TMI Blog2018 (9) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... s assumed jurisdiction over the case by mentioning that the JCIT has been given concurrent jurisdiction and has also referred to the Central Action Plan for 2013-14. The learned CIT (Appeals) has held that the JCIT has concurrent jurisdiction over this case in terms of Notification issued under Section 140 by the CBDT. As per the decision cited above it is an imperative mandatory requirement of law that an order in writing, to this effect, must be passed under Section 127 by the jurisdictional Commissioner of Income Tax for effecting the transfer of assessment proceedings from one Assessing Officer to another Assessing Officer. From the records before us, it is not clear as to whether such an order has been passed. Considering that there is no clarity on the process adopted, before the JCIT came to pass the impugned orders of assessment for Assessment Years 2010-11 to 2013-14; particularly whether an order under Section 127 of the Act was passed in this regard. In this factual matrix of the case, we deem it appropriate to remand the matter back to the file of the Assessing Officer to examine whether the necessary orders, as explained above, have been passed in the case on hand f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed a return of income on 6.12.2013 declaring income at NIL; while recomputing the brought forward losses at ₹ 3,41,48,848, thereby arriving at gross total income of ₹ 15,47,173 and claiming deduction thereon under Section 80P of the Act of ₹ 3,35,46,397. The claim for deduction under Section 80P of the Act was made in this return. 2.1.2 The case was taken up for scrutiny. As stated in the order, the Jt. Commissioner of Income Tax, Davangere Range ( JCIT ) took up the assessee's case for scrutiny on the ground that he has concurrent jurisdiction over all the cases in Davangere, and in the Central Action Plan, 2013-14, completion of scrutiny assessment is also one of the functions assigned to the Range Head. Vide letter dt.4.12.2013, the JCIT informed / intimated the assessee that he had assumed jurisdiction over the case. The JCIT completed the assessment under Section 143(3) r.w.s. 147 of the Act vide order dt.8.1.2014 determining the assessee's income at ₹ 22,70,100 after setting off the entire re-worked unabsorbed depreciation of ₹ 3,40,49,124, leaving NIL unabsorbed depreciation for carry forward to the subsequent years, and the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed its return of income on 30.9.2013 admitting NIL taxable income after claiming the entire income of ₹ 4,37,00,195 by claiming deduction under Section 80P of the Act and setting off the balance income by brought forward losses. Pursuant to survey action under Section 133A of the Act on 7.11.2013, the case was taken up for scrutiny for this assessment year also. The assessment was completed under Section 143(3) of the Act vide order dt.8.1.2014, wherein the assessee s income was determined at ₹ 4,36,50,200 after restricting the assessee's claim for deduction under Section 80P of the Act to ₹ 50,000 and also since there was no unabsorbed losses / depreciation of earlier years for set off in this assessment year. 2.2.5 In the aforesaid orders of assessment for Assessment Years 2010-11 to 2013-14, the JCIT has disallowed the claim for deduction under Section 80P of the Act by holding that - i) the assessee is a trading concern involved only in trading activities; ii) the assessee could not prove that the purchases and sales were intended only for agriculture; iii) the ultimate benefit does not accrue to the members of the society; iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings as being bad in law. (v) Transfer of a case may be effected at any stage of the proceedings and it is not necessary for the Assessing Officer to whose Ward / Circle / Range the case was transferred to re-issue the notice. The latter officer can continue and complete the proceedings as held in the case of Mathura Prasad Motilal Co. reported in (1956) 30 ITR 695 (Nagpur). 3.2.2 On the issue of providing the reasons for initiation of proceedings for reopening of the assessment, the CIT (Appeals) has given a clear finding that the assessee has written to the Assessing Officer requesting for copy of the reasons recorded in this regard and that it is also true that the Assessing Officer has not provided the same to the assessee. The learned CIT (Appeals), however, rejected the assessee's contentions by observing as under :- (i) The Assessing Officer has addressed letters to the assessee wherein he has indicated that he intended to pass the order of assessment in line with the proposal and the assessee replied to these letters; but in none of the assessee's letters was there any mention seeking the reasons for reopening. (ii) Not providing the reasons recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In support of this contention of the assessee, the learned Authorised Representative placed reliance on the judicial pronouncements in the following cases :- i) Valvoline Cummins Pvt. Ltd. Vs. DCIT (307 ITR 103) (Del) ii) Mega Corporation Ltd. Vs. Addl. CIT (155 ITD 1019) (Del) and iii) Tata Sons Ltd. Vs. ACIT (76 taxmann.com 126) (Mum) 4.3 It was also contended by the learned Authorised Representative that the assessee can raise such legal issues before the higher appellate authorities and not raising the issue before the JCIT (A.O) cannot be a reason for dismissing the issue. In this regard, the learned Authorised Representative placed reliance on the decision in the case of Ziaullah Shariff Vs. ACIT (316 ITR 92) (AT) Bangalore. 4.4.1 As regards the issue of non-furnishing of the reasons recorded for reopening the assessments for Assessment Years 2010-11 and 2011- 12 by the Assessing Officer to the assessee, the learned Authorised Representative contended that it is settled principle that failure to furnish the reasons recorded for reopening the assessments would render the orders of assessment for these two years bad in law. It was further contended that Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons :- (i) Not providing the assessee a copy of the reasons recorded will not vitiate the proceedings as the assessee was aware of the reasons. (ii) The Authorised Representative of the assessee attended hearings before the officer. (iii) The assessee deliberately omitted to remind the Assessing Officer for being supplied with copy of the reasons recorded. (iv) The Assessing Officer addressed two letters to the assessee wherein he had conveyed his intention to pass the orders of assessment for these two assessment years in line with his proposals. 4.7.2 It is the assessee's contention that providing the reasons recorded for reopening of the assessments for the two assessment years, 2010-11 and 2011-12, is a condition precedent for passing an order of assessment. According to the assessee, the admitted and undisputed facts, borne out from the orders of the learned CIT (Appeals), were that the assessee had requested the Assessing Officer in writing for being supplied with copy of the reasons recorded for initiation of proceedings for reopening of the assessments for both these assessment years. Therefore, since admittedly the Assessing Officer failed to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. We find that the impugned order merely applies the decision of the Apex Court in GNK Driveshafts (India) Ltd. (supra). Further it also follows the decision of this Court in Videsh Sanchanr Nigam Ltd. (supra) in holding that an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice under Section 148 of the Act being furnished to the assessee when sought for. It is axiomatic that power to reopen a completed assessment under the Act is an exceptional power and whenever revenue seeks to exercise such power, they must strictly comply with the prerequisite conditions viz. Reopening of reasons to indicate that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which would warrant the reopening of an assessment. These recorded reasons as laid down by the Apex Court must be furnished to the assessee when sought for so as to enable the assessee to object to the same before the Assessing Officer. Thus in the absence of reasons being furnished, when sought for would make an order passed on reassessment bad in law. The recording of reasons (which has been done in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are such that it would require a detailed examination of facts and application of legal provisions, taking into account the assessment order sought to be reopened, the string of violations, suppression of material particulars and transactions which would require considerable time and would be in the nature of a detailed adjudicatory process, the Assessing Officer can dispose of the objections, by giving his tentative reasons for overruling the objections. 18. The disposal of objections is in the value of a procedural requirement to appraise the assessee of the actual grounds which made the Assessing Officer to arrive at a prima facie satisfaction that there was escape of assessment warranting reopening the assessment proceedings. The disposal of such objection must be before the date of hearing and passing a fresh order of assessment. In case, on a consideration of the objections submitted by the assessee, the Assessing Officer is of the view that there is no ground made out to proceed, he can pass an order to wind up the proceedings. It is only when a decision was taken to overrule the objections, and to proceed further with the reassessment process, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view, the above principles apply squarely to the facts of the case on hand for both the assessment year 2010-11 and 2011-12. In the case on hand, the undisputed fact is that the assessee had asked the Assessing Officer to provide it the reasons recorded for reopening assessments, which was not furnished. However, in spite of the reasons recorded not being provided by the Assessing Officer, the assessee has participated and co-operated with the Assessing Officer in completion of the assessment proceedings. Respectfully following the decision of the Hon'ble High Court of Madras in the case of Home Finders Housing Ltd. (supra), we remit the matter back to the file of the Assessing Officer with a direction that this irregularity of non-provision of reasons recorded and other required procedures be correctly followed in accordance with the law and the order passed accordingly in line with the decision rendered by the Hon'ble High Court of Madras in the case of Home Finders Housing Ltd. (supra). 5. Order of assessment passed by JCIT, while notice u/s.143(2) Issued by ITO. 5.1.1 The assessee has raised this issue in all four assessment years 2010-11 to 2013-14; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.3.1 We have heard the rival contentions, perused and carefully considered the material on record; including the submissions made and judicial pronouncements cited. The issue of concurrent jurisdiction in the context of the CBDT Notification issued under Section 120 of the Act by the CBDT has been discussed in the decision of the ITAT, Delhi Bench in the case of Mega Corporation Ltd Vs. Addl. CIT(2015) 155 ITD 1019 [ITAT (Del)]. After discussing the issue of concurrent jurisdiction and the judicial pronouncements on the subject, the Tribunal held that the order passed by the Addl. CIT was without jurisdiction. In this decision, the Tribunal had relied upon the decision of the Hon'ble Delhi High Court in the case of Valvoline Cummins Pvt. Ltd. Vs. DCIT (supra) wherein the Hon'ble High Court has explained the concept of concurrent jurisdiction . The relevant paragraphs at paras 29 30 thereof are extracted hereunder :- 29. It appears to us quite clearly that there is a distinction between concurrent exercise of power and joint exercise of power. When power has been conferred upon two authorities concurrently, either one of them can exercise that power and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise directs the Additional Commissioner to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under the Act. As regards the notification no. 267/2001 dated 17.9.2001 we notice that such notification by CBDT u/s 120(4)(b) of the Act directs that Joint Commissioner of Income Tax or Joint Director shall exercise the power and function of an Assessing Officer in respect of specified cases in respect of which such Joint Commissioner or authorized by Commissioner of Income Tax vide CBDT notification dated 14.9.2001 and 31.7.2001. It is thus apparent that the said notification is applicable in respect of Joint Commissioner authorized by Commissioner of Income Tax under notification as specified therein and no more. In the instant case it is admitted position that none of the notifications as specified therein confer powers of an Assessing Officer to the Additional Commissioner of Income Tax, Range 6, New Delhi. 5.3.3 On similar facts, the ITAT, Mumbai Bench, in the case of Tata Sons Ltd. Vs. ACIT (2016) 76 taxmann.com 126 (Mumbai Trib.), has held that the assessment has to be completed by the assessing authority who has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax being in consequence upon the delegation of power duly authorized by the Legislature, the Chief Commissioner of Income-tax or Commissioner of Income-tax were duty bound, if at all they were to exercise such delegated power to act according to the provisions of law; meaning thereby that it was incumbent upon the Chief Commissioner of Income-tax or the Commissioner of Income-tax, as the case maybe, if at all they wanted to authorize the Additional CIT to act and perform the functions of an AO, to pass a proper order delegating such functions/powers upon him. This view of ours is fully supported by the decision of the Hon'ble Delhi High Court in the case of Dr. Nalini Mahajan v. DIT [2001] 252 ITR 123/[2002]122 taxman 897 wherein the Hon'ble High Court, while discussing the powers of Additional Director Investigation, held as under: It is now well-settled that when a power is given to do a certain thing in a certain manner, the same must be done in that manner or not at all. A delegation of power is essentially a legislative function. Such a power of delegation must be provided by the statute. The director himself for certain matters is the delegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken recently in another judgment by the Delhi bench of the ITAT in the case of Harvinder Singh Jaggi v. Asstt. CIT [2016] 157 ITD 869/67 taxmann.com 109. Relevant part of observations of the Bench is reproduced below:- . As regard the contention of the assessee that no order under section 127 was passed by the Commissioner of Income-tax, the revenue has submitted that the Addl. Commissioner of Income Tax was provided concurrent jurisdiction over the cases through the order of the Commissioner of Income tax and, therefore, no separate order under section 127 was required to be passed by the Commissioner of Income tax. However, no such order of the Commissioner of income tax conferring the concurrent jurisdiction to the Addl. Commissioner of Income Tax over the cases of the Income tax officer is either available on assessment record, or was produced by the revenue. Thus, in absence of any such order, it can't be established that said assessment order passed was within the jurisdiction of the Addl. Commissioner of Income Tax. Thus, the assessment completed by Additional Commissioner of Income Tax in the case being without jurisdiction, is void ab initio. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax or an Additional Commissioner of Income-tax under section 117(1). Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. The expression has a distinct meaning by virtue of the definition in section 2(28C). The Commissioner of Income tax is not a Joint Commissioner within the meaning of section 2(28C). There is no statutory provision under which power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner, it has to be done in that manner only 3.40. Thus, in view of the legal discussion made above and facts of the case, it is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard in these matters and to put forth details / submissions required which shall be duly considered by the Assessing Officer before deciding these issues. We hold and direct accordingly. 6. Deduction u/s.80P of the Act . 6.1 On the substantive issue of the disallowance of the assessee's claim for deduction under Section 80P of the Act, since the jurisdictional issues, namely non-furnishing of reasons recorded, validity of issued notices issued under Section 148 of the Act and validity of assumption of jurisdiction by the JCIT in passing the impugned orders of assessment have been remanded back to the file of the Assessing Officer for fresh consideration, in our considered view, adjudication on the substantive issue in the appeals at this stage would be premature. If the issue of notice and passing of orders fail to pass the test, in the light of our directions issued above, the impugned orders of assessment, having no legs to stand on, will fail and consequently so too with the disallowances made. We, therefore, refrain from adjudicating on the substantive issue of allowability of the assessee's claim for deduction under Section 80P of the Act. 6.2 It may how ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
