AO not at Fault in completing Income Tax Assessment once Jurisdiction to Issue Notice u/s 143(2) is Accepted: Delhi HC [Read Order]

The Delhi High Court recently upheld the powers of an Assessing Officer (AO) to complete a pending Income Tax Assessment, once the jurisdictional competence of the Officer to issue Notice under Section 143(2) of the Income Tax Act, 1961 is established.

A Writ Petition was filed before the Delhi High Court by the Petitioner-Assessee Nutan Gehlot impugning Notices under Section 143(2) and Section 142(1) of the Income Tax Act, 1961 in respect of the financials of the Petitioner for the Assessment Year (A.Y.) 2023-24, raising allegations of illegitimate assumption of jurisdiction.

The key contention raised by the Counsels for the Petitioner, N.P. Sahni and Kumar Abbas was that the issuing authority is not a ‘prescribed income-tax authority’ under the Act; further even if the Authority could be deemed a prescribed income tax authority, their power being limited to merely ‘serving’ a notice and not ‘issuing’ the same.

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The contention was founded by the Petitioner on the basis of Section 143(2) of the Income Tax Act, 1961, stating that where the jurisdiction to issue Notice has been vested with the Assessing Officer, that officer alone can issue notice under Section 143(2) and bars such issuance by any other prescribed income tax authority.

The Petitioner further submitted before the High Court that the impugned Notice under Section 142(1) of the Act was served by the Assessing Officer, Central Circle 20, Delhi after the period of limitation.

The Respondent Revenue, represented by Senior Standing counsel Vipul Agrawal along with Gibran Naushad and Sakashi Shairwal,referenced Rule 12E of the Income Tax Rules, 1962 to assert the rightful exercise of power derived by the Respondent to act as a “prescribed authority‟ under Section 143(2) of the Act.

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The two-member Bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma laid reference to Notification No. 56/2022 /F.NO. 225/91/2022/1TA-II dated 28.05.2022 issued by the Central Board of Direct Taxes (CBDT) wherein the CBDT ‘authorises the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle -1(1)(1), Delhi to act as the 'Prescribed Income-tax Authority' for the purpose of issuance of notice under sub- section (2) of section 143 of the Act.’

In tandem with the observation, the Bench held the Petitioner’s contention that only the Assessing Officer and Authorised Income Tax Officers of the National Faceless Assessment Centre can issue notice under Section 143(2) of the Income Tax Act, 1961 to be unfounded and not supported by the plain language of Section 143(2) of the Act and Rule 12E of the allied Rules.

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In light of the findings, the Delhi High Court dismissed the Petition while passing obiter that once the jurisdiction of the AO to issue a notice Section 143(2) of the Act has been accepted, the AO cannot be faulted for undertaking proceedings to complete the assessment.

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