Invalid Assumption Of Jurisdiction: Orissa High Court Quashes Reassessment Notices Against Vedanta

The Orissa High Court has quashed the reassessment notice issued against Vedanta Resources Ltd. (VRL) on the grounds of an invalid assumption of jurisdiction.

The division bench of Chief Justice Dr. S. Muralidhar and Justice M.S. Raman observed that under Section 127(2)(a), no transfer of jurisdiction can take place without affording the Assessee a reasonable opportunity of being heard in the matter.

The petitioner, VRL submitted that the web portal of the Department where on the page titled 'Know Your Jurisdictional AO', the jurisdiction of the petitioner is indicated as 'Circle International Taxation (1)(1)(1)' with its address at New Delhi. The e-mail id displayed corresponds to the DCIT.

VRL contended that ACIT International Taxation, Bhubaneswar could not have issued the notices to the petitioner. The VRL has not been made aware of or provide any order passed under Section 127 of the Income Tax Act transferring the jurisdiction from Delhi to Bhubaneswar.

VRL stated that at no point in time did VRL have a place of business at Jharsuguda. It is clarified that the lower deduction certificate had been applied for only because the payment was to be received at Jharsuguda and in any event the certificate was not acted upon. The certificate pertained to a transaction of 2020 whereas the reassessment proceedings pertain to AYs 2013-14 to 2017-18.

The department contended that ACIT International Taxation, Bhubaneswar would have jurisdiction over the petitioner since “the place of activity/operation of the Petitioner is at Jharsuguda, Odisha”.

The petitioner pointed out that in the absence of an order under Section 127, the jurisdiction could not have been transferred by the CIT (IT)-I, New Delhi to his counterpart in Kolkata and much less to ACIT International Taxation in Bhubaneswar.

The issue raised was whether the CIT International Taxation, Bhubaneswar can exercise jurisdiction over the VRL which is a non-resident company incorporated in UK.

The Court was not satisfied that the Department has been able to explain the legal basis for ACIT at Bhubaneswar exercising jurisdiction over the Petitioner and issuing the notices under Section 148 of the Income Tax Act.

The court held that notices issued by ACIT at Bhubaneswar were without jurisdiction and, therefore, are unsustainable in law.

Case Title: Vedanta Resources Ltd. Versus ACIT

Case No: W.P.(C) Nos. 6372, 6375, 6377, 6378, and 6395 of 2022

Date: 09.02.2023

Citation: 2023 LiveLaw (Ori) 19

Counsel For Petitioner: Sachit Jolly, Adhiraj Mohanty

Counsel For Respondent: R.S. Chimanka, Avinash Kedia 

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