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2020 (12) TMI 858 - AT - Income TaxReopening of assessment u/s 147 - ITO jurisdiction to frame the reassessment as per the CBDT Instruction No. 1/2011 dated 31.01.2011 - Jursidiction of Reassessment framed by the ITO/AO - HELD THAT - We find that the assessee has filed his return of income for the year under consideration before the ACIT Circle-1 Bhubaneswar which is clear from the copies of ITR filed for the assessment year 2012-2013 however the reassessment has been completed by the ITO Angul Ward Angul. When the return of income filed by the assessee is more than Rs. 15 lakhs the ITO has no jurisdiction to frame the reassessment as per the CBDT Instruction No. 1/2011 dated 31.01.2011. ITO/AO should have transferred the case to the Assistant Commissioner/Deputy Commissioner who is having well jurisdiction to frame the reassessment as per the above CBDT Instruction for the relevant assessment year under consideration. This fact was also uncontroverted by the ld. DR before us. It is also not the case of the revenue that the assessee has not raised any objection with regard to jurisdictional issue before either of the authorities below. The AO in its remand report has also accepted that this is a jurisdictional issue and therefore he brought the provisions of Section 292BB of the Act to reject the objection of the assessee. When the issue is a jurisdictional one the provisions of Section 292BB of the Act cannot cure jurisdictional error. On perusal of the appellate order it is also clear that the CIT(A) has discussed the jurisdictional issue raised by the assessee however he has rejected the contention of the assessee which in our opinion amounts to overruling the CBDT Instruction issued in this regard. It was the duty of the revenue authorities to give effect to the circulars/instructions issued by the CBDT which are binding on them. If the CBDT Instruction No. 1/2011 dated 31.01.2011 is not accepted by the revenue authorities as has been occurred in the present case in hand anyone can frame the assessment/reassessment even having no jurisdiction to enter into the same. The power conferred upon the CBDT to issue instructions and directions by section 119 of the Act is for proper working of the Act which should be followed by the revenue authorities in true spirit. Reassessment framed by the ITO/AO in the present case is legally not sustainable as having no jurisdiction. Accordingly we set aside both the orders of authorities below and quash the reassessment framed by the ITO/AO Angul Ward Angul and allow the legal issue raised by the assessee.
Issues Involved:
1. Jurisdiction of the Assessing Officer (AO). 2. Validity of the initiation of proceedings under Section 147 and issuance of notice under Section 148. 3. Non-service of notice under Section 143(2). 4. Addition of Rs. 1,05,00,000/- towards unexplained investment in fixed deposits under Section 69. 5. Addition of Rs. 5,63,203/- towards bank interest. Detailed Analysis: 1. Jurisdiction of the Assessing Officer (AO): The assessee challenged the jurisdiction of the Income Tax Officer (ITO) to assess the case, arguing that the returned income exceeded Rs. 15 lakhs, which as per CBDT Instruction No. 1/2011, should be assessed by an Assistant Commissioner/Deputy Commissioner. The CIT(A) dismissed this ground, stating that the assessee did not raise any objection during the assessment proceedings and participated without any objection. The Tribunal, however, found that the assessment order passed by the ITO was out of jurisdiction as the returned income was Rs. 35,09,538/-, which exceeded the Rs. 15 lakhs limit for non-corporate returns. The Tribunal quashed the reassessment framed by the ITO, citing the CBDT Instruction No. 1/2011 and relevant case laws, including the decision of the Kolkata Bench in Sukumar Ch. Sahoo vs. ACIT and the Delhi Bench in Attar Singh vs. ITO. 2. Validity of the initiation of proceedings under Section 147 and issuance of notice under Section 148: The assessee contended that the initiation of proceedings under Section 147 and issuance of notice under Section 148 were based solely on a survey report without independent satisfaction by the AO. The CIT(A) rejected this contention, stating that the AO applied his mind after receiving information from the Investigation Wing and issued notice under Section 148 after seeking approval from the competent authority. The Tribunal upheld this finding, noting that the AO had tangible material to reopen the case. 3. Non-service of notice under Section 143(2): The assessee argued that the assessment order was bad in law due to non-service of notice under Section 143(2). The CIT(A) noted that the assessee withdrew this ground during the appellate proceedings. The Tribunal did not specifically address this issue, as the primary ground of jurisdiction was sufficient to quash the reassessment. 4. Addition of Rs. 1,05,00,000/- towards unexplained investment in fixed deposits under Section 69: The AO added Rs. 1,05,00,000/- as unexplained investment in fixed deposits, noting that the assessee failed to explain the source of investment. The CIT(A) upheld the addition, finding that the assessee did not provide credible evidence to explain the source of the fixed deposits. The Tribunal, however, did not delve into the merits of this addition, as the reassessment was quashed on jurisdictional grounds. 5. Addition of Rs. 5,63,203/- towards bank interest: The AO added Rs. 5,63,203/- towards bank interest, concluding that the assessee did not disclose this income in the return. The CIT(A) upheld this addition. Similar to the addition towards unexplained investment, the Tribunal did not address this issue on merits due to the quashing of the reassessment on jurisdictional grounds. Conclusion: The Tribunal quashed the reassessment framed by the ITO on the ground of lack of jurisdiction, as the returned income exceeded Rs. 15 lakhs, which should have been assessed by an Assistant Commissioner/Deputy Commissioner as per CBDT Instruction No. 1/2011. Consequently, the Tribunal did not adjudicate the other grounds on merits, as they became academic in nature. The appeal of the assessee was allowed on the legal ground of jurisdiction.
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