TMI Blog2019 (12) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction in his favour. Assessment framed under section 143(3) quashed. - ITA No. 3081/Mum/2009, ITA No. 3082/Mum/2009, ITA No. 3037/Mum/2009, ITA No. 3038/Mum/2009, ITA No. 2056/Mum/2012, ITA No. 2057/Mum/2012 - - - Dated:- 4-9-2019 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM For the Appellant : Shri Nitesh Joshi, AR For the Respondent : Shri R Manjunatha Swamy, CIT DR PER BENCH: These Cross appeals are arising out of the order of Commissioner of Income Tax (Appeals)-XXX, 6, Mumbai in Appeal Nos. CIT(A)-XXX/IT-37,39/Rg.2(3)/08-09, CIT(A)-6/IT-22,23/2010-11 dated 27.02.2009, 20.01.2012. The Assessments were framed by the Addl. Commissioner of Income Tax, Range-2(1), Mumbai (in short ACIT/ AO) for AYs 2004-05, 2005-06 vide dated 29.12.2006, 31.12.2007 under section 143(3) of the Income-tax Act, 1961 (hereinafter the Act ). The penalties were levied by the DCIT, circle 2(3) under section 271(1)(c) of the Act vide even dated 24.03.2010 for AYs 2004-05 2005-06. In ITAs No. 3081, 3082,3037 3038/Mum/2009 2. At the outset, the learned Counsel for the assessee stated that the facts regarding additional gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order in this case should be quashed. 3. The learned Counsel for the assessee stated that these additional grounds of appeal are raised in these two appeals of assessee and relates to the cross appeals also being jurisdictional issue. The learned Counsel for the assessee stated that he will narrated the facts for AY 2005-06 in assessee s appeal in ITA No. 3082/Mum/2009 and specifically referred to the additional grounds raised i.e. grounds No. 2, 3 and 4. He stated that the above additional grounds raised by assessee company is purely legal grounds and challenging the validity of the assessment order passed by the Addl. CIT, goes to the very root of the matter and deal with the jurisdiction and authority of the Addl. CIT to pass the assessment order. He stated that these additional grounds do not require any investigation as to bring new / fresh facts and can be decided on the basis of records available in the assessment proceedings. He placed reliance on the following precedents for admission of the additional grounds: - Jute Corporation of India Ltd. v. CIT (187 ITR 688 (SC) National Thermal Power Corpn. Ltd. V. CIT (229 ITR 383) (Bom High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Departmental Representative fairly conceded that there were no such orders issued and he is unable to answer this. 8. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that challenging the very jurisdiction of the AO for framing of assessment is purely a jurisdictional issue which is raised by assessee vide letter dated 20.01.2017 and 27.01.2017. The facts of the case are that the assessee company inter alia is engaged in the business of generation purchase, transmission and distribution of electricity. For the assessment year under consideration i.e. 2005-06, the assessee company filed its return of income on 31.10.2005 and subsequently revised its return of income on 31.03.2006. The assessee s company case was selected for scrutiny for the relevant assessment year and ACIT, Circle 2(1), Mumbai issue notice under section 143(2) of the Act dated 21.07.2006. Subsequently, the Addl. CIT Range 2(1), Mumbai issue notice under section 143(2) of the Act dated 05.07.2007. the relevant notices are enclosed in assessee s paper book at page 1 and 2 respectively and the same is drawn our attention. Thereafter, the Addl. CIT passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decisions of Co-ordinate Benches of this ITAT in the group concern of assessee s cases as noted above. We, hereby referred to the case law of Tata Communications Ltd., wherein this issue had been dealt at length by the co-ordinate bench of this Tribunal for AY 2002-03 in the case of Tata Communications Ltd. (formerly Videsh Sanchar Nigal Ltd.) in ITAs No. 6981 7071/Mum/2005 and ors. dated 30.06.2017, wherein it is held as under: - 13. We have carefully and patiently considered elaborate submissions made by bath the parties orally as well as in writing. We have also applied our mind to the decisions cited at the Bar. Specific issue raised before us which merits consideration is, whether the Addl CIT, Range-1(3), had the competence andjurisdiction to pass the assessment order in case of the assessee. As far as the relevant facts are concerned, there is no dispute that the assessee was under the assessment jurisdiction of Dy. CIT-1(3). In fact, the DCIT, being the Assessing Officer had initiated assessment proceedings in case of the assessee for the impugned assessment year by issuing notice under section 143(2) on 15th Oct 2003. Before that, he has also processed the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. It is relevant to observe, the provisions of section 2(7A) underwent a change by virtue of amendment brought by Finance Act, 2007. As per the said amendment in the second limb of section 2(74) along with the JCIT and JDIT, Addl. CIT /Addl. DIT were also to be treated as an Assessing Officer if they were directed to act as an Assessing Officer in terms of section. 120(4)(b). This amendment brought to section 2(7A) was with retrospective effect from 1st June 1994. Corresponding to the amendment made to section 2(7A), the Finance Act, 2007, amended the provisions of section 120(4)(b), providing that the Board in writing can empower the CCIT/CIT to issue orders directing an Addl. CIT/ADIT to act as an Assessing Officer in respect of any specified area or persons or classes of persons or classes of income or cases of classes of cases which earlier would only be vested with JCIT or JDIT. This amendment to section 120(4)(b) brought by Finance Act, 2007 was also with retrospective effect from 1st June 1994. Thus, as could be seen, for assigning the work of an Assessing Officer to the Addl. CIT, the Board has to empower the concerned CCIT/CIT to issue order in writing in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 120 of the Act. A conjoint reading of Section 2(7A) an Section 120 would make it clear, as far as ACIT, ADIT, DCIT, ADIT; DDIT and ITO are concerned, they have to be vested with the power of Assessing Officer under section 120(1) or (2), whereas, AddI. CIT, Addl. DIT, KIT, MIT can be vested with the power of Assessing Officer under Section 120(4)(b). In a notification issued under section 120(1) and 120(2), Addl. CIT cannot be vested with power to act as an Assessing Officer. Therefore, notification no.228 of 2001 dated 31 July 2001, cannot be said to be vesting power of Assessing Officer with the Addl. CIT. Similar is the situation with notification doted 1st August 2001, issued by the CIT, Mumbai, as it is a notification issued under section 120(1) and 120(2) and not under sub-section (4)(b). The third notification dated 8th August 2001, has been issued by the Addl. CIT, Range-.1(3), Mumbai, vesting jurisdiction upon himself to act as an Assessing Officer. Certainly, this notification is not in conformity with the provisions contained under section 120(4)(b), inasmuch as, this notification has been issued under section 120(1) and 120(2) and not u/s.(4)(b) of section 120. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validly authorize or empower the Addl. CIT, Range-1(3) to act as an Assessing Officer in the present case. In case of Mega Corporation Ltd. vs. ACIT, [2015] 155 ITD 1019, the Tribunal while deciding identical issue of exercise of powers and functions of Assessing Officer by Addl. CIT dealt with the aforesaid notifications relied upon by the learned Departmental Representative and following the decision of the Hon'ble Delhi High Court in Valvoline Cummins v/s DCIT, [2008] 307 FUR 103 (Del) held that without a notification under section 120(4)(b) authorizing the Addl. CIT to exercise the powers and functions of the Assessing Officer, assessment order passed by the Addl. CIT is without jurisdiction, hence, invalid. Moreover, it was held that once a proceeding has been initiated by an officer having valid jurisdiction, without any order of transfer under section 127 of the Act, the Addl CIT cannot be vested with power to function as Assessing Officer. The Tribunal negated the contention of the Department regarding exercise of concurrent jurisdiction by both the officers. It was held by the Bench that there is a distinction between concurrent exercise of power and joint exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment order, if so challenged by an assessee at any stage. 3.12. We have examined this issue. it is well accepted position 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 aformesaid 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 ' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere acquiescence in the exercise of powers by a person who does not have jurisdiction to exercise that power cannot work as an estoppel against him. 3.15. It is further noted by us that in the case 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 lTD 1019 (Delhi) following the judgment of Hon'ble Delhi High Court in the case of Valvo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner could have exercised the power of an Assessing Officer only if they were so authorized specifically by their jurisdictional Commissioner. In support of his proposition, he relied upon following judgments: Mega Corporation v: Add!; CIT (62 taxmann.com 351 (Del. ITAT) Bindal Apparels Ltd. ACIT 104 TTJ 950(Del) City Garden vs. ITO (21 taxmann.com 373 (Jodhpur ITAT) Micro fin Securities (P) Ltd. vs Add!. CIT i SOT 302 (Luk.) Prachi Leathers Ltd. 26L/Luk/201 0 in ITA No. 744/Luk/2004 order dat. 29.03.2010 1-farvinder Singh Jaggi vs. ACIT 67 Taxmann.com 109(DeL ITAT) Dr. Nalini Mahafan vs. OfT (Inv.) 257 ITR 123(Del. HC) Ghansh yam K. Khabrani vs. ACIT 346 IT!? 443(Bom. HC) 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ACIT Cir-2(3), Mum bal, dated 5th September 2091, intimating the assessee about change in jurisdiction and Claiming that jurisdictional was with the said officer. The relevant part of the said notice is reproduced hereunder: Sub: Change in jurisdiction-Intimation regarding In terms of Notification No. SO No. 732(E) dated 31.7.2001 of Central Board of Direct Taxes and consequential Notification dated 7.8.2001 of CIT. MC-11, 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 7(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers can be assigned the jurisdiction by the higher authority. But, exercise of the jurisdiction between both the officers shall always be mutually exclusive to each other. If the jurisdiction has been assigned to one of the officers, it shall not be exercised by the other, and lithe jurisdiction is taken away from the former officer and assigned to the latter, then it shall be exercised by the latter only and. hot 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)inter-alia 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne superior officer and the other part will be dealt with by one subordinate officer. ... ............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 once a decision is taken to 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur to .the Addl. CIT, Range-6,Kanpur and therefore, the assessment framed by the Addl CIT, Range-,Kanpur irrespective of the fact as to whether he was authorized to perform the functions of an AO or not, is illegal and void ab intio for want of jurisdiction. Consequently, we are of the opinion that the assessment order in the present case dated 31.3.2003 passed by the Addl. CIT, Range (6), Kanpur 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 al/owed. 3.23. In the case before us, the facts are 'identical. it is noted that Ld. CIT-op 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 Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently for the purposes of performing the role as an Assessing Officer, despite the fact that for all the other purposes 'Joint Commissioner' meant Additional Commissioner as well., as per section 2(25C). It is clear from the facts that by way of subsequent amendment by Finance Ad, 2007, words 'Additional Commissioner' have also been inserted along with words 'Joint commissioner', in section 2(7A) which defines the term for 'Assessment Officer' In case, the legislature would have intended and meant that 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. 36 In addition to the above, it further noted by us that only that Joint Commissioner' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assigning jurisdiction to various Commissioners and it is thus of no use to Revenue as far as issue before us is concerned. So for as Notification No.267/2001 is concerned, it reads as follows:- In exercise of the powers conferred by clause(b) of subsection (4) of section 120 of the income -tax Act,1'9'61(43 of 1961), the Central Board of Direct Taxes, hereby directs that the Joint Commissioners of Income Tax or the Joint Directors of Income tax, shall exercise the. powers and functions of the Assessing Officers, in respect of territorial area or persons or classes of persons or incomes or classes of income or cases, or classes 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) dared 31.072001, S.O.880(E) dated 14.09.2001 S.0.881(E) dated 14.09.2001, S.O.882(E) 14.09.2001 and S.0. 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 Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdictional Commissioner to do so. It is noted that any such order would not be available with the Revenue, because even in the notifications discussed above only 'Joint Commissioners' were authorized to perform the role of the Assessing Officers. However, the Revenue is not able to bring before us any order of the Commissioner authorizing even the 1 Joint Commissioner' to perform powers and' functions ' of Assessing Officer of the assessee. As per the discussion made by us in 'detail in the earlier part of our order, it is dear that no such order is available in the assessment record or in any other record. Legal consequences of the same have been elaborately analysed m many judgments by various courts. 3.32. Identical issue came up for consideration berore 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed under section 120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under the Act. under the Act In other. Words, an Additional Commissioner can only be directed u/s 120(4)(b) of the Act to Assistant Commissioner or Deputy Commissioner or Assistant Director or deputy Director or Income Tax Officer under the Act. This interpretation also 'derives strength from the provisions contained in section 120(4)(b) of the Act which reads as under: 120.Jurisdiction of income-tax authorities (4) Without prejudice to the provisions of sub-sections (1) and (2) , the Board may, by general or special order, and subject to such conditions, restrictions or limitations as 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 p rsohs or incomes or classes of income or cases or classes of cases, shall be exercised or performed by an Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Delhi Bench in the of Mega Corporations Ltd, supra and relevant portion of the order as discussed therein is reproduced below: - 16.2 From the contents of. the aforesaid provisions, it isq uite clear that so far as Addl. Commissioner is concerned firstly he has been included in the definition of Assessing Officer given under section 2(7A) of the Act with effect from 1.6.1994 as a result of retrospective amendment made by the Finance Act, 2007 but at the same time, it/s also clear that the Add/. Commissioner will be Assessing Officer as envisaged in section 2(7A) so amended only if he is directed under clause (b)of cub-section (4) of section 120 to exercise 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 power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Additional Director (Investigation), is fully applicable to the present 18.3 In view of the aforesaid facts, circumstances and the discussion and following the law laid down by the Hon'ble De/hi High Court in the case of Dr. Na/ii Mahajan (supra), first of all we are of the opinion that the Addl. CIT, Range-6, Kanpur having not been empowered to exercise or perform the powers or functions of an Assessing Officer, the assessment framed by him was illegal and void ab initio. ..... 3.34. It is further noted that similar view has been expressed by Jodhpur Bench of ETA in the case City Garden Vs. ITO 21 taxman.com 373 (Jodhpur) wherein it has been held that in the absence 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 case of Micro fin Security Pvt. Ltd vs. Additional CIT 94 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any legal force. It is well settled that jurisdictional conditions required to be fulfilled by the assessing officer must be performed strictly in the manner as have been as prescribed and if it has not been done in the manner under the law. then it becomes nullity in the eyes Hon'ble Supreme Court in the case of CIT Vs. M. H. Ghaswala observed that it is a normal rule of construction that when a statue vests certain powers in an authority to be exercised in a particular manner, then that authority is bound to exercise it only in the manner provided in the statue only. 3.39 Hon ble Bombay High court dealt with a similar situation in the case of Ghansham K.Khabrani Vs. ACIT 346 ITR 443 wherein the 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 mat sanction was granted by an officer superior in rank and therefore, no prejudice was caused to the assessee But Hon'bl High. Court did not agree with the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the matter back to the file of the learned Commissioner (Appeals) for adjudicating the jurisdictional issue. We do not find any valid reason to accept the contention of the learned Departmental Representative. As stated earlier by us, exercise of jurisdiction by the Addl. CIT has to be examined on the basis of notification / orders passed under section 120(4)(b), inasmuch as, n 127(1) of the Act. In this context, learned Departmental representative has relied upon certain notifications to justify the validity of the assessment order passed by the Addl. CIT. As far as existence of any order under section 127(1) is concerned, the learned Dlearned Departmental Representative has fairly submitted that no such order exist on record. At least, nothing was brought to our notice in spite of specific query bang raised by the Bench. Therefore, when the issues are to be decided on the basis of facts already available on record and keeping in view the relevant notifications placed on record as well as the decisions cited, there is no necessity of restoring the matter back to the file o the learned Commissioner (Appeals). As far as the contention of the learned Departmental Representative re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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