Participation by Assessee in Proceedings After Notice Validates Non-jurisdictional AO’s Order

Case Details: Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology - [2023] 151 taxmann.com 434 (SC)

Judiciary and Counsel Details

• • S. Ravindra Bhat & Dipankar Datta, JJ.
  • Raj Bahadur Yadav, AOR, Balbir Singh, A.S.G., Raj Bahadur Yadav, AOR Adv., Shashank Bajpai, Naman Tondon, H.R. Rao, Mrs Rekha Pandey, Priyanka Das, Rupesh Kumar, & Prashant Singh Ii, Advs. for the Petitioner.
  • Mritunjay Kumar Sinha, AOR, Amitesh Kumar & Ms Priti Kumari, Advs. for the Respondent.

Facts of the Case

The assessee filed a writ petition for challenging the notice under section 143(2), issued by the Assistant Commissioner of Income Tax, Corporate Circle-1(2), Bhubaneswar, as without jurisdiction.

The High Court allowed said writ petition and set aside notice issued under section 143(2) on the ground that the jurisdictional Assessing Officer had not adjudicated upon returns as jurisdiction had been changed after returns were filed.

Aggrieved by the order, a special leave petition was filed to the Supreme Court.

Supreme Court Held

The Apex Court held that the jurisdiction had been changed after the returns were filed. However, the records also reveal that the assessee had participated pursuant to the notice issued under section 142(1). During the proceedings, he had not questioned the jurisdiction of the Assessing Officer.

It should be noted that Section 124(3)(a) precludes the assessee from questioning the jurisdiction of the Assessing Officer if he does not do so within 30 days of receipt of notice under section 142(1).

In the present case, the facts did not warrant the order made by the High Court. At the same time, Supreme Court noticed that the High Court had granted liberty to the concerned authority to issue appropriate notice.

Therefore, the Supreme Court allowed the special leave petition and clarified that the Assessing Officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such an event, the assessee shall not raise the question of limitation.

List of Cases Reviewed

• • Kalinga Institute of Industrial Technology v. Dy. CIT [2023] 151 taxamann.com 433 (para 2) reversed.