SHRI ANWARKHAN M. PATHAN,AHMEDABAD vs. THE PR. CIT-1, RAJKOT

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ITA 465/RJT/2017Status: HeardITAT Rajkot26 July 2022AY 2007-084 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Principal CIT, Rajkot, lacked jurisdiction to pass an order under section 263 because the assessee resided in Jetalpur (Ahmedabad), and the AO at Rajkot also lacked jurisdiction over the assessee. Therefore, the order passed by the Principal CIT was liable to be set aside.

What were the facts?

The Assessing Officer (AO) initiated assessment proceedings under section 147 based on information that the assessee sold immovable property. However, it was later discovered the assessee resided in Jetalpur (Ahmedabad), not Jetpur (Rajkot), leading the AO to drop the proceedings due to lack of jurisdiction. The Principal CIT then invoked section 263, deeming the AO's order erroneous and prejudicial to revenue.

What were the issues?

The primary issue was whether the Principal CIT had the jurisdiction to revise an order when the original assessment proceedings were dropped due to the AO's lack of territorial jurisdiction over the assessee.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Respondent: Shri Sanjeev Jain, CIT-D.R

आदेश/ORDER

PER BENCH:- This assessee’s appeal for A.Y. 2007-08, arises from order of the Principal Commissioner of Income Tax-1, Rajkot dated 30-03-2017, in proceedings under section 263 of the Income Tax Act, 1961; in short “the Act”.

Page No 2 Shri Anwarkhan M. Pathan vs. Pr. CIT-1

2. The assessee has raised the following grounds of appeal:-

“Being aggrieved and dissatisfied by the order dt. 15-06-2017 passed by the Id. CIT (A), the appellant begs to prefer this appeal on the following .amongst other-grounds :

1.

That the Ld, Pr. CIT erred in law and in the facts of the case in passing the impugned order without it being erroneous and prejudicial to the interest of the revenue.

2.

That the Ld. Pr. CIT erred in law and in the facts of the case in passing the impugned order when the AO is not under his jurisdiction.

3. That the Ld. Pr. CIT erred in law and in the facts of the case in passing the impugned order without issuing a show cause notice to the address of the appellant.

4.

Any other ground which may be urged before or during the hearing of the appeal.”

3.

The brief facts of the case are that the assessment order was framed by the AO, Rajkot under the impression that the assessee who was residing at Jetpur (i.e. within his jurisdiction), had sold one immovable worth � 1,51,91,950/- and no return of income was filed. Accordingly, assessment proceedings were initiated under section 147 of the Act. However, at the time of finalising the assessment, the AO came to know that the address mentioned in the information so received by the Assessing Officer was not Jetpur but was Jetalpur (district Ahmedabad). Since the jurisdiction over the case did not vest with the AO, he dropped the assessment proceedings. However, in view of the fact that the income on account of sale of immovable property had escaped assessment, the Principal Commissioner of Income Tax-1, Rajkot initiated proceedings under section 263 of the Act Page No 3 Shri Anwarkhan M. Pathan vs. Pr. CIT-1 with a view to tax the capital gains income arising on the sale of aforesaid property. The Principal CIT held that the order passed by the AO is erroneous and prejudicial to the interests of the revenue with the following observations:

“5. The issue on hand is that, the assessee had sold one immovable property and no return of income has been filed. As per the AO's record, the assessee's address was shown as Jetpur, However, after gathering the property documents, it was gathered that the assessee's address is Jetalpur (Dist Ahmedabad), The AO ought to have transferred the records to the concerned AO, which he failed to do so, Instead the AO in the order passed u/s. 147 the AO did not consider this issue at all. Hence, the assessment order passed u/s. 143(3) r.w.s. 147 is erroneous and prejudicial to the interest of Revenue.”

4. The assessee is in appeal before us against the aforesaid order passed by Principal CIT. One of the issues which came up for consideration was that the Principal CIT, Rajkot did not have the jurisdiction to pass order under section 263 of the Act, as is evident from the 263 order that the assessee was residing in Jetpalur (district Ahmedabad) and hence, Principal CIT, Rajkot did not have the jurisdiction to pass 263 order against the assessee. We note that it is not in dispute that the assessee was a resident of Jetpalur (district Ahmedabad), and once as it is evident from the order of the Principal CIT, Rajkot passed under section 263 of the Act, that the AO situated at Rajkot itself did not have the jurisdiction to pass order under section 147 r.w.s. 143(3) of the Act upon the assessee (refer paragraph 5, page 2 of the 263 order quoted above), we are unable to understand that how the Principal CIT, Rajkot is able to exercise jurisdiction over an assessee who is admittedly residing at Jetpalur (district Ahmedabad). The Page No 4 Shri Anwarkhan M. Pathan vs. Pr. CIT-1 proceedings under section 147 of the Act were dropped for the very reason that the AO situated at Rajkot could not pass assessment order on the assessee who was residing at Jetpalur (district Ahmedabad) and even the 263 order itself mentions that the AO ought to have transferred the records to the concerned AO situated at Ahmedabad which he failed to do so. In view of the facts stated above, in our considered view the order passed by the Principal CIT is liable to be set aside for want of jurisdiction.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 27-07-2022

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