Income Tax--Current Issues

Practice Update

CA V.K. Subramani

VALIDITY OF REASSESSMENT AFTER CHANGE OF CASE TO ANOTHER JURISDICTIONAL AO

Section 130 of the Income Tax Act, 1961 was inserted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f. 1.11.2020. It empowers the Central Government to make a scheme for the purposes of section 120, 124, 127 and 129 to impart greater efficiency, transparency and accountability by (i) eliminating the interface between the Income-tax authority and assessee or any other person, to the extent technologically feasible; (ii) optimizing utilization of resources through economies of scale and functional specialization; (iii) introducing team based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases, with dynamic jurisdiction.

The Central Government vide Notification S.O. 1400(E), dated 28-3-2022 has notified Faceless Jurisdiction of Income Tax Authorities Scheme, 2022. Thus, provisions of sections 120, 124, 127 and 129 are brought under single umbrella viz. the faceless jurisdiction Scheme.

Madras High Court in the case of Charu K. Bagadia v. Asst. CIT 2022 TaxPub(DT) 4423 (Mad-HC) dealt with a case where the assessment jurisdiction was transferred after a notice under section 148 was issued by the income tax authority who held jurisdiction over the assessee previously. The income tax authority to whom the proceedings of the assessee got transferred did not issue a notice under section 148 but continued the proceedings by issuing a notice under section 143(2). The Court held that section 129 would apply only when there is change in incumbent within the same jurisdiction. Since the proceedings were transferred to another income tax authority due to change of jurisdiction, a fresh notice under section 148 ought to have been issued. The facts of the case relate to assessment year 2011-12.

This decision would not be applicable now as dynamic jurisdiction is applicable by virtue of faceless jurisdiction, which is a recent development in tax administration.