By TIOL News Service

NEW DELHI, AUG 09, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether the act of re-opening by AO at the behest of a superior officer and without exercise of discretion, can be challenged for lack of jurisdiction. YES is the answer.

Facts of the case:

The AO re-opened the assessment and then passed an order, which on subsequent appeal, was upheld by the CIT(A). The assessee assailed such order of the CIT(A) in the present appeal, challenging the jursidiction of the AO to pass such order without mandatory service of notices under several sections of the Act. The assessee also alleged that the AO did not comply with several provisions of the Act.

On appeal, the ITAT held that,

++ considering the provisions of Section 151(2), it is evident that if the case is reopened by any AO who is below the rank of Joint Commissioner within four years, no approval from the higher authority is required. The officers below the rank of the Joint Commissioner are Income Tax Officer, ACIT, DCIT, to reopen the assessment within four year u/s 151(2) mandatorily did not have any approval from their superior authority. Moreover, the Punjab High Court in S. Sewa Singh Gill vs. CIT wherein it has been held that competency of ITO could not be doubted and challenged as the assessment drafted by the ITO is final assessment and the CIT(A) making the approval regarding assessment is not valid. Considering the facts and circumstances of the case, it becomes clear that the AO has acted at the behest of the superior authority and accordingly assumption of jurisdiction was bad. Accordingly, it will be a case of failure to exercise the discretion all together and such direction is held to be illegal and unwarranted, therefore, order so passed by the AO is directed to be quashed.

(See 2017-TIOL-1113-ITAT-DEL)