AO had no jurisdiction to frame assessment when statutory notices issued at parental house

AO had no jurisdiction to frame assessment when statutory notices issued at parental house and assessee was living at a different State.

ABCAUS Case Law Citation:
ABCAUS 2955 (2019) (05) ITAT

The assessment proceedings u/s 147 of the Income Tax Act, 1961 (the Act) was initiated against the assessee and statutory notice u/s 148 was issued. The assessee neither comply with the notice nor filed its return of income thereafter statutory notices u/s 142(1) was issued, however the same could not be served upon the assessee.

The AO also issued a show cause notice along with notice u/s 142(1) requiring the assessee to attend the proceedings and dispatched the notice through speed post and simultaneously got served by affixture, however the assessee failed to appear on the stipulated date.

However, during the course of assessment proceedings, the appellant sent a letter to the AO to the effect, since he came to know about the affixture of notice very late therefore within such a short span, he could not prepare and attend the hearing.

The assessee also apprised the AO that his Income Tax Jurisdiction falls within other State and he further also asked the details of information against him.

However, the Assessing Officer did not accede to the request of the assessee and considering the case as time barring, ultimately framed the assessment u/s 144 of the Act.

The assessee challenged the assessment order before the CIT(A) alleging that the notice Issued u/s 148 and the Order Passed by the AO u/s 144 R.W. 147 were illegal, bad in law and without jurisdiction.

However, the CIT(A) affirmed the assessment order by confirming the validity of notices u/s 148 and 142(1) of the Act as well as the jurisdiction of the Assessing Officer (AO).

Before the Tribunal, the assessee contended that the Assessing Officer had no jurisdiction to frame the assessment in this case because the assessee being an agriculturist living in in a different State whereas the statutory notices have been issued and also the affixture was made at the parental house at another State.

The Tribunal observed that admittedly the Assessing Officer himself had written a letter to the AO having jurisdiction at the assessee for transferring the jurisdiction of the cases pertaining to assessee and his father for appropriate actions but the same were returned by the said Assessing Officer, on the pretext that order for transfer of jurisdiction as per Sec. 127 of the Act was not available on record therefore appropriate proceedings could not be possible.

The Tribunal observed that provisions of section 124 of the Act make it clear that the Assessing Officer has the jurisdiction of the area where any person is carrying on a business or profession. Further at the principal place of business or profession situates within area, if the person is carrying on business or profession in more places than one. The provision further prescribes that the Assessing Officer has been vested with the jurisdiction over any area of other person residing within the area.

The Tribunal opined that there was nothing on record to show that the notice u/s 148 had ever been served upon the assessee at his proper address at the State where he lived.

The Tribunal noted that though the Assessing Officer transferred the assessee’s and his father case to the ITO having the jurisdiction, they were returned back. However, the Assessing Officer did not mention the said facts in the assessment order.

The Tribunal further observed that once it was accepted by the Assessing Officer itself that he had no jurisdiction and therefore transferred the assessee’s case for appropriate actions, however on returning the assessment proceedings on technical ground, the Assessing Officer again assumed jurisdiction without disclosing as to how and under what circumstances, he had jurisdiction to frame the assessment against the assessee.

The Tribunal further opined that in vuew of the fact that the properties against which the Assessing Officer has initiated the proceedings u/s 147 of the Act, transactions had also been held at and the residence of the assessee were all in the other State the AO had no jurisdiction to frame the subjected assessment, consequently the assessment order could not stands in the eyes of law for want of jurisdiction.

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