Monetary limit fixed for assessment to be done by ACIT won’t preclude jurisdictional AO to initiate reassessment: HC

Case Details: Shivaaditiya Jems And Jewellery (P.) Ltd. v. ITO - [2022] 143 taxmann.com 64 (Allahabad)

Judiciary and Counsel Details

• • Surya Prakash Kesarwani & Jayant Banerji, JJ.
  • Suyash Agarwal for the Petitioner.
  • Gaurav Mahajan, A.S.G.I., Manu Ghildyal & Sudarshan Singh for the Respondent.

Facts of the Case

Assessee-company disclosed a total income of more than Rs. 32 lakhs in the relevant assessment year. The Monetary limit fixed for assessment by AO for return was up to Rs. 15 lacs, thus, the assessee’s assessment was completed by the Assistant Commissioner of the Income-tax (ACIT).

Later, a search was conducted at the premises of a third party by the Investigation wing. On perusal of information from the Investigation Wing, Assessing Officer (AO) observed that the assessee had not shown purchase entry of a substantial amount alleged to be an accommodation entry.

Thus, AO issued reopening notice under section 148. The assessee challenged said notice on the ground that the reopening notice should have been issued by ACIT.

High Court Held

The Allahabad High Court held that the Board had issued a direction by Instruction No. 01 of 2011 dated 31-1-2011 and 6 of 2011 dated 8-4-2011 for equitable distribution of works amongst the Assessing Officers.

It should be noted that as per section 124(1), AO who has been vested with jurisdiction over any area, shall have jurisdiction within the limits of such area. Further, AO vested with jurisdiction by virtue of direction of sub-section (1) and (2) of section 120 shall have all powers conferred by or under the Act, 1961 on an AO in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction.

The facts and legal position leave no manner of doubt that the AO had territorial jurisdiction over the assessee. Objection to the jurisdiction had been raised merely on the ground that on account of pecuniary limit, the proceedings ought to have been initiated by ACIT.

Merely because some pecuniary limit has been fixed for purpose of distribution of work between officers, it would not mean that there shall be an inherent lack of jurisdiction of AO. Thus, it cannot be said that AO lacked inherent jurisdiction while issuing the impugned notice under section 148.

List of Cases Reviewed

• • Abhishek Jain v. ITO [2018] 94 taxmann.com 355/405 ITR 1 (Delhi) (para 22) followed.

List of Cases Referred to

• • Abhishek Jain v. ITO [2018] 94 taxmann.com 355/405 ITR 1 (Delhi) (para 21).