The Income Tax Appellate Tribunal (ITAT) Raipur bench held that reassessment order passed on the basis of invalid assumption of jurisdiction could not be revised under Section 263 of Income Tax Act, 1961. The bench observed that the assessment order was null and void as it was based on a non-est return, therefore, the Commissioner could not have exercised his jurisdiction under section 263 of the Income-Tax Act.
Aruna Tiwari ,the taxpayer filed the appeal against the order passed by the Pr. Commissioner of Income Tax(PCIT), Raipur under Section 263 of the Income-Tax Act. After completing the assessment teh AO passed assessment order under section 143(3) of the Act.Therfater after verifying the assessment order the PCIT held that the order passed under section 263 of the Income-Tax Act observed that as the A.O had failed to both carry out necessary verification and apply his mind while framing the assessment.
Aggrieved by the order, the assessee filed an appeal before the tribunal .
Before the tribunal Nikhilesh Begani, Counsel for assessee submitted that , the assessment order passed by the A.O under Section 143(3) of the Income-Tax Act was in itself invalid, therefore, the Pr. CIT had wrongly assumed jurisdiction and revised such non-est order in exercise of jurisdiction under Section 263 of the Income-Tax Act .
The AO was not jurisdiction to frame the assessment order, thus reassessment order passed on the basis of invalid assumption of jurisdiction could not be revised under Section 263 of Income Tax Act.
Further A.O, i.e. ITO, Ward-4(1), Raipur had framed the assessment vide his order passed under Section 143(3) of the Income-Tax Act without issuing any notice under Section .143(2) of the Income-Tax Act
V.K Singh, Counsel for Revenue submitted that the assessee had neither challenged the jurisdiction before AO during the assessment proceeding nor before PCIT during proceeding under Section 263 of the Income-Tax Act . Thus, it is evident that the assessee has challenged the jurisdiction only in order to escape from tax liability on account of issue arising during review proceeding.
It was observed by the tribunal that jurisdiction over assessee case at the stage of issuance of notice under Section 143(2) of the Income-Tax Act was admittedly vested with the ITO, Ward-4(1), Raipur, therefore, in absence of any notice issued by the letter under Section 143(2) of the Income-Tax Act , the assessment framed by him vide his order passed under Section 143(3) of the Income-Tax Act could not be sustained and is liable to be struck down on the said count itself.
Therefore, if the original re-assessment order itself was not validly passed, the subsequent revisional order by the PCIT was required to be held invalid.
The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Arun Khodpia,(Accountant Member ) and Ravish Sood,( Judicial Member) quashed the order passed by the Pr. CIT under Sec. 263 of the Act on account of invalid assumption of jurisdiction by Pr. CIT .
Thus the bench allowed the appeal filed by the assessee.
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