the place where the assessee ordinarily resides or carries on business/profession
It was observed that the assessee made a request for change of address/migration of PAN to Bangalore on the basis of her residence/place of profession. The address was changed in the records prior to passing of the assessment order and subsequent thereto, the PAN has been migrated on 26.02.2021. Moreover the notices were served to the appellant on her Bangalore address.
The bench further observed that . Sub-section (1) of Section 120 of the Act provides that income tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred or assigned to them under the Act, in accordance with such directions as the Central Board of Direct Taxes (‘Board’ for short) may issue from time to time.
Therefore according to the order issued by CBDT would indicate that the territorial jurisdiction of the AO is determined on the basis of place where the assessee resides and/or carries on his business or profession
After reviewing the facts the ITAT bench of C.V. Bhadang, (President) and B.R. Baskaran, (Accountant Member) held that the assessee was residing and carrying on her profession at Bangalore, the assumption of jurisdiction by the AO at Mumbai was invalid.
Therefore The change of address in the records and/or migration of PAN are not strictly relevant in the matter where the jurisdiction is governed by the statutory provisions as contained in Section 120 read with Section 124 of the Income Tax Act and the notification issued by the Board.
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