Issuance of Notice for Reopening Income Tax Assessment by ITO not having Territorial jurisdiction is invalid: ITAT [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) held that reopening of the assessment recorded by an Authority, who does not having territorial jurisdiction over the assessee is bad in the eyes of law and consequently the assessment order is not sustainable.

The assessee Pritthvi Global Ventures Pvt. Limited has shown long-term capital gain at Rs.7,31,66,678/- in the original return of income. It claimed set off of brought forward long-term capital loss of assessment year 2004-05 amounting to Rs.2,97,870/-. The assessment order was silent about the status of the original return whether it was processed under Section 143(1) or under Section 143(3) of the Income Tax Act 1961. The assessment order narrated about the reopening of assessment by issuance of a notice under Section 148 of the Income Tax Act.

Further the Assessing Officer passed the assessment order under section 147 read with section 143(3) of the Income Tax Act, where he determined the taxable income at Rs.7,27,60,833/-, which is slightly lesser than the capital gain shown by the assessee in the original return.

Aggrieved by the Order of the Assessment, assessee preferred an appeal before the Commissioner of Income-Tax (Appeals) [CIT(A)], which passed an ex-parte order dismissed the appeal of the assessee. Further aggrieved the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT).

The Authorised Representative of the assessee Sanjay Mody, contended by the assessee that ITO (Income Tax officer), Ward-1/2/ACIT, Tinsukia were not having any territorial jurisdiction over the assessee. Hence the assessment of the assessee was erroneously reopened by the ITO, Ward-Tinsukia.

He further stated that the assessment passed by the DCIT(Deputy Commissioner of Income Tax), Circle-3, Guwahati is not sustainable because no reasons were recorded by the Competent Officer for reopening of the assessment. On the strength of the reasons by the ITO, the assessment cannot be framed by the DCIT, Guwahati.

The Departmental Representative Amit Kumar Pandey was unable to controvert the submissions made by the Counsel for the assessee.

The Bench comprising of Rajpal Yadav, Vice-President Girish Agrawal, Accountant Member  relied on the case of Ashok Devichand Jain v. Union of India, where it was held that if an Officer, who has issued notice under Section 148 of the Income Tax Act was not having jurisdiction over the assessee, then, subsequent assessment order upon the assessee by the Officer, who is having territorial jurisdiction will not be valid.

Hence the reopening is bad in the eyes of law and consequently the assessment order is not sustainable. Accordingly the Tribunal allowed the appeal of the assessee and quashed the orders of both the Revenue Authorities.

To Read the full text of the Order CLICK HERE

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