PCIT Must Resolve Jurisdictional Objections Before Passing Revisionary Order: ITAT

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has recently quashed a Revisionary Order as the relevant notice was issued by a non-jurisdictional Assessing Officer.

The assessee, Nirmaben Sureshkumar Patel’s assessment was completed, where the assessee’s return was accepted, and no additions were made by the National Facless Assessment Centre (NFAC). However, the Principal Commissioner of Income Tax (PCIT) reopened the case based on the information received by the Investigation Wing, which suggested that the assessee had purchased a villa and paid Rs 61,51,005 to Greens project developed by Navaratna Organisers and Developers Pvt. Ltd. (NODPL), where a search and seizure operation was conducted.

The PCIT then issued a show cause notice under section 263, saying that the original assessment was erroneous to the interest of Revenue, claiming that the Assessing Officer (AO) failed to investigate the alleged money payment, the source of investment and the related documentation. The PCIT quashed the original assessment and directed the AO to conduct a fresh assessment after doing the detailed verification. The assessee approached the Income Tax Appellate Tribunal (ITAT) to challenge the revisionary order.

The assessee argued that the notice under section 148 was issued by ITO, Ward 1, Mehsana, who was not the jurisdictional Assessing Officer, as the assessee had filed all her returns with ITO, Ward 2, Vapi. The assessee contended that this issue was objected to before the PCIT, but the same was ignored.

The Tribunal agreed with the assessee and pointed out that the Revenue did not submit any material to prove that the jurisdiction was altered or transferred to Mehsana. The Tribunal also observed that PCIT did not solve the jurisdictional objections raised by the appellant, and these objections were important because they were about the assessment’s validity. The Tribunal held that the PCIT must first resolve the objection before assuming revisional jurisdiction.

Since the notice was issued by the non-jurisdictional Assessing Officer, and the same was not resolved by the PCIT, the Tribunal set aside the revisional order, and the matter was sent to the PCIT for fresh consideration.