TMI Blog2017 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) or sub-section (4),which prescribe the procedure for dealing with “question” relating to jurisdiction of AO’s, do not become applicable at all since they are applicable only when a “question” relating to jurisdiction arises. No merit in the argument of the assessee that the issue related to transfer of jurisdiction and hence required order to be passed by the requisite authority as per the provisions of section 127 of the Act. As stated above, in the present case the jurisdiction has been established categorically as lying with the ITO,Solan and the issue is definitely not of transfer of case from Delhi to Solan,since that could be the case only if the ITO at Delhi had valid jurisdiction which for some reason was being transferred to ITO,Solan. That being not the case, the provisions of section 127 we find do not apply in the present case - Decided against assessee. Addition on account of estimation of net profit - Held that:- If the assessee had some material or some basis to dislodge this belief or this rate adopted by the Assessing Officer, it could have produced the same atleast before us, which has not been done. The assessee cannot adopt the attitude of non-coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Brief facts relating to the issue are that the assessee e-filed its return for the impugned assessment year declaring loss of ₹ 8,43,807/- on 30.9.2009. Thereafter the case of the assessee was selected for scrutiny through CASS by the ITO, Ward-1, Solan and notice under section 143(2) of the Income Tax Act, 1961 (in short the Act ) was issued and served on the assessee on 14.9.2010. In response to the same, the assessee filed a letter dated 23.9.2010 stating that it was assessed with Range 24, C.R. Building, New Delhi. Thereafter another notice was issued to the assessee under section 142(1) asking to file hard copy of the e-filed return of the year, complete certified copy of Audit Report in Form Nos.3CD, 10CCB, Balance Sheet manufacturing and trading-cum profit and loss account alongwith its annexures and certified copy of partnership deed. The assessee in response to the same again informed the Assessing Officer that the assessee is assessed in New Delhi. Another notice was issued under section 142(1) dated 19.8.2011 to which the assessee responded in identical manner. Another notice under sections 142(1) and 143(2) of the Act was issued to which the assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO, Baddi. Thus both in terms of PAN as well as its principal place of business, the territorial jurisdiction over the firm vested with the ITO, Baddi. Merely unilaterally putting some address of Delhi in its income tax return does not validly result in the change of the assessee's jurisdiction. It is pertinent to note that under the existing policy of the Income Tax Deptt., only very few returns are selected for scrutiny assessment. And even the said selection for scrutiny takes place through CASS. Thus the selection for scrutiny is PAN based and is not based en the address(es) mentioned by the assessee in its income tax return. Hence it is obvious that the case of the appellant could never have been picked up for scrutiny assessment by any officer at Delhi as its PAN belonged to the ITO, Baddi jurisdiction. Accordingly there is found no strength in the repeated arguments of the appellant that it was regularly being assessed at New Delhi. In fact, it is prima-facie clear that the appellant had adopted a very clever strategy to avoid the scrutiny assessment in its case. While it challenged the jurisdiction of the ITO, Baddi on the ground that it was filing its return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n opportunity of hearing to the assesses. In fact, it is the assessee who squandered all the opportunities granted by the A.O. by raising a bogey of jurisdiction and by completely ignoring the A.O.'s final show cause notice. It is further pertinent to note that the appellant moved an application during the course of appellate proceedings for admission of additional evidence under Rule 46A of the I.T. Rules, 1962. The said application of the appellant alongwith the documents furnished was referred to the A.O. for examination and report. Accordingly the A.O. provided a fresh opportunity to the appellant vide his office letter dated 04.10.2012 duly served on the assessee on 08.10.2012, and again vide letter dated 11.10.2012 duly served on the assessee on 13.10.2012. But, surprisingly enough, no compliance was made by the assessee to any of the given notices of the A.O. This .again establishes beyond doubt that the appellant is just not interested in pursuing the income tax proceedings and is trying to seek relief on flimsy grounds without seriously discharging the onus that lies at its door to prove the authenticity and genuineness of its accounts and activities. Hence ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objected to the jurisdiction of the ITO,Solan within the time prescribed u/s 124(3) and therefore the ITO,Solan should have referred the matter to the higher authorities as prescribed u/s 124(4) instead of suo moto deciding the issue by rejecting the assessees contentions.For this reason also, Ld.Counsel stated, that the jurisdiction assumed by the ITO,Solan was bad and the order passed by him should be set aside. 7. The Ld. DR, on the other hand, relied upon the order of the CIT (Appeals). 8. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. We find no infirmity in the order of the Ld. CIT (Appeals) in rejecting the assessee s contention and holding that the jurisdiction to frame assessment of the assessee lay with the ITO, Solan only and not the ITO Delhi and thus the assessment framed by the ITO,Solan was in order. The issue before us pertaining to jurisdiction of the Assessing Officer and the same being spelt out in section 124 of the Act, it is pertinent to reproduce the same for a better understanding of the issue in hand. Sub-section (1) to section 124 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drop of the above facts, did not lie with the ITO, Solan, despite repeated opportunities given. The entire thrust of the arguments of the Ld. counsel for the assessee was that it was consistently filing returns at Delhi and was being assessed there. This argument has no legs to stand on. The assessee has not stated as to why it was filing its returns at Delhi. It is not the assessee s case, nor has it been demonstrated before us that it had its head office or any place of business in Delhi. Specific query was raised by the Bench in this regard but nothing was forthcoming from the Ld. counsel for the assessee as to what was the basis of filing its return in Delhi. Merely because the assessee gives address of Delhi and files return there, the territorial jurisdiction is not conferred on the Assessing Officer located in Delhi. In as much as the place of carrying on business was located at Solan,by virtue of conferment of jurisdiction over the area,the ITO,Solan had the requisite jurisdiction to complete the assessment of the assessee firm. We, therefore, have no hesitation in upholding the order of the Ld. CIT (Appeals) on this issue. The contention of the Ld. counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority as per the provisions of section 127 of the Act. As stated above, in the present case the jurisdiction has been established categorically as lying with the ITO,Solan and the issue is definitely not of transfer of case from Delhi to Solan,since that could be the case only if the ITO at Delhi had valid jurisdiction which for some reason was being transferred to ITO,Solan.That being not the case, the provisions of section 127 we find do not apply in the present case and the argument of the Ld.Counsel as also the reliance placed by it on the decision of the Delhi High Court on the issue of transfer of jurisdiction,needs to be rejected. We may add that the Hon'ble Allahabad High Court in the case of Hindustan Transport Co. vs. IAC (1991) 189 ITR 326 (All) dealt with the various provisions of the Act dealing with the jurisdiction of AO as prescribed u/s 124 127 ,and stated that these sections have been enacted as a measure of administrative convenience and the concept of jurisdiction cannot be imported in them so as to invalidate the resultant action on account of defect in the exercise of fuction .The Hon ble High Court held as follows: the material questions requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC, the ITO shall perform such functions as are assigned to him by the IAC. In the end, a general power of assignment of functions is conferred upon the Board under s. 126. When power is exercised under this provision, the assignments made under the sections mentioned hereinbefore are nullified and stand substituted by the assignment made under s. 126. 14. Sec. 127 also, falling under Chapter XIII, deals with transfer of cases. Under sub-s. (i), the power to transfer cases is conferred upon the Commissionerand the Board. In cases not covered by the proviso , the power of transfer is to be exercised after giving the assessee a reasonable opportunity of being heard. An opportunity is to be given wherever it is possible to do so. Reasons are also required to be given for transferring cases. This is the position where the case is transferred outside the same city, locality or place . The proviso covers a situation where the offices of the transferee officers are situate in the same city, locality or place. In ther words, it covers local transfers. In such transfers, neither is opportunity of hearing required to be given to the assessee nor are reasons required to be recorded. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring a case from one place to another. Since the assessee does not suffer any inconvenience or prejudice if a case is transferred locally, no such opportunity has been prescribed. From these provisions it is obvious that the Board and the Commissioner will exercise the power of allocation of functions to various authorities or officers in the exigency of tax collection with due regard to the convenience of the assessee. In other words, the allocation is a measure of administrative convenience. In such a situation, the concept of jurisdiction cannot be imported and, certainly, not in the sense of invalidating the resultant action on account of the defect in the exercise of functions. 17. Being an enactment aimed at collecting revenue, the legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has; therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in s. 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the CIT by the Board. Courts do not come into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) and stated that the Ld. CIT (Appeals) has passed a detailed and well-reasoned order on the issue giving categorical finding of number of opportunities given to the assessee, which remained un responded and, therefore, ex-parte order passed was justified. 15. We have heard both the parties and find no merit in ground raised by the assessee. We agree with the Ld. DR that the Ld. CIT (Appeals) has specifically mentioned number of opportunities afforded to the assessee vide notice dated 14.9.2010, 19.8.2011 and 13.12.2011 all of which remained un-responded. A detailed show cause notice was also issued to the assessee and served on 13.12.2011 before the passing of the ex parte order and it was made absolutely clear to the assessee that the assessment would be completed ex-parte in case of non-compliance of the same. The Ld. CIT (Appeals), we find, has rightly held that it is the assessee who squandered the opportunities granted by the Assessing Officer by raising the issue of jurisdiction and ignoring even Assessing Officer s final show cause notice. Further, we find that even during the appellate proceedings where the assessee submitted additional evidences, the same were admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 16,73,640/-, which was also added back to the income of the assessee in the absence of any documentary evidence in support of the same. Thus a total addition of ₹ 61,71,365/- was made to the income of the assessee. During the appellate proceedings, the assessee filed evidences in the form of partnership deed, income tax returns, audit report, income tax returns of partners and also copy of bank account of one of the partners Shri Vikas Bhalla, which were admitted by the CIT (Appeals) and sent to the Assessing Officer for his report. The assessee did not participate in the remand proceedings also and, therefore, the Assessing Officer accordingly, sent his report in support of the addition made. The same was confronted to the assessee, after which the Ld. CIT (Appeals) upheld the addition made. 20. Before us, the Ld. counsel for the assessee stated that the addition made on account of estimation of net profit @ 5% had no basis and, therefore, the same ought to be rejected for this reason alone. As for the addition made on account of introduction of capital in the partners account, the Ld. counsel for the assessee referred to the copy of the bank account of one of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable instances, as to how the net profit rate of 5% estimated by the Assessing Officer was incorrect . In the backdrop of non cooperative and unresponsive attitude of the assessee at all stages, the only inference which can only be drawn is that the assessee has nothing to say about 5% net profit rate adopted and the same was, therefore, correct and not unreasonable. If the assessee had some material or some basis to dislodge this belief or this rate adopted by the Assessing Officer, it could have produced the same atleast before us, which has not been done. The assessee cannot adopt the attitude of non-cooperation all along when the onus lies on the assessee to prove that the profit returned by it is correct. The assessee cannot shift the onus on the Revenue after not cooperating throughout the proceedings and then stating that there has to be some basis with the Assessing Officer to adopt a net profit rate. It is a highly unreasonable and illogical argument given by the assessee which cannot be accepted and the addition made on account of net profit rate amounting to ₹ 44,97,725/- is, therefore, upheld. 23. As far as the addition made on account of introduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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