INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Lack of jurisdiction - Order passed by AO not having jurisdiction

AO, Ward-1(4), Jaipur recorded reasons stating that deceased assessee sold a land and such land falling within the prescribed limit of municipality area and provisions of capital gains were applicable on such sale of land. As the assessee had not filed his return of income and also not paid tax on sale of immovable property, therefore, there were reasons to believe that the income had escaped assessment within the meaning of section 147. Accordingly, a notice under section 148 was issued in the name of legal heir of the deceased assessee. Subsequently, the AO passed an order under section 147. It was contended on behalf of legal heir of the assessee that the notice under section 148 was issued to the legal heir by AO, Ward-1(4), Jaipur whereas the jurisdiction over the deceased assessee was with AO, Ward 2(1), Jaipur. Hence, he challenged the impugned order passed under section 147 for want of requisite jurisdiction with the AO. Held: It was found that AO, Ward 1(4), admitted that she did not have jurisdiction over assessee's matter and the jurisdiction lied with the AO, Ward-2(1), as clear from her letter written to PCIT. The said letter was written to the PCIT very next month of issuance of notice under section 148. Apparently, there was no further communication from the office of PCIT and PAN of the deceased assessee was not transferred to AO, Ward-2(1) and continued with AO, Ward-1(4) and having issued the notice under section 148, she continued with the proceedings and passed the assessment order under section 147. Therefore, even though notice was issued by AO, Ward-1(4), but once she was clear that the jurisdiction over the matter lied with the AO, Ward-2(1), thus, merely because the permission had not been received from the PCIT for transfer of PAN, she could not proceed and pass the assessment order in absence of requisite jurisdiction at first place. Hence, the order passed under section 147 was set aside being bad in law.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09

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