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TMI Blog2016 (10) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 14A of the administrative 3expenses attributable to the earning of the exempted income should be restricted to 1 crore as against 2% of such expenses disallowed by the AO." 2. During the course of hearing, arguments were made by Shri Dinesh Vyas, Authorised Representative (Sr. Counsel) on behalf of the Assessee and by Shri K. Srisha Murthy, Departmental Representative (CIT-DR) on behalf of the Revenue. 3. During the course of hearing, the assessee filed few more additional grounds on merits. The assessee vide its petition dated 15.01.2016 filed additional grounds raising jurisdictional validity of assessment order on the ground that the assessment order was passed by the Additional Commissioner of Income Tax u/s 143(3) who was not competent under the law to discharge functions of AO and therefore, impugned assessment order was passed by him without authority of law and thus, assessment order was bad in law. 3.1. During the course of hearing, Ld. Senior counsel vehemently argued that he should be heard first on the aforesaid legal grounds which go to root of the matter and if need arises, then this case may be heard on merits. 3.2. Per contra, Ld. CIT-DR initially requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce the records. Accordingly, date of 29th June 2016 was given as last and final opportunity to the Revenue on the condition that no further adjournment shall be given and if still records were not produced, then, adverse view may be taken on 29.06.2016. On the said date, the AO was personally present along with Ld. CIT-DR to again make a request for further time. Somehow, accepting his request, the case was adjourned for11.07.2011. On said date, again adjournment request was made by the department and to accommodate the department, case was adjourned on 19.07.2016. On said date, the CIT-DR again moved an application requesting for two days time and gave an undertaking that no further adjournment shall be taken by the department. Thus, taking strict view on the conduct of the department following order was passed: "On 15t h June , 2016 the learned D.R. was di r e c ted to be present alongwi th necessary documents, on 27th June, 2016 last opportunity was provided to the Department with a direction that necessary documents/ case record will he produced. Again on 27th June, 2016 nothing was produced and again at the request of the Department last opportunity was provided to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aware that these are old appeals and must be disposed of at the earliest. However, considering the totality of facts, these appeals are de-heard. It is adjourned for fresh hearing by the regular bench. Adjourned to 18th October; 2016 along with appeal in ITA No. 193/Mum/2006; 4542/Mum/2005; 2745/Mum/2006; NS ITA No.3623/Mum/2008. The Ld. CIT(DR) had no objection to this date. However, it is made clear that if the department still seeks time, at that time heavy costs will be put on the department and these appeals shall be decided on the basis of material held on record." 3.6. Under these circumstances, case was adjourned for 18th October, 2016, for producing requisite records and for making final arguments. On 18.10.2016, Ld. CIT-DR again made an adjournment application in a highly casual manner which was turned down as mentioned above and therefore, he was directed to argue the matter and was also directed to instruct the AO to remain present during the course of hearing. Under these circumstances, on 19.10.2016, AO appeared along with Ld. CIT-DR and tendered his apologies for not being able to provide the records as was directed by the Bench on earlier occasions. Under these cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case the assessment order dated 19.03.2004 passed by the Additional Commissioner of Income Tax under section 143(3) is had in law, illegal and without jurisdiction and/or in excess of jurisdiction. on the grounds amongst others, that he failed to establish that he possessed legal and valid jurisdiction under the Act to pass the assessment order and consequently the Hon'ble Tribunal he pleased to quash the said order. 2. The Additional Commissioner of Income Tax lacked jurisdiction to pass the Order of Assessment u/s 143(3) dated 19.03.2004 and to exercise the powers of performing the functions of an Assessing Off icer, without establishing that he possess such jurisdiction conferred on him under section 120(4)(b) of the Act. Accordingly in the absence of an order u/s 120(4)(b) conferring jurisdiction on the Additional Commissioner of Income Tax the assessment order dated 19.03.2004 passed by him needs to be quashed. 3. The proceedings having been initiated by issue of a Notice u/s 143(2) on 30.09.2002 by the Asst. Commissioner of Income Tax, in the absence of an Order transferring jurisdiction u/s 127 to the Addi t ional Commissioner of Income Tax, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the Tribunal is a final fact finding body. Requisite documents required for establishing legal authority of the Assessing Officer who had passed the assessment order are expected to be available in the assessment records. Thus, the legal issue raised by the assessee falls in the category of cases which can be decided on the basis of material held on record. 3.13. Further, it is noted by us that the aforesaid grounds are purely legal grounds and do not require any investigation of fresh facts and can be decided on the basis of records held on record. It has been held by the Hon'ble Supreme Court in the case of National Thermal Power Corporation 229 ITR 383 as well as in the other judgments as have been relied upon by the Ld. Counsel in its petition that assessee should be permitted to raise legal grounds at any stage, if they go to the root of the matter. 3.14. Revenue's argument to reject the additional grounds due to acquiescence and participation of the assessee in assessment proceedings: It was contended by the Ld. CIT-DR that during the course of assessment proceedings, assessee had made participation in the proceedings. Therefore, assessee cannot be allowed to chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se before us, a challenge has been made about the legal competence of the Additional Commissioner of Income tax and his jurisdiction to exercise the powers and perform the functions of the Assessing Officer of the assessee and to carry out the assessment proceedings and frame the assessment order in accordance with the provisions of the Income tax Act, 1961. Thus, reliance upon the provisions contained in Section 124 of the Act would be of no help to the Revenue as the assessee has not challenged either territorial jurisdiction or irregular exercise of jurisdiction by the Additional Commissioner of Income Tax but challenge was made to the authority and legal competence itself of the Additional Commissioner of Income tax to pass the impugned assessment order upon the assessee. Similar view has been taken by the Delhi Bench of ITAT in the case of Mega Corporation Ltd Vs. Additional CIT 155 ITD 1019 (Delhi) following the judgment of Hon'ble Delhi High Court in the case of Valvolines Cummins Ltd, supra. 3.16. In view of the facts and circumstances, of this case and the judgments of Hon'ble Supreme Court and Hon'ble Bombay High Court relied upon by the Ld. Counsel in its petition as me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 351(Del. ITAT) 2. Bindal Apparels Ltd. ACIT 104 TTJ 950(Del) 3. City Garden vs. ITO (21 taxmann.com 373 (Jodhpur ITAT) 4. Microfin Securities (P) Ltd. vs. Addl. CIT 3 SOT 302 (Luk.) 5. Prachi Leathers Ltd. 26L/Luk/2010 in ITA No.744/Luk/2004 order dat. 29.03.2010 6. Harvinder Singh Jaggi vs. ACIT 67 Taxmann.com 109(Del. ITAT) 7. Dr. Nalini Mahajan vs. DIT (Inv.) 257 ITR 123(Del. HC) 8. Ghanshyam K. Khabrani vs. ACIT 346 ITR 443(Bom. HC) 9. CIT vs. SPL's Siddhartha Ltd. 345 ITR 223 (Del. HC) 3.18. Per contra, Ld. CIT-DR, with the assistance of Ld. AO, vehemently opposed the submissions of the Ld. Senior Counsel and argued that all the Additional Commissioners have concurrent jurisdiction upon all the assesses falling in their respective ranges and therefore, Additional Commissioner was well within his competence to pass the impugned assessment order. It was further submitted that as per section 2(28C), Joint Commissioner includes Additional Commissioners also. It was further submitted that section 2(7A) was amended retrospectively and the word 'Additional Commissioner' was also inserted along with word 'Joint Commissioner' by Finance Act, 2007, with retros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 732(E) dated 31.7.2001 of Central Board of Direct Taxes and consequential Notification dated 7.8.2001 of CIT. MC-II, Mumbai, jurisdiction over your case with effect from 1.8.2001 vests with the undersigned. All IT./W.T. and Interest tax Returns and necessary correspondence on that account are therefore required to be filed with the undersigned. All payments towards Income-tax (by way of Advance tax, Regular tax or S.A. tax), Interest tax, Wealth tax and payment u/s. 115-0 of the I.T. Act are also to be made w.e.f. 1.8.2001 to the credit of the ACIT Circle 2(3), Mumbai. 2. Similarly, jurisdiction over the Managing Director, Director, Manager, and Secretary of your company also vests with the undersigned vide Notifications quoted supra. Consequently, all the returns of the above persons and follow up correspondences on that account are to be made with the undersigned. All payments towards Income-tax and Wealth-tax w.e.f 01.08.2001 of the above persons are also to be made to the credit of ACIT Cir.2(3) Mumbai. This may be carefully noted. Your's Faithfully Sd/- (Jagadish Prasad Jangid) ACIT Cir. 2(3), Mumbai. 3.21. Thus, from the above, it is clear that initially the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and not by the former. Thus, the jurisdiction can be exercised by only one Assessing Officer at any given point of time who has been duly assigned the jurisdiction by the competent authority. The assignment of jurisdiction to an officer and its transfer from one officer to the other can be made only through the prescribed process of law. Section 127 of the Act contains provisions regarding process to be followed by the Revenue Officers and their powers for transfer of cases from one Assessing Officer to the other. Section 127(1) interalia provides and mandates that the Commissioner may after recording his reasons for doing so, transfer any case from one Assessing Officer subordinate to him to any other Assessing Officer (whether with or without concurrent jurisdiction) also subordinate to him. Thus, mandatory requirement of the law in this regard is that an order in writing must be passed by the jurisdictional Commissioner of Income tax for effecting transfer of assessment proceedings from one Assessing Officer to the other. Law in this regard was explained in detail by Hon'ble Delhi High Court in the case of Valvolines Cummins, supra. Similar view was taken by the Delhi bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise the power by any one of those authorities, that exercise must be terminated by that authority only. It is not that one authority can start exercising a power and the other authority having concurrent jurisdiction can conclude the exercise of that power. This perhaps may be permissible in a situation where both the authorities jointly exercise power but it certainly is not permissible where both the authorities concurrently exercise power. One example that immediately comes to the mind is that of grant of anticipatory bail. Both the Sessions Judge and the High Court have concurrent power. It is not as if a part of that power can be exercised by the High Court and the balance power can be exercised by the Sessions Judge. If the High Court is seized of an application for anticipatory bail it must deal with it and similarly if the Sessions Judge is seized of an anticipatory bail, he must deal with it. There can be no joint exercise of power both by the High Court as well as by the Sessions Judge in respect of the same application for anticipatory bail. 30. In the facts of the present case, since the Additional Commissioner had exercised the power of an Assessing Officer, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur was illegal and void ab initio for want of jurisdiction. Consequently, the assessment order is quashed." 9.2 Consequently on this count also, the assessment made on 29.12.2008 by the Additional Commissioner is illegal and bad in law for want of jurisdiction. 10. for the reasons aforesaid we hold that the order of assessment dated 29.12.2008 was without jurisdiction and therefore is quashed as such. In result, ground Nos. 1 and 2 are allowed." 3.23. In the case before us, the facts are identical. It is noted that Ld. CIT-DR as well as the Assessing Officer (present incumbent) who was personally present during the course of hearing before us, jointly stated that no such order (as prescribed under section 127(1) required to be passed by the jurisdictional Commissioner of Income tax) is available in the records. Thus, it is clear that there was no valid transfer of jurisdiction to the Additional Commissioner of Income Tax who had passed the impugned assessment order. Thus, impugned assessment order had been passed without assuming jurisdiction as per law. 3.24. Next issue raised by the Ld. Senior Counsel was that the Additional Commissioner who had passed the impugned assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the purpose of acting as Assessing Officer, 'Joint Commissioner' and 'Additional Commissioner' means one and the same, then there was no need to come out with an amendment made by Finance Act, 2007, wherein the word 'Additional Commissioner' was also inserted in the definition of 'Assessing Officer' as contained in section 2(7A). Thus, it is clear as per the plain reading of the statute that when the assessment order was passed, the 'Additional Commissioner' was not authorized to act as Assessing Officer. 3.26. In addition to the above, it further noted by us that only that 'Joint Commissioner' was authorized to act as an Assessing Officer who was directed under clause (b) of subsection 4 of section 120 to exercise or perform all or any of the powers and functions of an Assessing Officer as defined u/s 2(7A) of the Act. Now, if we refer to section 120, its perusal makes further clear that only CBDT can empower the Chief Commissioners or Commissioners for issuance of orders to the effect that powers and functions of an Assessing Officer for a particular assessee or classes of assessee shall be exercised by a 'Joint Commissioner'. Despite numerous directions, the Revenue was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of cases, in respect of which such Joint Commissioners of Income tax are authorised by the Commissioner of Income tax, vide Government of India, Central Board of Direct Taxes notification number S.O.732(E) dated 31.07.2001, S.O.880(E) dated 14.09.2001, S.O.881(E) dated 14.09.2001, S.O. 882(E) dated 14.09.2001 and S.O. 883(E) dated 14.09.2001 published in the Gazette of India, Part II, Section 3, sub-section (ii), Extraordinary. (emphasis supplied) 3.29. Perusal of the aforesaid notification reveals that only those Joint Commissioners shall exercise the powers and functions of the Assessing Officers who have been authorized by the concerned Commissioners of Income tax in pursuance to the relevant notification conferring requisite powers to the concerned Commissioners. 3.30. Similarly notification No.228/2001, supra authorize the Commissioners of Income tax to issue orders for authorizing in turn, the Joint Commissioner of Income tax who are subordinate to them for exercising of the powers and performance of the functions of the Assessing Officers. It also, inter-alia, authorizes the Joint Commissioners who were so authorized by the Commissioners, to issue orders in writing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many judgments by various courts. 3.32. Identical issue came up for consideration before Delhi Bench of Income Tax Appellate Tribunal in the case of Mega Corporation, supra. The bench discussed entire law available on this issue and held that an 'Additional Commissioner of Income Tax' cannot ipso facto exercise the powers or perform the function of an Assessing Officer under the Act. He can perform the functions and exercise the powers of an Assessing Officer only if he is specifically directed under section 120(4)(b) of the Act to do so. Relevant part of the observations of the bench is reproduced hereunder for the sake of ready reference:- "........... We have considered the arguments advanced by the parties and perused the order of the learned CIT(A), comments of the Assessing Officer and material placed on record. The controversy raised in this appeal relates to the validity of order of assessment dated 29.12.2008 passed by Additional CIT, Range 6, New Delhi. According to the appellant/assessee, it is incumbent under the scheme of statute to vest the Additional CIT u/s 120(4)(b) of the Act to exercise or perform all or any of the powers and functions of Assessing Officer un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be specified therein,- (b) empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made there under to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or a Joint Director, by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply." 5.3 It will be seen that the said provision provides that Board may by general or special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise or perform all or any of the powers and functions concerned on or assigned to an Assessing Officer; meaning thereby that the Addl. CIT can function or can exercise the powers and perform the functions of an Assessing Officer if he is empowered by the CBDT as required under clause (b) of sub-section (4) of section 120. ...... 18.1 So far as the issue before us in the present appeal is concerned, it is now clear from the provisions as discussed hereinbefore that the Additional CIT could act and exercise the powers of an AO only in consequence upon delegation of such authority by the Board, Chief Commissioner of Income-tax or Commissioner of Income-tax as envisaged in the provisions of section 120(4)(b) of the Act. However, the power given to the Chief Commissioner of Income-tax or Commissioner 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 Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a specific order issued in pursuance to Section 120(4)(b) specifically authorizing Joint Commissioner of Income Tax to exercise the powers and perform the function as conferred on or assigned to an Assessing Officer by or under the Act or a notification under section 120 of the Act, he is not competent to act as an Assessing Officer and pass an assessment order. 3.35. Similar view has been taken by Lucknow Bench of ITAT in the case of Microfin Security Pvt. Ltd vs. Additional CIT 94 TTJ 767 wherein it was held that in absence of any allocation being made in favour of Additional Commissioner to make an assessment, he cannot assume for himself such an authority so as to pass an assessment order. 3.36. Similar view has been taken recently in another judgment by the Delhi bench of the ITAT in the case of Harvinder Singh Jaggi Vs. ACIT 157 ITD 869 (Delhi). 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 ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said assessee raised an issue that requisite sanction prescribed u/s 151 for reopening of an assessment was required to be obtained by the AO from Joint Commissioner of Income tax whereas the same was granted by Commissioner of Income tax and therefore the same was nullity in the eyes of law. Revenue took a stand that sanction was granted by an officer superior in rank and therefore, no prejudice was caused to the assessee. But Hon'ble High Court did not agree with the contention of the Revenue and observed that:- "........The expression "Joint Commissioner" is defined in section 2(28C) to mean a person appointed to be a Joint Commissioner 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 exer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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