The jurisdiction cannot be challenged after expiry of time limit prescribed u/s 124(3). The challenge to jurisdiction is different from challenge to transfer of jurisdiction – ITAT
ABCAUS Case Law Citation:
ABCAUS 2475 (2018) 08 ITAT
The instant appeal was filed by the assessee against the order of Commissioner of Income-tax (Appeals) challenging the jurisdiction of assessing authority.
The assessee was a Trust and had originally been denied registration u/s 12A of the Income Tax Act, 1961 (the Act) and subsequently on account of the Order of the Tribunal, Registration had been granted.
There was a survey on the premises of the assessee trust and subsequently notices under sections 142(1) & 148 of the Act was issued by the Joint Commissioner of Income Tax (JCIT).
The assessee was under the bona fide belief that the JCIT did not have jurisdiction over the assessee, therefore it did not co-operated for assessment proceedings and the assessments was completed u/s 144 r.w.s. 147 of the Act after making a disallowance of 40% of the expenses. Also, the registration u/s 12AA was not considered the AO.
The assessee-trust filed a Writ Petition before the Hon’ble High Court which was dismissed and the Writ Appeal filed against it was pending.
Before the Tribunal, the assessee fairly agreed that hitherto it had not filed its returns of income being under the bona fide belief that its income was exempt. Also, there was no evidence that the assessee had challenged the jurisdiction of the JCIT within the time provided u/s 124(3)(b) of the Act.
The assessee submitted that the main thrust of the argument was that there was violation of provisions of the section 120(4)(b) of the Act in so far as there was no notification directing the assessee was to be assessed by the JCIT. On merits, It was submitted that issues in the appeals may be restored to the file of the Assessing Officer for re-adjudication and that the assessee would co-operate in the set aside proceedings.
The Tribunal observed that the assessee had not challenged the jurisdiction by intimating the Assessing Officer as required u/s 124(3)(b) of the Act within the time provided therein.
The Tribunal opined that the challenge to the jurisdiction has been provided in Section 124(3) of the Act wherein the time for challenging has also specified, so that the Revenue would also have an opportunity to rectify any defects, if found validly raised. This had not been done.
The Tribunal stated that once the time limit for challenging jurisdiction expires, the same cannot be challenged. Also, the provisions of the section 292BB introduced by the Finance Act, 2008 had no applicability in so far as the assessee was not challenging the notices or the service of the notices, but the assessee had challenged the very jurisdiction and the challenge to the jurisdiction has to be within the time provided u/s 124(3) of the Act.
With respect to Writ Petition filed by the assessee and the order passed by the Hon’ble Jurisdictional High Court thereon, the Tribunal clarified that the challenge in the Writ Petition was in respect of the order passed u/s 127(3) regarding the transfer of jurisdiction. The matter before the Tribunal was not the transfer of jurisdiction, but a challenge to the jurisdiction u/s 120(4)(b) of the Act. This challenge to the jurisdiction was completely different from the challenge to the transfer of jurisdiction, which had been made in the Writ Petition and which had been dismissed by the Hon’ble jurisdictional High Court.
The Tribunal opined that in view of the fact that the challenge to the jurisdiction u/s 120(4)(b) of the Act had not been made within the prescribed time u/s 124(3) of the Act to the authority, whose jurisdiction was being challenged, issue of the challenge of the jurisdiction no more survived and consequently, the jurisdiction of the JCIT was confirmed.
On merits, the Tribunal observed that the assessee had never filed its returns hitherto earlier, therefore, its bona fide belief that the JCIT did not had jurisdiction cannot be disregarded. Further, the Assessing Officer had completed the assessment with the presumption that the assessee did not have registration u/s 12AA of the Act.
In view of the above, the Tribunal restored the issues with respect to merits, to the file of the Assessing Officer for re-adjudication.