D.b. Income Tax Appeal v. Poonam Chand Surana

D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 1 // D.B. INCOME TAX APPEAL NO. 189/2013.Commissioner of Income Tax, BikanerVs.Poonam Chand Surana .. Date of Order :: 9[th] November 2013. HON'BLE MR. JUSTICE DINESH MAHESHWARIHON'BLE MR. JUSTICE V.K. MATHUR Mr. K.K. Bissa, for the appellant. <><><> BY THE COURT: By way of this appeal under Section 260-A of the Income TaxAct, 1961 [‘the Act’], the revenue seeks to question the order dated17.05.2013 passed by the Income Tax Appellate Tribunal, JodhpurBench, Jodhpur [‘ITAT’] in ITA No. 596/JU/2010 for the assessmentyear 2003-04 whereby, the ITAT has affirmed the order dated22.10.2010, as passed in favour of the assessee (respondent herein)by the Commissioner of Income Tax (Appeals), Bikaner [‘CIT (A)’] inAppeal No. 138/BKN/2009-10 while holding that the notice issued bythe Income Tax Officer [‘ITO’], Suratgarh to the assessee sufferedfrom want of jurisdiction. The relevant background aspects of the matter are that on05.03.2003, a survey under Section 133-A of the Act was conductedat the business premises of the firm M/s Vardhman Mills, said to beproprietorship concern of the respondent-assessee. A notice underSection 143(2) dated 06.04.2004 was issued by the ITO, Suratgarh.In response thereto, the respondent-assessee stated that the ITO atSuratgarh had no jurisdiction in the matter for himself and the family D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 2 // were residing at Chennai for last 25 years and he was filing returnsof income with the Income Tax Officer-VII(2), Chennai; and prayedthat the entire survey records be transferred to the concernedIncome Tax Officer at Chennai. It appears that such proceedingswere dropped on 18.10.2005. However, later on, a notice underSection 148 of the Act dated 03.04.2006 was issued by the ITO,Suratgarh for the assessment year 2003-04 which was served uponthe respondent-assessee on 09.05.2006. The respondent-assesseeagain submitted that he was not residing at Suratgarh and reiteratedthe request for transfer of the records to Chennai. The respondent-assessee objected to the initiation of proceedings under Section 147of the Act but the objections were rejected by the ITO by his orderdated 05.07.2007. It is borne out that about 15 months after initiationof re-assessment proceedings, the ITO, Suratgarh started theproceedings under Section 127 of the Act for transfer of therespondent’s case from Chennai to Suratgarh. Meanwhile, therespondent-assessee filed a writ petition in this Court againstinitiation of re-assessment proceedings. The jurisdiction over therespondent’s case was finally transferred on 21.08.2007 fromChennai to Suratgarh; and the ITO, Suratgarh proceeded tocomplete the assessment in question under Section 147 read withSection 148 of the Act on 27.11.2007. It appears that in the earlier round of proceedings, the CIT (A),by the order dated 18.03.2008, allowed the assessee’s appealagainst the assessment in question on the ground of jurisdiction. Thewrit petition filed by the respondent-assessee in this Court on theissue of jurisdiction (CWP No. 6051/2007) was dismissed as D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 3 //infructuous on 08.07.2009. However, the ITAT, by its order dated10.07.2009, remanded the matter to the CIT (A). Hence, the matterwas before the CIT (A) for consideration afresh. In the impugned order dated 22.10.2010, the CIT(A)proceeded to re-consider the question as to whether the ITO atSuratgarh had the jurisdiction over the assessee at the time ofissuance of notice under Section 148 of the Act; and ruled in favour of the assessee with the following observations and findings:- D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 3 //infructuous on 08.07.2009. However, the ITAT, by its order dated10.07.2009, remanded the matter to the CIT (A). Hence, the matterwas before the CIT (A) for consideration afresh. In the impugned order dated 22.10.2010, the CIT(A)proceeded to re-consider the question as to whether the ITO atSuratgarh had the jurisdiction over the assessee at the time ofissuance of notice under Section 148 of the Act; and ruled in favour of the assessee with the following observations and findings:- “......... it is evident that the appellant was filling his returns of-income regularly with ITOVII(2), Chennai, both at the time ofsurvey U/s 133 A as well as issue of notice U/s 148. From theperusal of case records it could not be ascertained as to why theproceedings U/s 143(2) were initiated on 06.04.2004 which weresubsequently dropped on 18.10.2005. Secondly, soon thereafteri.e. on 03.04.2006 again proceedings U/s 147/148 were initiated.All along the appellant had maintained that the ITO, Suratgarh didnot have the required jurisdiction over the appellant. Instead ofaddressing the jurisdiction issue the AO apparently was not sureabout the correct course of action to be followed in the appellant'scase. Equally noteworthy is the fact that much after the issuanceof notice U/s 148, it is only on 24.07.2007 that the proposal fortransfer of jurisdiction from Chennai to Suratgarh was made whichultimately became effective on 21.08.2007. Thus, prior to21.08.2007 the ITO, Suratgarh did not have the necessaryjurisdiction over the appellant…….……..……..…….. …….In the instant case, the ITO, Suratgarh got jurisdiction overthe appellant only on 21.08.2007 with the passage of necessarynotification in this regard by the CIT-7, Chennai. Prior to that theAO did not have jurisdiction. The pecuniary or territorialjurisdiction as contemplated U/s 124 was also not applicable inview of the fact that the appellant was filling his return of incomewith ITO, Ward-VII (2), Chennai.......” (underlining supplied for emphasis) It appears that the similar nature controversy was alsoinvolved in the case relating to another assessee Shri GouravSurana, being the proprietor of M/s Gourav Industry, Suratgarh. Theappeals in relation to the present assessee and the said otherassessee were taken up for consideration by the ITAT together; andwere dismissed by the impugned common order dated 17.05.2013. The ITAT took note of the akin facts relating to the case of the D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 4 // said assessee Gourav Surana and observed that the assessee wasregularly filing his returns of income at Chennai and the return ofincome for the year under consideration had also been filed atChennai. The ITAT found that the ITO at Suratgarh sent a proposalto the concerned Commissioner of Income Tax at Chennai fortransfer of jurisdiction over the assessee from Chennai to Suratgarhonly on 24.07.2007; and held with reference to these facts andfactors that at the time of issuance of notice under Section 148 of theAct, the ITO at Suratgarh was having no jurisdiction over therespondent-assessee. The ITAT, therefore, found the similar natureorder passed by the CIT(A) in relation to the said other assesseejustified and not calling for any interference. The appeal in relation tothe present respondent-assessee was also dismissed after findingthat the identical facts were involved in this case. Seeking to question the order aforesaid, it is contended onbehalf of the appellant-revenue that the CIT(A) and ITAT have erredin quashing the proceedings initiated under Section 148 of the Act onthe ground of jurisdiction of the ITO, Suratgarh over the case of therespondent-assessee when the principal place of business of theassessee as also his residence are at Suratgarh. It is submitted thatthe assessee was not residing at Chennai and his returns also madeout that the main source of his income had been from the businesscarried out at Suratgarh; and that he filed the returns at Chennai forthe reasons best known to him. Other facts have also been referredto suggest that the assessee entered into partnership business ofM/s Vardhman Industry at Suratgarh and, in the applicationsubmitted to the Commercial Taxes Department, declared his D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 5 // permanent home address being at E-14-A Industrial Area, Suratgarh.It is submitted that the CIT, Chennai had transferred the jurisdictionto the ITO, Suratgarh by the notification dated 21.08.2007 with theobservations that the transfer was for coordinated investigationbecause of the assessee’s place of business being at Suratgarh. It isstrenuously argued that in the given set of facts, the ITO atSuratgarh, the place where the assessee is residing and is havingprincipal place of business, has the jurisdiction; and, therefore, theCIT(A) and ITAT have erred in holding want of jurisdiction with theITO, Suratgarh. The submissions, in our view, do not make out a case forentertaining this appeal. As noticed by the Appellate Authorities, theproceedings were initiated on 06.04.2004, which were subsequentlydropped on 18.10.2005. Thereafter, on 03.04.2006, the proceedingsunder Section 147/148 of the Act were initiated but then, a proposalfor transfer of jurisdiction from Chennai to Suratgarh was made onlyon 24.07.2007, which ultimately materialized on 21.08.2007. We findnothing of error or illegality in the observations of the CIT(A), asapproved by the ITAT, that the ITO at Suratgrarh got the jurisdictionover the respondent-assessee only on 21.08.2007 and prior to that,he was not having the jurisdiction over the assessee, particularlywhen the assessee was filing the returns of income with ITO-VII(2),Chennai. In the indisputable fact situation that the proposal fortransfer of jurisdiction over the respondent-assessee, from Chennaito Suratgarh, materialized only on 21.08.2007, the proceedingsinitiated by the ITO, Suratgarh prior to this date by issuance of noticeunder Section 148 on 03.04.2006 cannot be considered authorized /Mohan/- D.B. INCOME TAX APPEAL NO. 189/2013.CIT, Bikaner Vs. Poonam Chand Surana // 6 // and competent. The facts regarding place of business or residence of theassessee, as sought to be referred in this appeal, in our view, carrylittle relevance in the given indisputable fact situation that theassessee was indeed filing his returns at Chennai and thedate/period when the proceedings were sought to be adopted by theITO at Suratgarh, the jurisdiction for assessment in relation to therespondent-assessee was being exercised at Chennai. In the aforesaid view of the matter, we are unable to find anycogent reason to entertain this appeal so as to interfere with theconcurrent orders passed by the CIT (A) and ITAT. Accordingly, the appeal stands dismissed. (V.K.MATHUR),J. (DINESH MAHESHWARI),J.