TMI Blog2016 (7) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... eals)-XXXVI, Kolkata by even date i.e. 27.01.2010. Assessment was framed by ITO Ward-56(4), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 31.12.2009 for assessment year 2007-08. 2. Both the appeals are heard together and are being disposed of by way of a consolidated order. Shri S.K.Tulsian, Ld. Authorized Representative appeared on behalf of assessee and Shri S.Srivastava, Ld. Departmental Representative appeared on behalf of Revenue. First we take up assessee s appeal ITA No.1301/Kol/2011 3. Grounds by assessee per its appeal are as under:- 1. For that in view of the facts and circumstances of the case, the Ld. CIT(A) was wholly wrong and unjustified in holding the assessment order u/s 143(3) dt. 31.12.2009 as legal and valid on the alleged ground that the notice u/s 143(2) dt. 02.09.2009 issued by ITO. Ward - 3(1), Kolkata, holding jurisdiction and access over the e-return filed for relevant A.Y 2007-08 was legal and valid. The decision of the Ld. CIT(A) was wholly unreasonable, uncalled for and bad in law as the ITO, Ward-3(1) had no legal jurisdiction vested with him to commence the assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by one M/s Murray Co. Pvt. Ltd. and not by the assessee and that the purported old agreement dt. 06.01.1975 between the real owner and the assessee for the proposed sale of that property was unregistered and suffered from many anomalies and the title possession of the property was not handed over to the assessee. The unlawful decisions of both the AO and the Ld. CIT(A) were wholly unreasonable, uncalled for and bad in law. 6. For that in view of the facts and circumstances of the case, the Ld.CIT(A) was wholly wrong and unjustified in confirming the AO's action in rejecting the assessee's claim of Long Term Capital Loss of ₹ 39,54,0001- suffered on sale of the said house property without considering the facts that as per the said old agreement dt. 06.01.1975 between the assessee and the erstwhile owner M/s Murray Co. Pvt. Ltd., duly authenticated and registered by a Notary, the assessee firm became the deemed owner of the property u/s 2(47)(v) of the I.Tax Act and accordingly the gain 1 loss on sale of the property is assessable under the head Capital Gain in the hands of the assessee firm as the property was sold by the erstwhile owner for and on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration also filed its ITR on 17.01.2009 with DC Central Circle XI declaring income at Nil . The copy of ITR is placed on page 2 of the paper book. Thereafter, the jurisdictional Ward of the assessee was transferred from DC Central Circle-XI to Ward-56(4) in terms of transfer order issued u/s 127 of the Act dated 06.4.2009 by Ld. CIT, Central-1, Kolkata vide order no. 1/2009-10 dated 06/04/2009. The copy of the transfer order is placed on page 28 29 of the paper book. In the meantime a notice u/s 143(2) was issued and served by ITO Ward-3(1) on dated 02.09.2009. The same was challenged by assessee on the ground that jurisdiction was not lying with the ITO Ward-3(1) and therefore notice issued is not a valid notice. The copy of the notice issued under section 143(2) is placed on page 30 of the paper book and letter for challenging the notice is placed on page 31 of the paper book. Thereafter notice was issued u/s 142(1) of the Act dated 06.11.2009 by ITO Ward-56(4) having jurisdiction over the assessee which is placed on page 32-33 of the paper book. The assessee has also objected the legality of the notice issued under section 142(1) of the Act before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed time limit, while having jurisdiction over the return. Therefore, the notice was legal and valid. Being aggrieved by the order of ld. CIT(A), the assessee came in second appeal before us. 7. The Ld. AR before us reiterated that the entire assessment made by the ITO, Ward- 56(4), u/s.l43(3) of the Act, for the relevant Assessment year, is illegal without jurisdiction and hence, bad in law. As it is a mandatory requirement for the issuance of notice u/s 143(2) of the Act for the A.Y. 2007- 08 for making the scrutiny assessment, but it was never complied by the jurisdictional ITO Ward- 56(4) or his predecessor. In this regard, the attention is invited to the relevant provisions of section 143(2) of the Income-tax Act, 1961, which reads as under: 143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section(1) of section 142, the Assessing officer shall (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the time limit prescribed is mandatory and it is not a mere procedural requirement. Again, at this juncture attention is invited to the definition of Assessing Officer as contained in section 2(7A) of the Income Tax Act, 1961, reproduced as under: Assessing officer means the Assistant Commissioner or Deputy Commissioner or /Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub- section (2) of section 120 or any other provision of this Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act. As apparent from above, the Assessing Officer in relation to an assessee means the AO, who is entrusted with the relevant jurisdiction as per the directions issued in this regard. There is no denying fact that the jurisdiction of the appellant was with DCIT, Central Circle till 06/04/2009. Return of income was file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or other assessees fall under his jurisdiction . 9. In the present case, the ITO-(HQ) CIB, Pune, has no jurisdiction, even to issue notice under s. 142(1). Of course, he can call for information in respect to filing of return or in respect to PAN etc., of a particular assessee. After receiving the required information, if the ITO feels it necessary, can send the details to the ITO, who has the jurisdiction over a particular assessee. Therefore, in our considered view, issuance of notice under s. 142(1) itself is without jurisdiction. The ITO-(HQ) CIB, Pune, has completed the assessment under s. 144 even without issuing statutory notice under s. 143(2), which is mandatory for allowing opportunity of being heard to the assessee for completion of assessment under s. 143(3) or under s. 144. No such notice has been issued; therefore, for this reason also the assessment so completed by the ITO-(HQ) CIB, Pune, is null and void; therefore, liable to be quashed. 10. It is a matter of fact that the areas of jurisdiction of the AO are earmarked and as per area / earmarked, the assessees who belong to that area files their return with their respective ITOs. As no area has been earmarke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice under section 143(2) of the Act. In the case of Romi vs. Commissioner of Income Tax [2014J 363 ITR 311 (Ker), the Hon'ble Kerala High Court has held that where no notice was issued under section 143(2) to assessee, assessment made under section 143(3) was to be set aside. In the case of Commissioner of Income Tax vs. Salarpur Cold Storage Private Limited [2015J 228 Taxman 48 (Mag.) (Allahabad), the Hon'ble Allahabad High Court has held that, where there is a failure apparent to issue a notice under section 143(2) within prescribed period, it cannot be cured by taking recourse to section 292BB of the Income Tax Act 1961 . More so, at this juncture, reference is invited to the decision of the Hon'ble Kolkata Tribunal in the , case of M/s. Nemchand Jain Sons vs. DCIT, ITA No.1874/Kol/2012, [order copy enclosed at page nos. 60-65 of the P/B] wherein it was held that, as the notice has been served beyond the specified period of twelve months, respectfully following the decision of the hon 'ble Gujarat High Court in the case of Maxima Systems Ltd. as also the decision of the Hon 'ble jurisdictional \ High Court of alcutta in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid contention of the appellant is supported by the Hon 'ble Delhi decision in the case of KUBER TOBACCO PRODUCTS (P) LTD. v. COMMISSIONER OF INCOME TAX (2009) reported in 120 TTJ 577. In the said case, the Special Bench of Delhi Tribunal placing reliance on the decision of the Apex. Court in the case of KARIMTHARUVI TEA ESTATE LTD. v. STATE OF KERALA [1966]60 ITR 262 (SC) observed as under: If the present issue is considered in the light 0/ the above decision 0/ Hon'ble Supreme Court, then, it has to be held that s.292BB is applicable to asst. yr. 2008-09 and subsequent years. Therefore, answer to the second aspect of the question is that assessee is precluded from taking such objection/or and from asst. yr. 2008-09. 45. Summarising our findings, we hold as follows: (i) Sec. 292BB even if it is procedural it is creating a new disability as it precludes the assessee from taking a plea which could be taken as a right, cannot be construed retrospectively as the same is made applicable by the statute w.e.j. 1st April, 2008. (ii) Sec. 292BB is applicable to the asst. yr. 2008-09 and subsequent assessment years. Again, even otherwise also, in view of the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted with DCIT, CC-XI, Kolkata and was subsequently transferred to ITO, Ward 56(4). The transfer order dated 06/04/2009 passed u/s 127 of the Act [copy enclosed at page no. 28-29 of the P/b], in itself evidences the above fact. Again, the contention of the AO that the notice u/s 143(2) has been validly issued by ITO, Ward- 3(1) who was holding the PAN at the time of selection of case through CASS, is also having no basis. This is because it is clear from the above-referred transfer order that the jurisdiction of the appellant never vested with ITO, Ward 3(1), even before the order of transfer or at any time thereafter. There is no doubt that the jurisdiction of the appellant as per PAN was with DCIT, CC-XI, Kolkata, till the point of transfer to ITO, Ward -56(4). Therefore, on what basis the AO claimed that previous jurisdiction of the appellant vested with ITO, Ward - 3(1), is known best to the AO himself, especially in view of the fact that no reply was given by ITO, Ward - 3(1) when the appellant at the very outset challenged the issue of notice u/s 143(2) by the AO, ITO, Ward - 3(1), vide letter dated 01/10/2009. Further, it is relevant to note here that CASS, on which reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7.4 Finally, when the Ld.CIT itself in his appellate order dated 07/0912011 has acknowledged the fact that at the time of filing of return, the DCIT, CC-XI, Kolkata, was the jurisdictional Assessing Officer and that subsequent to the transfer order passed u/s.127 of the Act by the Ld.CIT, Central-I, Kolkata, on 06/04/2009, the jurisdiction of the appellant was transferred to ITO, Ward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... internal purpose only. This Instruction cannot overrule the provision of Income Tax Act. He further submitted that assessee in the present case is a partnership firm and has never filed any income-tax return to ITO Ward-3(1). Further submitted that ITO Ward-3(1) is a Corporate Ward where only returns of corporate can be filed and processed. So in support of its claim Ld. AR submitted the list of Words having jurisdiction over different assessee which are placed on pages 91 to 94 of the Paper Book. 8. We have heard the rival parties and perused the materials available on record. From the foregoing discussion, we find that assessee has been filing its income tax return with DCIT Circle-XI in the earlier years including for the year under consideration. Thereafter the case was transferred to ITO Ward 56(4) by the order of Commissioner of Income Tax passed u/s 127 of the Act. However for the year under consideration a notice under section 143(2) of the Act was issued by the ITO of ward 3(1) for scrutiny assessment. The assessee challenged the validity of the notice on the ground that the jurisdiction on the assessee vests with the ITO of ward 56(4). On bringing this anomaly to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Principal Commissioner of Income Tax vs. Silver Line (2016) 283 CTR 148 (Del), wherein the extract portion reproduced below:- With the legal position being abundantly clear that a reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. In view of the settled legal position on all the issues raised by the Revenue in these appeals, HIGH Court was of the view that no substantial question of law arises for determination. Revenue s Appeal was thus dismissed. A reassessment order cannot be passed without compliance with mandatory requirement of notice being issued by AO to assessee u/s 143(2). In support of the above, reliance is placed on the judgments of Hon'ble Supreme Court in the case of ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) in the said case, the Hon'ble Supreme Court observed as under (page 369) Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o bring anything contrary to the arguments advanced by the ld. AR with regard to the jurisdiction of the AO for the issue of notice. The provisions of section 292BB of the Act shall also not be applicable in the instant case as the assessee objected on the validity of the notice issued under section 143(2) of the Act. The AO has been defined u/s 2(7A) of the Act who is having jurisdiction over the assessee by virtue of the provisions of section 120 of the Act. In the instant case, the ld. CIT(A) has clearly observed the fact that at the time of return filing, the DCIT Central Circle XI was the jurisdictional Assessing Officer and on a later date the case was transferred to Ward 56(4) in pursuance of the order passed under section 127 of the Act. The findings of the ld. CIT(A) is reproduced below:- 3.3. The submission of the Ld. AR of the appellant have been considered in the light of materials brought on record and the case laws referred to. It appears form the record that the appellant firm had filed its return belatedly u/s. 139(4) of the Act, on 17/01/2009. The return was filed electronically with digital signature. At the time of filing return, the DCIT, Central Circle-XI, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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