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TMI Blog2019 (1) TMI 1686X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of this case and in law, the ld. CIT(A) erred in quashing the complete assessment passed by the Addl. CIT as the A.O considering it to be extra-jurisdictional and hence not valid. 2. Whether on the facts and circumstances of this case and in law, the ld. CIT(A) erred in disregarding the order u/s 120(4) passed by the Pr. CIT assigning the case to the Addl. CIT for assessment due to erroneous interpretation of the order restructuring passed by the CBDT vide S.O. 2752(E) dt. 22.10.2014. 3. That the assessee craves leave to add, amend or modify any or all grounds of appeal at or before the time of hearing of the appeal." 4. The brief facts qua the issue are that assessee company filed its return of Income disclosing loss to the tune of Rs.(-)8,47,55,799/-. During assessment proceedings assessee filed revised computation of income reducing its loss to the tune ofRs.(-) 1,93,15,404/-. Subsequently, this loss was again scaled down to Rs.(- ) 1,51,66,719/-. Assessee is running a mall and earning income mostly from rent. Initially rental income was offered as business income. However, in the revised computation, rental income was offered for taxation under the head in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances Range Heads could have performed the function of the A.O., in absence of valid order u/s 120(4)(b). In support of its proposition assessee had relied on the Delhi, ITAT's decision in the case of Mega Corporation Ltd. -vs- Addl.CIT, 62 Taxman.com 351. 7. On the issue of jurisdiction, report of the A.O. was called. In report dated 17.11.2Ol5, Jt.CIT, Range-7 submitted that notice u/s 143(2) was issued by DCIT, Circle-7, but the case was subsequently assigned u/s 120(4) to Jt./Addl. CIT, Range-7, by CIT-3 vide order no. 2/2014-15 dated 29.05.2014. In a subsequent report dated 15.01.2016, Jt. CIT, Range-7 submitted as under: a) Pre restructuring jurisdiction vested with Addl.CIT, Range-7. Hence post restructuring jurisdiction was also with Addl. CIT, Range-7. b) Restructuring was an administrative exercise. There were changes only in the nomenclature of the IT authorities. Hence order u/s 120(4) passed prior to 14.11.2014 was valid with all force in post restructuring period as well. c) Exercise of restructuring has not affected the power of the Commissioner with regard to jurisdiction. d) Post 15.11.2014 no supporting order for assigning case from one A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) Assessee had complied with the directions of Addl. CIT, Range-7 in good faith, not knowing at that time whether necessary powers were vested with Addl.CIT, Range-7, regarding jurisdiction over the case. d) Notification number 64 dated 30.11.2014 issued by CBDT is in force since 15.11.2014. As per this notification, after 14.11.2014 an Addl. CIT, Range was permitted to perform A.O.s function only if Pr. CCIT or Pr. CIT authorized him to perform such functions. Permission u/s 120(4) having received on 15.11.2014, Pr. CCIT, WB & Sikkim or Pr. CIT-3, Kolkata should have passed a new order authorizing Addl. CIT, Range-7 to perform such functions. e) With effect from 15.11 .2074 jurisdiction of A.O.s was determined as per the new jurisdiction order. f) Order u/s 120(4) was passed by CBDT on 13.11.2014 in supersession of earlier order. g) Pr. CCIT, WB & Sikkim did not pass any order u/s 120(4)(b) enabling Pr, CIT to empower Range Heads to function as A.O. 10. After getting the reply from the assessee during the appellate proceedings, the ld CIT(A), in order to decide the jurisdiction of the officer, who has passed the assessment order has referred the notification date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rformance of the functions by the Additional Commissioners of Income-tax or Joint Commissioners of Income-tax, who are subordinate to them, in respect of such cases or classes of cases specified in the corresponding entries in column (6) of the said Schedule-I, of such persons or classes of persons specified in the corresponding entries in column (5) of the said Schedule-I, in such territorial areas specified in the corresponding entries in column (4) of the said Schedule-I, in respect of all incomes or classes of income thereof; (d) authorizes the Principal Commissioners of Income-tax or Commissioners of Income-tax specified in column (2) of the said Schedule-II to issue orders in writing for exercise of the powers and performance of the functions by the Additional Commissioners of Income-tax or Joint Commissioners of Income-tax, who are subordinate to them, in respect of any cases or classes of cases, of any persons or classes of persons in respect of all incomes or classes of income, in such territorial areas specified in the corresponding entries in column (4) of the said Schedule-II; (e) authorizes the Additional Commissioners of Income-tax or Joint Commissioners of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with effect from 15th day of November, 2014. 11. Having gone through the notification, the ld CIT(A) noted thatas per the above mentioned notification, S.O. 732(E) dated 31.07.2001 was superseded. Till 14.11.2014, the I.T. Authorities exercised jurisdiction as per S.O. 732(E). However, on restructuring, with effect from 15.11.2014, income tax authorities [assessment charges] exercised jurisdiction as per S.O. 2752(E).In sub clause (b) & (c) of notification dated 22.10.2014, Pr. CIT or CIT were authorized to pass orders in writing for the exercise of the powers and functions by the Addl.CIT or Jt. CIT, who were subordinate to them. Consequently Pr. CIT passed suitable orders but Addl. CIT / Jt. CIT who were supervising a Range, were not given the powers of A.O. Post of Special Ranges were created and only the Addl. CIT / Jt. CIT who was holding the post of Special Range was authorized to act as A.O., in respect of cases assigned to them through order u/s 127 in future. As pointed out by the AR, A.O. is defined in section 2(7A) of the Act and it says that ACIT / DCIT, ADIT / DDIT or the ITO would be considered as A.O. who are vested with the relevant jurisdiction by order u/s 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unctions on the basis of jurisdiction assigned by any order passed under the said Act on the date of publication of this notification, till such jurisdiction is revoked; (b) directs that the Director General of Income-tax or the Chief Commissioner of Income-tax specified in column (2) of the said Schedules or the Principal Commissioner/Commissioner of Income-tax specified in column (4) of the said Schedules or Joint Commissioners of Income-tax subordinate to them, shall exercise powers and perform the functions as stipulated in the said Act in respect of such cases or classes of cases or such persons or classes of persons, assigned to Assessing Officers subordinate to them, under section 127 of the said Act, from the date of publication of this notification; (c) authorises the Director General of Income-tax or the Chief Commissioner of Income-tax specified in the said Schedules, or the Principal Commissioner/Commissioner of Income-tax specified in column (4) of the said Schedules, to issue orders in writing, vesting jurisdiction to exercise powers and perform functions of an Assessing Officer as defined under clause (7A) of section 2 of the said Act, to the Deputy Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Ltd. -vs- Addl. CIT, 62 Taxmann.com 351, wherein issue regarding jurisdiction of Addl. CIT was taken up for the first time before the ITAT and Hon'ble ITAT, Delhi admitted the additional ground and held that Additional CIT did not have jurisdiction to perform the powers of A.O. as no valid order u/s 120(4)(b) or u/s 127 as passed. Assessee has also submitted that they were not aware that Addl. CIT, Range-7 no longer could exercise the powers of an A.O after 15.11.2014 and they continued attending the proceedings in good faith. 14. We have heard both the parties and perused the material available on record, we note that the judgment cited by the Jt. CIT, Range in remand report relates to irregular jurisdiction exercised by the A.O. There was dispute regarding the correct A.O. who would exercised jurisdiction over the case. But there was no confusion regarding officer passing the assessment order having the powers to act as an A.O., whereas in assessee's case Addl. CIT, Range-7 was divested of the powers of A.O. with effect from 15.11.2014. Therefore, the order u/s 143(3) passed by Addl. CIT, Range-7 on 27.02.2015 is illegal and not sustainable in law. That being so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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