Back
IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA
TARLOK SINGH CHAUHAN, RAKESH KAINTHLA, JJ.
M/s Deluxe Enterprises - Appellant
Versus
Income Tax Officer - Respondent
ITA No. 23 of 2017 alongwith CWP No.6575 of 2014
Decided on : 02-01-2025
(A) Income Tax Act, 1961 - Sections 143(2), 142(1), 144, and 127 - Jurisdictional issues in income tax assessment - The appellant/petitioner contested the authority of the Income Tax Officer to issue notices and finalize assessments without proper jurisdiction transfer under Section 127 - The court found that the transfer of jurisdiction was not compliant with statutory requirements, thus quashing the assessment orders. (Paras 19, 23, 27)
(B) Natural Justice - Requirement of recording reasons for jurisdiction transfer - The court emphasized that the failure to communicate reasons for transferring jurisdiction violates principles of natural justice, impacting the assessee's right to challenge the order. (Paras 25, 26)
Facts of the case:
The appellant/petitioner established a partnership firm and was assessed by the Assistant Commissioner in New Delhi. Disputes arose when notices were issued by an Income Tax Officer in Himachal Pradesh without proper jurisdiction transfer.
Findings of Court:
The court ruled that the assessment orders were quashed due to non-compliance with Section 127, allowing for fresh proceedings.
Issues: The main issues included the authority of the Income Tax Officer to assess without jurisdiction transfer and the procedural compliance under Section 127.
Ratio Decidendi: The court held that jurisdictional transfers must comply with statutory provisions, and failure to do so undermines the assessment process.
Result: Appeals and writ petition allowed.
JUDGMENT :
Tarlok Singh Chauhan, J.
Since common questions of law and fact arise for consideration in both appeal and writ petition, therefore, they were taken up together for hearing and are being disposed of by a common judgment.
2. Brief facts of the case are that Mr. Vivek Bhalla (appellant in ITA No.23/2017 and petitioner in CWP No. 6575/2014), hereinafter referred to as the appellant/petitioner, established M/s. Deluxe Enterprises, Delhi, in the year 1997 as partnership firm and obtained permanent account number (PAN) with registered office at E 143, Sector 1 Dwarka, New Delhi.
3. In the year 1999, the appellant/petitioner established industrial undertaking/manufacturing unit/branch at Village Ranguwal, Bhartgarh Road Nalagarh, Himachal Pradesh, and commenced its operations on 23.12.1999 manufacturing different types of cotton yarn, textiles etc.
4. On 13.03.2006, respondent No. 4 i.e. Assistant Commissioner of Income Tax Circle 24(1), New Delhi, assessed the income of the petitioner under section 143(3) of the Income Tax Act, 1961 (for short, the Act). Thereafter, on 14.09.2010 respondent No. 5, i.e. Income Tax Officer, Barotiwala Road, Baddi, issued notices under Section 143 (2) and 142(1) of the Act, initiating proceedings under Section 144 of the Act for the assessment year 2009-2010.
5. According to the appellant/petitioner, he had been regularly filing his income tax returns for the assessment years 1997- 1998 to 2012- 2013 at Delhi with respondent No 4. On 27.12.2011 Assessing officer without considering the written reply submitted by the respondents framed the best judgment/assessment under section 144 of the Act for the assessment year 2009-2010 and made additions without first deciding the preliminary issue of jurisdiction.
6. On 24.01.2012, the appellant/petitioner filed an appeal before the Commissioner of Income Tax (Appeals), Shimla, which came to be rejected on 14.03.2013. Thereafter on 03.06.2013, the appellant/petitioner preferred second appeal before Income Tax Appellate Tribunal bench at Chandigarh against the order dated 14.03.2013, which too, has been decided against the appellant/petitioner on 16.1.2017, which has been separately assailed by medium of ITA No. 23/2017.
7. It is vehemently argued by the appellant/petitioner, who has appeared in person, that once he was being assessed by the Assistant Commissioner, Income Tax, New Delhi, respondent No.5 i.e. Income Tax Officer, Barotiwala road, Baddi had no authority to issue notice under Section 143(2) read with Section 142 (1) of the Act and finalize the assessment of the appellant/petitioner without transferring his case file under Section 127 of the Act.
8. Respondents No. 1, 2 and 5 have filed a common reply to the writ petition, wherein it has been averred that the matter in issue arose for the first time as far back as on 14.09.2010 when notice under Section 143(2) of the Act was issued to the petitioner by Income Tax Officer, Solan and thereafter, the best judgment assessment was framed for that year on 27.12.2011. It is averred that the appellant/petitioner though had already availed alternate remedy of filing statutory appeals against the assessment orders for the assessment year 2009-10 and order of the CIT Appeals in respect of that year, hence, the appellant/petitioner cannot seek the same relief in respect of the present assessment year by filing the writ petition.
9. It is further averred that the best judgment assessment orders under Section 144 of the Act have been passed in respect of assessment year 2011-12 on 10.02.2014 and the petitioner has statutory remedy of appeal. It is not open to the assessee (appellant/petitioner) to choose a place of jurisdiction in contravention of statutory provisions and hence, the writ petition is liable to be dismissed.
10. It is also averred that the PAN of the assessee firm was generated as far back as on 18.02.1999 with the AO Code of I.T.O, Parwanoo as the industrial undertaking of the petitioner exists with
AI
Jurisdictional transfers in income tax assessments must comply with statutory provisions, including the requirement to record reasons and provide the assessee an opportunity to be heard.
Jurisdiction of an Assessing Officer under the Income Tax Act must be established through statutory orders, not merely system data, underscoring the necessity for compliance with Section 127 regardin....
The transfer of an assessee's case from one jurisdiction to another must be done in accordance with the provisions of Section 127 of the Income Tax Act, 1961, and the assessee must be given an opport....
The court upheld the validity of an administrative order transferring a tax case based on existing connections to other investigated parties, concluding that sufficient opportunity and reason for the....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
