Case Law Details
Ziyauddin Traders Vs Assessment Officer National Faceless Assessment Centre And Another (Allahabad High Court)
The case of Ziyauddin Traders vs Assessment Officer National Faceless Assessment Centre and Another, heard by the Allahabad High Court, concerns an assessment order passed by the Faceless Assessment Center under Section 144-B of the Income Tax Act, 1961 for the assessment year 2022-23. The petitioner, Ziyauddin Traders, challenged this assessment order on various grounds.
The primary challenge raised by the petitioner was regarding the jurisdiction of the Allahabad High Court to entertain the petition. The revenue argued that since the petitioner filed its return from outside the state of Uttar Pradesh (U.P.) and the assessment order was passed by the Faceless Assessment Center, the petition should not be entertained by the Allahabad High Court. However, the court disagreed with this argument.
The court emphasized that the residence of the assessee as per the PAN registration details is decisive for jurisdiction. Although the petitioner filed its return from Dholpur, Rajasthan, its PAN was registered within the state of U.P. Therefore, the court held that a vital part of the cause of action had arisen within U.P., and thus, the jurisdiction of the Allahabad High Court was not precluded.
Furthermore, the court addressed the merits of the case. It noted discrepancies between the additions proposed in the show cause notice and those made in the assessment order. The assessment order exceeded the proposed additions, indicating an inadvertent mistake on the part of the assessing authority. As such, the court set aside the assessment order.
Regarding the availability of alternative remedies, the revenue argued that the petitioner should seek redress through alternative forums. However, the court rejected this argument, stating that since the mistake in the assessment order was fundamental, pursuing an alternative remedy would not serve any useful purpose.
Consequently, the court disposed of the petition, setting aside the assessment order and allowing the petitioner to treat the adverse findings in the order as points to be addressed in their response. The petitioner was given three weeks to furnish a final reply, after which a date for a personal hearing would be scheduled. The petitioner committed to appearing before the assessing authority on the designated date, after which an appropriate order would be passed.
In summary, the Allahabad High Court’s judgment in Ziyauddin Traders vs Assessment Officer National Faceless Assessment Centre and Another underscores the importance of jurisdictional considerations based on PAN registration details. Additionally, the court’s decision reflects a commitment to rectifying fundamental errors in assessment orders and ensuring that parties have the opportunity to address adverse findings before the assessing authority.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Supplementary affidavit filed today, taken on record.
2. Heard Sri Krishna Dev Vyas, learned counsel for the petitioner and Sri Ashish Agrawal, learned counsel for the revenue.
3. Sri Ashish Agrawal, learned counsel for the revenue has received written instructions in two parts. Both are marked as ‘X’ and retained on record.
4. Challenge has been raised to the assessment order dated 27.03.2024 passed by respondent no.1 for A.Y. 2022-23 under the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). That order has been passed by the Faceless Assessment Center under Section 144-B of the Act. It is undisputed that the petitioner’s PAN is mapped to ITO Ward 4(1)(1), Aligarh i.e. the jurisdictional assessing authority of the assessee. Here, it may be noted, with respect to the PAN assigned to the petitioner his address continues to fall within the territorial jurisdiction of the I.T.O. Ward 4(1)(1), Aligarh. However, the petitioner may have filed its return for A.Y. 2022-23 through online mode, disclosing his present address at Dholpur, Rajasthan.
5. In view of the above fact, first preliminary objection raised by learned counsel for the revenue that the present petition may not be entertained by this Court as the assessee filed its return from outside the State of U.P. and the assessment order has been passed by the Faceless Assessment Center, is misconceived.
6. Insofar as the principle of part cause of action is to be applied in these cases, we are of the opinion since the assessee continues to be an assessee holding PAN registration within the State of U.P. and insofar as it cannot be disputed by the revenue that for that reason his jurisdictional assessing authority remains the I.T.O. Ward 4(1)(1), Aligarh, it would be hyper technical and therefore wrong to hold that vital part of cause of action had not arisen inside the State of U.P. In the scheme faceless assessment being implemented by the revenue under the Act, the concept of geographical location of the assessing authority has been rendered largely irrelevant for the purpose of determining the territorial jurisdiction of the High Court to which such assessing authority may abide. Faceless Assessment Center located at place ‘A’ may therefore remain simultaneously amenable to the writ jurisdiction of different High Courts exercising their territorial jurisdiction over different assessees residing within the territories of different States, whose assessment case may be handled by such Faceless Assessment Center.
7. To determine the issue of territorial jurisdiction, the residence of an assessee in the PAN registration details may remain vital and decisive. Once it is not disputed to the revenue that the petitioner-assessee continues to be registered inside the State of U.P. on its PAN registration, the preliminary objection being raised as to territorial jurisdiction cannot be accepted. Vital part of the cause of action has arisen to the petitioner inside the U.P. upon service of assessment order etc.
8. On merits, learned counsel for the petitioner would submit, the assessment order dated 27.03.2024 exceeds and thus departs from the show cause notice preceding the order, being notice dated 15.03.2024. The additions proposed in the notice dated 15.03.2024 do not match with the additions made. In fact, the additions exceed the enhancement proposed. In paragraph no. 17 of the petition, it has been stated as below :
“17. That, on 15.03.2024 a show cause notice was issued proposing variations to be made to the income of the petitioner. The show cause notice was mainly issued for making addition to the income of the assessee on two aspects. Firstly, with respect to the substantial payment made in cash to the tune of Rs. 1,67,10,500/- to the entities not registered under GST and thereby making an addition of Rs. 33,42,100/- as unexplained expenditure u/s 69C of the Act. Secondly, an addition of Rs. 4,80,000/- on salary and wages amounting to Rs. 24,00,000/-. The show cause notice was issued for submitting response from the assessee by 18.03.2024 at 12:47 hours. True copy of the show cause notice dated 15.03.2024 is hereby marked as Annexure No. 5 to this petition.”
9. In paragraph no.17 of the written instruction, the said contention is opposed on the following reasoning :
“17. The assessee was requested vide notice dated 06/12/2023 to furnish complete details as per the proforma in respect of the total purchases of Rs. 1,06,04,69,060/-. But the assessee did not make proper compliance. Therefore, the disallowance of 20% was intended to be proposed on entire purchases. However, the amount of proposed addition in the SCN was wrongly calculated on the amount of cash purchases of Rs. 1,67,10,500/-instead of total purchases of Rs. 1,06,04,69,062/-.”
10. In view of the above, we find, inadvertent mistake crept in the assessment order as may not allow the impugned order dated 27.03.2024 to be sustained.
11. Accordingly, no useful purpose may be served in keeping the present petition pending or relegating the petitioner to the forum of alternative remedy, as submitted by learned counsel for the revenue. Once the mistake cannot be disputed and it goes to the root of the matter, no fruitful purpose may ever arise in remitting such a matter to the forum of alternative remedy wherein in any case, power to remand to the assessing authority has been done away by virtue of the amendment made to Section 251 of the Act. Accordingly, the second preliminary objection as to availability of alternative remedy is also rejected.
12. The present petition is disposed of, at this stage. The impugned assessment order dated 27.03.2024 is set aside. The petitioner may treat the adverse findings in the impugned assessment order as points on which he may show cause. The petitioner may furnish his further/final reply within a period of three weeks and no more, from today. Thereupon, appropriate date may be fixed for personal hearing with at least 15 days advance notice. The petitioner undertakes to appear before the assessing authority on the date fixed. Thereafter, appropriate order may be passed.
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