TMI Blog2012 (12) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied in letter and spirit. However, in the instant case, for the reasons stated above, instructions issued by the CBDT are not shown to have been satisfied for assumption of jurisdiction. Thus, we are in agreement with the contention raised by the appellant that notice issued u/s 143(2) of the Act for assumption of jurisdiction was not in terms of the instructions of the CBDT - Hence, both the notice and the assessment framed are held to be without valid jurisdiction and stand quashed as such - notice as well the as assessment is quashed, we do not consider it necessary to render any decision on merits of the other grounds raised in both these appeals, as the necessary consequence thereof shall follow in the light of judgment rendered by the Hon’ble Calcutta High Court in the case of Rawatmal Harakchand Vs. CIT [1978 (3) TMI 10 - CALCUTTA HIGH COURT] - In the result, assessee’s appeal stands allowed and that of the department is dismissed. - ITA 3630/Del/09 & 4002/Del/09 - - - Dated:- 2-11-2012 - SHRI B.R. MITAL SHRI B.R. JAIN JJ. Assessee by: Shri Gautam Jain CA Respondent by: Shri Deepak Sehgal Sr. DR O R D E R Per B.R. Jain.: These cross appeals, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax (Appeals) has erred both in law and on facts in upholding the adhoc addition of Rs. 25 lacs out of selling and distribution expenses and manufacturing expenses claimed by the appellant company. ITA no. 4002/Del/09 ( Revenue s appeal): 1. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 93,18,740/- on account of unsecured loans from two persons namely M/s BRL Finlease Ltd. And M/s Centum Finance Ltd. As the assessee has not furnished confirmation of these two transactions and failed to prove the genuineness and creditworthiness of these two companies before the A.O. 2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 60,000/- on account of interest charged on investment in shares (unquoted), which was made by the ASSESSING OFFICER under the provisions of section 14A of the Income-tax Act, 1961. 3. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 18,58,373/- on account of interest charged on advances to supplies and security deposits which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee stated that jurisdiction could be assumed only if an addition/ disallowance of Rs. 5 lacs or more was pending in appeal before the CIT(A) and such identical issue also originated in the year under consideration. It was stated that there was no addition/ disallowance of Rs. 5 lacs in A.Y. 2004-05 and moreover there was no such identical issue arising in the year under consideration. In support ld. Counsel referred to following order of the ITAT: (i) Smt. Nayana P. Dedhia Vs. ACIT 86 ITD 398 (Hyd), affirmed by High Court in the case of CIT Vs. Smt. Nayana P. Dedhia 270 ITR 572 (AP. (ii) Aggarwal Farm Equipments Vs. ITO 148 Taxmann 33 (Mag.); (iii) Sunita Finlease Ltd. Vs. DCIT 118 TTJ 263 (Billaspur) 4.1. It was further submitted that mere participation in proceedings cannot confer jurisdiction as has been held by Hon ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 (Guj.); and Bombay High Court in the case of Inventors Industrial Corporation Ltd. 194 ITR 548 (Bom.). It was also submitted that the finding of the CIT(A) that appellant had acquiesced to jurisdiction by seeking adjournment in response to notice dated 28-11- 2007 is fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the authorities below that an identical issue had arisen in the year under consideration. Moreover, it is also seen that each of the disallowances made in A.Y. 2004-05 were lump sum disallowances, which cannot be said to be arising in the succeeding year. Thus, in our considered opinion, notice issued u/s 143(2) was not in terms of the instructions issued by the CBDT. Now the question that arises is that since notice issued was not in terms of the instructions issued by the CBDT, can it be held that assumption of jurisdiction was illegal so as to hold the entire proceedings as invalid. In this context, we seek to rely upon the judgment of Hon ble Andhra Pradesh High Court in the case of CIT Vs. Smt. Nayana P. Dedhia 270 ITR 572 (AP), affirming the decision of the Tribunal, by holding as under: A very short question is involved. Admittedly, the Department issued a circular by way of press release on March 12, 1996. These guidelines were regarding "scrutiny assessment guidelines for assessment year 1996-97". By these guidelines, it was notified that the Income-tax Department had decided not to select returns for the assessment year 1996-97 for detailed scrutiny, if the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. Provided that no such orders, instructions or directions shall be issued- (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner ; or (b) so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions'. Under sub-section (2) of section 119, without prejudice to the generality of the Board's power set out in sub-section (1), a specific power is given to the Board for the purpose of proper and efficient management of the work of assessment and collection of revenue to issue from time to time general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions, not being prejudicial to assessees, as to the guidelines, principles or procedures to be followed in the work relating to assessment. Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed scrutiny in view of the circular issued by the Board. 7.1. CIT(A) has proceeded to support the initiation of proceedings by holding that since the appellant had acquiesced to the jurisdiction by seeking adjournment in response to notice dated 28-11-2007, therefore action of the AO was valid. We find from the record that in response to notice dated 28- 11-2007 the appellant had filed letter dated 18-1-2008 wherein it was stated as under: With reference to your letter Dt. 07-01-08,it is respectfully submitted as under: That the jurisdiction over above case was with ACIT Sonepat Circle, Sonepat and the case was fixed for 09-01-08 and as such reply to your notice Dt. 28-11-07 could not be filed due to misunderstanding. The assessee was never informed that jurisdiction over this case has been transferred to your Honour. However, the above misunderstanding is regretted. Regarding reply to your queries, the case fixed for 18-01-08 was adjourned to 24-01-08 on the req8uest of the undersigned. Madam, before the assessment proceedings are taken up, the undersigned once again request your good self to kindly dispose off the objections Dt. 07-12-07 filed in your good office on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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