By TIOL News Service

ALLAHABAD, MAY 18, 2017: THE ISSUE BEFORE THE COURT IS - Whether when the petitioner is a regular assessee at Mumbai and was never assessed to tax at Kanpur, then I-T Authorities at Kanpur have no territorial jurisdiction to issue any notice u/s 148 for reassessment of assessee in accordance with Section 147. YES is the verdict.

Facts of the case:

During the subject year, M/s. Rave Entertainment Private Limited was assessed to tax for the A.Y 2009-10. This order of assessment was set aside by the CIT(A) and was affirmed by the tribunal. The appeal of the revenue against the same to the High Court was dismissed by us by a separate order. Thus, the assessment order came to an end. The aforesaid Rave Entertainment Private Limited amalgamated with Adlabs Films Limited now M/s. Reliance Media Works Limited Mumbai w.e.f. 1.4.2008 as per the scheme of amalgamation duly sanctioned by the company Judge. In view of the above amalgamation Rave Entertainment Private Limited stood dissolved and ceased to exist w.e.f. 1.4.2008. Its assets and liabilities were taken over by the successor company and its income, if any, thereafter was taxable in the hands of the successor company only. The aforesaid Rave Entertainment Private Limited was assessed to tax earlier at Kanpur. Consequently, its head office had shifted to Goregaon East, Mumbai before amalgamation and that the petitioner successor company was also based at Mumbai and it was not assessable to tax at Kanpur. The Asst CIT at Kanpur then called upon the assessee to submit statement of account for the A.Y 2009-10 as there was reason to believe its income had escaped assessment. The aforesaid notice was challenged on the ground that the ITAT had no jurisdiction to issue any such notice to the assessee and that the notice itself was bad in law for the reason that it contained no material or any reason on the basis of which the authority could formulate any reason to believe for revising the assessment of the assessee for the year 2009-10.

On appeal, the HC held that,

++ it is admitted on record that the petitioner is a regular assessee at Mumbai and was never assessed to tax at Kanpur. Therefore, ex-facie the Income Tax Authorities at Kanpur have no territorial jurisdiction to issue any notice u/s 148 for reassessment of the assessee in accordance with Section 147. The controversy involved herein has been dealt with by the Apex Court in Marshal Sons and Company India Limited Vs. Income Tax Officer - 2002-TIOL-2570-SC-IT wherein the Apex Court had said that in such a situation assessment can always be made and is supposed to be made on the transferee company taking into account the income of both the transferor and transferee company. It means the assessment has to be made by the Assessing Authority of the transferee company which happens to be the authority at Mumbai. Therefore, the income tax authority of Kanpur has no jurisdiction to issue any notice of reassessment of the petitioner who is based at Mumbai and is assessable to tax there. In view of the above, we quash the impugned notice as without jurisdiction leaving it open upon the revenue to draw the appropriate proceedings in accordance with law against the petitioner at Mumbai, if necessary.

(See 2017-TIOL-941-HC-ALL-IT)