Jurisdiction of Re-Assessment Proceedings can be Questioned at any Stage

In Teena Gupta v. CIT, a division bench of the Allahabad High Court ruled that the jurisdiction of re-assessment proceedings under the Income Tax Act can always be raised at any stage. A Notice dated 11.05.2000 was issued against the assessee without specifying the assessment year.Following the same, a notice under Section 142(1) of the Act dt. 13.6.2000 was issued in respect of assessment proceedings for the assessment year 1997-98. In the meanwhile, the order confirming the notice dt 11.05.2000 was passed ex-parte against the assessee. The assessee questioned the validity of the notice on ground of non-disclosure of the assessment year. On second appeal, the Tribunal rejected the claim of the assessee by holding that the assessee has not raised this ground during the pre-assessment stage.  Further, relying on the pre-assessment notice dated 13.06.2000, the Tribunal upheld the validity of the re-assessment.Aggrieved by the order of the ITAT, the assessee approached the High Court for relief. A bench comprising of Justices Bahrati Sapru and Saumitra Dayal singh allowed the appeal and said that it is settled law that the reassessment notice is a jurisdictional notice and it is equally settled law that ground of lack of jurisdiction may be raised at a subsequent stage as well. “In the instant case the reassessment order was admittedly an exparte order and, therefore, there was no occasion for the assessee to have conceded to the reassessment proceedings.” Relying on the decision in Smt Prabha Rani Agarwal Vs. Income Tax Officer and another, the bench held that the issue of validity of reassessment proceedings is a jurisdictional issue which goes to the root of the matter. “The Tribunal ought to have examined the ground no.3 raised in the assessee’s appeal on its merit without being prejudiced by the facts that the reassessment order has been passed on the ex-parte basis in which the proceedings the assessee has not objected to the initiation of the reassessment.”