Case Law Details
Case Name : Raj Kumar Mangla Vs ACIT (ITAT Delhi)
Appeal Number : I.T.A No. 556-558/Del/2011
Date of Judgement/Order : 23/09/2015
Related Assessment Year : 1989-90 to 1991-92
Brief of the case:
- The ITAT Delhi in the case of Raj Kumar Mangla vs. ACIT(Inv Circle), Gurgaon held that when a clear order transferring the jurisdiction is passed by a competent authority in law the AO from whose jurisdiction transfer was ordered can no longer assume his jurisdiction over the assessee.
- Therefore, any notice issued or any order passed by AO after getting such direction would be illegal as made without any jurisdiction.
Facts of the case:
- The assessee was an employee of M/s. Ravi Trading Co., Gurgaon. He used to derive his income from salary/commission and other sources and was assessed to tax by the ITO, Gurgaon.
- e.f 30.06.1988 the assessee commenced his proprietorship business in the name of and style of M/s. Deep Electricals at Shop No.20, 1st Floor, 1767/68, Bhagirath place, Chandni Chowk, Delhi. He obtained, State Sales Tax/ Central Sales Tax registration certificates from Govt of Delhi. He also paid advance tax for the relevant and subsequent assessment years with, I.T.O., Ward 10(1), New Delhi, as the assessee was of the opinion that his place of business falls within the territorial jurisdiction assigned to ITO, Ward 10(1), New Delhi. The assessee continued to reside at Gurgaon.
- ACIT(IC), Gurgaon issued noticed under section 148 for assessment year 1989-90, 1990-91 and 1991-92. In response to these notices, the assessee filed a reply that ACIT(IC) Gurgaon has no jurisdiction over him as he had left the employment of M/s Ravi Trading Co. and he has started his own proprietary business at Bharigarh Palace, New Delhi and had filed returns of income with ITO-10(1), New Delhi.
- The AO on 31.03.1995 framed separate assessment orders for all the three years. Aggrieved the assessee carrying the matter in appeal. The CIT(A) held that since assessee had not moved out of Gurgaon jurisdiction continued to vast with Assessing Officer Gurgaon unless on the request of the assessee his case was transferred to the Assessing Officer of another District. The process of filing of return therefore did not automatically if so faster given the correct jurisdiction to the assessing officer who processed the return in a mechanical manner. This view is supported by Hon’ble Supreme Court in the case of Industrial Trust Ltd. Vs. CIT 91 ITR 550.
- Aggrieved assessee is in appeal before ITAT.
Contention of the Assessee:
- It was submitted that the assessee on serving of very first notice challenged the jurisdiction of the ACIT (Investigation), Gurgaon u/s 124(3) of the Act. In such a situation, the AO was required to refer the matter for determination of the jurisdiction to the CIT (A) or Chief Commissioner of Income Tax u/s 124(2).AO instead of referring so the matter to CIT/CCIT, assumed his jurisdiction by default and proceeded to complete the assessment u/s 144 read along with sec 144.
- It was also submitted that the assessee filed its return of income with ITO, Ward 10(1), New Delhi and the same was processed u/s 143(1) and thereafter rectification was made u/s 154 of the Act.
- Again assessment of income of the assessee by ACIT, Gurgaon resulted in two assessment orders, by different AO, on the same person, on the same income, which is against the Section 4 of the Income Tax Act.
Contention of the Revenue:
- The learned counsel for the revenue made the following arguments:
i) The assessee’s residence was in Gurgaon, and that he was partner in partnership concern situated in Gurgaon and under those circumstances the assessment was correctly done in Gurgaon.
ii) On the issue of two assessment being made by different assessing officers in respect of same person and same income, it was submitted that u/s 143(1)/154 is not an assessment rather only a processing of return.
iii) The order u/s 124 dated 03.05.1988 passed by CIT(Rohtak) stated that post search assessments for subsequent Assessment Years also lies with the same AO, unless an order is made, de notifying to assessment from the investigation circle.
- Accordingly , it was prayed that the order of the first appellate authority be upheld and the appeal of the assessee may be dismissed.
Held by ITAT Delhi:
- As per Sec 124(2) when the question arises as to which AO has jurisdiction to assess the person, CIT/Chief CIT has the authority to decide the jurisdiction. The power to transfer a case from one jurisdiction to another jurisdiction also lies with CCIT or the CIT.
- In exercise such power, the CIT, Haryana, Rohtak vide his order dated 22.03.1995 No. Tech/ Misc/ 94-95/15498, which has been extracted at Para 16 of this order, has specifically directed the ACIT, Investigation, Circle Gurgaon to transfer the relevant record to the ITO, Ward 10(1) at New Delhi.
- As such the ACIT, Investigation, Gurgaon was divested of his jurisdiction of this case by CIT’s order dated 22.03.1995. The issue of notice u/s 142(1) dated 27.03.1995 and consequent passing of the order’s u/s 143(3) on 31.03.1995, was without jurisdiction.
- Therefore, tribunal concluded that when a clear order transferring the jurisdiction is passed by a competent authority (CIT/CCIT), the question of assuming jurisdiction by ACIT(Investigation), Gurgaon does not arise at all.
- In result appeal filed by assessee was allowed.