Jurisdiction of AO cannot be challenged after completion of assessment proceedings. ITAT dismissed assessee’s appeal in view of provisions of section 124(3)(a)
The appellant assessee by cross objections had challenged the order passed by the CIT(A) in confirming the action of the Assessing Officer (AO) in framing the impugned assessment order without issuing and serving the mandatory notices u/s 143(2) of the Income Tax Act, 1961 (the Act).
ABCAUS Case Law Citation:
ABCAUS 2340 (2018) (05) ITAT
The first statutory notice u/s 143 (2) was issued by the AO who was not the jurisidiction AO as per return filed by the assessee. Later, the assessment record of the assessee was transferred to the jurisdictional AO who issued the second notice.
The assessee contended inter alia that the AO had no jurisdiction to pass the assessment order for want of issuance of valid notice u/s 143 (2) of the Act. The case of the assessee was that since the AO who issued the first notice had no jurisdiction whereas the second notice issued by the jurisdictional ACIT was beyond statutory period, the assessment order was liable to be quashed. It was submitted that mere proving of dispatch was not enough to prove the service of notice on the assessee which was a mandatory requirement and that notice issued by the non-jurisdictional AO was invalid.
The Tribunal observed that as per the provisions contained u/s 124(3)(a) the assessee is not entitled to question the jurisdiction of the AO after an expiry of one month from the date on which he/she was served with notice u/s 142(1), 142(2) and 143(2) or after the completion of the assessment, whichever is earlier.
It was further observed that the assessee had first time questioned the assessment order on the basis of jurisdictional error for want of issuance of the statutory notice before first appellate authority, Commissioner (Appeals). It was also not in dispute that the assessee continued to attend the assessment proceedings after receipt of the notice issued u/s 143 (2) and had failed to bring on record if any prejudice was caused to her.
The Tribunal noted that Hon’ble Allahabad High Court while deciding the identical issued relying on the decision of the Hon’ble Supreme Court held that the question of jurisdiction of the assessing authority cannot be disputed after completion of the assessment proceedings which can only be addressed by the Commissioner or the Board, as the case may be, as per provisions contained under section 124 (4) which excludes the jurisdiction of first appellate authority or the court.
The Tribunal observed that it was not the case of the assessee that the ACIT who has passed the assessment order was having no jurisdiction over the subject matter of the case rather she/he had questioned the territorial jurisdiction for want of issuance of a notice issued u/s 143 (2) which is a mere irregularity and the assessment cannot be set aside on this ground as has been held by Hon’ble Apex Court. Moreover, no prejudice was shown to have been caused by the assessee for want of issuance of statutory notice issued by ACIT having no territorial jurisdiction rather defended the proceedings before AO without raising any objection.
It was further observed that an identical issue had also been decided by Hon’ble jurisdictional High Court wherein issue of jurisdiction had been decided in favour of the Revenue in accordance with the provisions contained u/s 124(3)(a) which raised a bar for the assessee to question the jurisdictional issue after the expiry of one month from the date of notice u/s 142 (2) or after completion of the assessment, whichever is earlier.
The Tribunal observed that in the instant case, no doubt, the AO/ACIT who had issued the first notice u/s 143(2) had no jurisdiction and subsequently, the case was transferred to jurisdictional AO/ACIT before whom the assessee continued to attend the proceedings and get the assessment completed without raising any objections. Therefore, in view of the judgment of the jurisdictional High Court, the assessee was not entitled to question the jurisdictional issue.
The ITAT opined that CIT(A) had rightly decided the issue as to the service of notice u/s 143(2) as a jurisdictional error against the assessee.
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