TMI Blog2020 (3) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... on a specific query of the Bench to the Ld.DR in the course of the hearing on as to whether there was any order/ notification issued under section 127/ 120(4)(b) of the Act, the Ld.DR conceded that there were no such orders issued. In view of the thereof, the ld Counsel of the assessee company argued that as the Addl.CIT did not possess the relevant jurisdiction to act as on AO, the assessment order passed by him under section 143(3) of the Act dated 29.12.2008 is without jurisdiction, illegal, bad in law and hence ought to be quashed. Respectfully, following assessee's own case [ 2019 (4) TMI 510 - ITAT MUMBAI] , [ 2017 (12) TMI 297 - ITAT MUMBAI] and [ 2016 (10) TMI 1228 - ITAT MUMBAI] we allow the additional ground raised by the assessee challenging the validity of the assessment framed by the Addl.CIT and accordingly, quash the assessment framed under section 143(3) of the Act. The cross appeal of the revenue is rendered infructuous as we have already quashed the assessment order passed by the Addl. CIT in the above para. Accordingly, the same is dismissed. Since, we have quashed the assessment order on jurisdictional issue, the other grounds on jurisdictional issue as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(2) on 3.09.2007 by the Asst. Commissioner of Income Tax, in the absence of an Order transferring jurisdiction u/s 127 to the Additional Commissioner of Income Tax, the Order of Assessment datedl9.03.2004 passed by the Additional Commissioner of Income Tax, is without jurisdiction and needs to be quashed. 4. The proceedings having been initiated by the lower authority (viz. Asst. Commissioner of Income Tax), in the absence of an Order transferring jurisdiction u/s 127 to the Additional Commissioner of Income Tax, the Order of Assessment passed by the higher authority (viz. Additional Commissioner of Income Tax) is without jurisdiction and needs to be quashed. 5. As held in Mega Corporation Ltd vs. Addl. CIT ITA No. 102/Del/2014, in a case where the proceedings have been initiated by one officer and the assessment order is passed by the another officer, the assessment order is bad in law and illegal and therefore the impugned assessment order is this case should be quashed. 3. The learned Counsel for the assessee stated that these additional grounds of appeal raised in these two appeals of assessee relate to the cross appeals also being jurisdictional issue. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT, Range 2(3), Mumbai calling upon the assessee to furnish information in connection with the assessment u/s 142(1) of the Act. Finally the assessment was framed by the Add. CIT as stated above. The assessee vide letter dated 20.3.2017 requested to its jurisdictional AO to furnish certain documents including the relevant authorization from the Central Board of Direct Taxes (CBDT) to the CIT and the relevant order passed by the CIT and any other relevant documents. The learned Counsel further stated that the assessee company vide letter dated 20.3.2017 made similar prayers before the Hon ble Tribnal to direct the AO to furnish any notification/circular /order in support of the its case. In view of the above, the learned Counsel for the assessee requested that the assessee company prays and presses for admission of additional grounds of appeal raised by assessee for adjudication. 6. On the other hand, the Ld. CIT-DR, Shri Manjunatha Swamy argued that this ground is raised by assessee almost after 10 years after framing the assessment order and now by raising this jurisdictional issue the assessee company wants to go scot-free without paying any tax which in the interest of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst this assessment assessee filed appeal before CIT(A), who partly allowed the relief to the assessee vide order dated 15.5.2012. Against the order of CIT(A), the assessee as well as the Revenue filed appeals before the Tribunal. 10. We note that as per section 2(7A) of the Act, AO means inter alia an Addl. CIT who is directed u/s.120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on, or assigned to, an AO under the Act. As per Section 120(4)(b) of the Act, the CBDT has to first empower the Commissioner to issue orders and then the said authority has to assign or confer the authority of the AO on the Addl.CIT. In the present case none of such notifications/ orders as required by section 120(4)(b) of the Act have been issued. Further, as per section 127 of the Act when there is a transfer of jurisdiction, then the condition therein has to be fulfilled. In the present case, originally the jurisdiction to make the assessment over the company was with the Asstt.CIT. The assessment order has been passed by the Addl.CIT without any transfer of jurisdiction in his favour. Further, on a specific query of the Bench to the Ld.DR in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeding to decide the, issue, it is necessary to examine certain provisions of the Act. The expression Assessing Officer' has been defined under section 2(7A) of the Act. The aforesaid provision as it existed during the relevant period is extracted hereunder for convenience: Definitions 2. In this Act, unless the context otherwise requires, - ......... .......... (7A) 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 subsection (1) or sub-section (2) of sect/on 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. 14. A plain reading of the aforesaid provision makes it clear that it is in two parts. First limb of the provision says, the Assessing Officer would include ACIT or D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n/2001- 02 dated 08.08.2001; and iv) Notification no.267/2001 dated 17.09.2001 15. At this stage, we propose to deal with each of the aforesaid notification relied upon by the Department to establish the valid exercise of jurisdiction as an Assessing Officer by the Addl. CIT. The first notification being notification no.228 of 2001 dated 31st July 2001, corresponding to notification no. S.O. 732(E) dated 31 July 2001, is a notification issued under sub-section (1) and (2) of section 120 of the Act and obviously is not a notification issued under clause (b) of sub-section (4) of section 120. As observed earlier by us, the Addl. CIT was not included as an Assessing Officer either under section 2(7A) or under section 120(4)(b) earlier. Only by virtue of Finance Act, 2007, the aforesaid provisions were amended by including Addl. CF as an Assessing Officer. However, even after such inclusion of Addl. CIT as Assessing Officer with retrospective effect from 1st April 1994, Section 2(7A) made it clear, Asstt. CIT, DCIT, ADIT, DDIT, ITO, can act as an Assessing Officer if they are vested with relevant jurisdiction by virtue of directions and orders issued under sub-section (1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation dated 17th September 2001, can be said to have conferred the jurisdiction of assessing officer on Addl. CIT. In this context, it is necessary to deal with the argument of the Department that as per the definition of JCIT under section 2(28C), it includes Addl. CIT, therefore, the notification dated 17th September 2001, issued under Section 120(4)(b) also covers the Addl. CIT. We are not convinced with the aforesaid submissions of the Department. Had it been the intention of the legislature to treat the Addl. CIT as JCIT and, in turn, as Assessing Officer under section 2(7A) r/w section 120(4)(b), there was no necessity to amend the provisions of section 2(7A) and 120(4)(b) specifically including the Addl. CIT and Addl. DIT, since JCIT and JDIT were already included as Assessing Officer under both the provisions. This clarifies the intention of legislature in not treating JCIT and Addl. CIT as one. Thus, the Department has failed to bring to our notice any notification issued in conformity with section 120(4)(b) empowering the Add!. CIT, Range-1(3), to act as an Assessing Officer in respect of present assessee. The notifications relied upon by the learned Departmental Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered view that these decisions of the Tribunal have been rendered more or less on identical facts and issues and after considering the very same notifications relied upon by the learned Departmental Representative in the present case and the Tribunal has ultimately concluded that in absence of a valid notification under section 120(4)(b) the Addl. CIT cannot exercise power of an Assessing Officer. In this context, it is necessary to reproduce the observations of the Bench in the case of Tab Sons Ltd. (supra) hereunder:-. 3.11. Admission of Additional Grounds: The assessee has challenged legal competence of the Additional Commissioner of Income Tax to act as an Assessing Officer of the assessee and to pass the impugned assessment order by way of additional grounds. The issue raised by the assessee goes to the root of the matter and seeks to shake the very sustainability of the impugned assessment order in the eyes of law. During the course of hearing, it was shown by the Ld. Senior Counsel of the assessee that law in this regard has been developed recently. Moreover, this fact was not in the knowledge of the assessee that the Additional Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the proceedings carried out by the AO to frame the assessment order. it is well settled law that consent of the assessee cannot confer jurisdiction to an assessing officer who lacked jurisdiction under the law. Similarly, vice versa is also true i.e. absence of consent of the assessee shall not take away jurisdiction from an Assessing Officer who actually possessed a valid jurisdiction in the eyes of law. Thus, legal competence of the officer who passed the assessment order as well as validity of the assessment order must be examined on the basis of factual analysis and provisions of law and not on the basis of conduct of the assessee. This issue is not res-integra. Immediate reference in this regard can be made on the judgment of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Limited Vs. CIT 194 ITR 548 (Bombay). Similar view was taken by Hon'ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 (Gui). Recently Hon'ble Delhi High Court handled a similar situation in the case of Valvoline Cummins Ltd 307 ITR 103 (Del) wherein challenge was made to the jurisdiction of Additional Commissioner of Income Tax who had passed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction of assessment was with the said officer. Subsequently, notice u/s 143(2) was issued by the DCIT dated 01.12.2003. Thereafter a questionnaire was issued by the Additional Commissioner of Income Tax Range-2(3), Mumbai dated 10th February 2004 and finally the Additional Commissioner of Income Tax framed the assessment order. He took us through the various provisions of Income Tax Act to impress upon the point that Additional Commissioner of Income tax was not legally competent to act as Assessing Officer and to pass assessment orders. He referred to provisions of section2(7A) which provide definition of the term 'Assessing Officer'. He also referred to the provisions of section 2(28C) which defines Joint Commissioner of Income Tax. It was argued that in the definition of Assessing Officer earlier only Joint Commissioner was provided and Additional Commissioner was inserted subsequently. It was further submitted that only those Joint Commissioners/Additional Commissioners were competent to pass the assessment order who were authorized to act an Assessment Officer as per clause (b) of sub-section 4 of section 120. It was vehemently argued that the Additional Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious order sheet entries recorded by the bench on earlier dates wherein bench had repeatedly directed and had given opportunity to the department to produce if there Wd5 any order authorizing the Additional Commissioner of Income Tax to pass impugned assessment order, It was further submitted by him that assessee is not challenging territorial jurisdiction of the assessee; but the assessee is challenging legal competence of the officer to pass the impugned Assessment order and it can be done at any stage. Under these circumstances, the restriction provided u/s 124 was not applicable. If the legal competence of the officer is challenged, then it is for the Revenue to establish that the officer was legally authorized to. pass the assessment order. It was lastly argued that case of the assessee was squarely covered in view of various judgment relied upon by the counsel wherein it has been inter alia held that if the law mandates a particular act to be done in a particular manner, then that act should be done by the concerned authorities in that manner alone as has been prescribed under the law, else it shall be deemed that the said act has never been done. He requested for quashing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax became AO of the assessee and passed the impugned assessment order. 3.22. Thus, the first issue raised by the assessee before us is that in this case assessment proceedings were initiated by the Assistant Commissioner of Income Tax but were taken over in the middle of the proceedings by the Additional Commissioner of Income Tax and completed by him without there being any valid transfer of jurisdiction from the Assistant Commissioner of Income Tax to the Additional Commissioner of Income tax, as required under section 127 of the Income Tax Act. In this regard, Ld.CIT-DR was of the view that the Additional Commissioner of Income tax and Assistant Commissioner of Income tax have concurrent jurisdiction over the assessee. In our view, contention of Ld. CIT-DR is not valid as it is not based upon correct appreciation of the law. It appears that Revenue has misunderstood and miss-applied the very concept of concurrent jurisdiction' and has ignored the distinction between the 'concurrent jurisdiction' and Joint jurisdiction'. When we talk about assignment of concurrent jurisdiction' to two officers of different hierarchy, it does not mean char both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct by another AO, the issue involves the interpretation of concurrent jurisdiction which is beyond the scope of this appeal within the restricted directions of the Hon'ble ITAT. He has held that, in my considered Opinion, since both Addl. CIT Range-6 and DCIT Circle-6(1) works as subordinate officer to the same CIT and the CIT having entire territorial jurisdiction, the passing of assessment order by the Addl. CIT after issue of notice u/s 143(2) by the DCIT Circle 6(1) does not affect the taxability of the appellant or appellant is not adversely affected by the order The Hon'ble . Delhi High Court in the above context in the case of Valvoline Cummins Ltd. (supra) has held as under; 28. On the issue of 'concurrent' jurisdiction between the Additional Commissioner and the Deputy Commissioner, learned counsel for the assessee relied upon a decision of the Calcutta High Court in Berger Paints India Ltd. v, Asstt. CIT [2000] 246 ITR 133. The Calcutta High Court had explained the meaning of the expression 'concurrent' to mean two authorities having equal powers to deal with a situation -but the same work cannot be divided between Concurrent jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that this was not permissible in law. 9.1 We therefore hold that applying the above judicial position that assessment has to be completed by the authority who has initiated the proceedings for making assessment and any other authority can take over the proceedings only after a proper order of transfer u/s 127(1) or 12 7(2) of the proceedings. The revenue has not brought any order for transfer of the proceedings from DCIT, Circle- 6(1), New Delhi to the Additional CIT, Range-6, New Delhi and therefore it is quite evident that the Additional CIT, Range-6 took over the assessment proceedings without there being an order u/s 127(1). In the case of Prachi Leathers Pvt. Ltd. (supra), it has been held as under: 19. We are further of the opinion that the notice under section 143(2) of the Act having been issued by the Income-tax Officer, Range 6(2), Kanpur on 16.8.2002, it was Income-tax Officer alone who could frame the assessment subject however to the fact that that the assessment could be framed by any other officer also provided there was an order of transfer of jurisdiction over assessee's case from Income-tax Officer, Range-6(2), Kanpur to that officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 120 or any other provision of this Act, and the 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 f the powers and functions conferred on, 'or assigned to, an Assessing Officer under this Act. Subsequently, the word 'Additional Commissioner' was also added in the said definition by Finance Act, 2007, with retrospective effect from day 01.06.1994. Thus, from the above, it is clear that when the impugned assessment order was passed, definition of the word 'Assessing Officer' did not include 'Additional Commissioner of Income Tax. It is further noted that section 2(28C) defines Joint Commissioner. Section 2(28C) was available on statute since 01.10.1998 and provide as under: 2(28C) Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under sub-section (1) of section 117. On the other. hand, section 2(1C) defines 'Additional Commissioner' as under: Additional Commissioner means a person 35 appointed to be an Additional Commissioner of Income Tax Under subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the aforesaid section and therefore, it was not possible for the Chief Commissioner or the Commissioner to have authorized an Additional Commissioner for exercising powers and functions of an Assessing Officer for a particular assessee or classes of assessee. Even otherwise, no order could be shown to us, whereby any such authority was given to the Joint Commissioner of the Range. Under these circumstances, we find that the Revenue is not able to show any order or notification in favour of the Additional Commissioner authorizing him for performing the powers and functions of the Assessing Officer of the assessee. 3.27. During the course of hearing, Ld. CIT-DR had drawn our attention upon Board's Notification No.267/2001 dated 17-9-2001, Notification No.228/2001 dated 31.7.2001 and Notification No.335/2001 dated 29-10-2001 with a view to argue that the jurisdiction was assigned to all the Officers including 'Additional Commissioner' for exercise of powers as Assessing Officer, and thus the 'Additional Commissioner. of Income Tax' who had passed the impugned assessment order had inherent powers under the law to act as assessing officer of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in this notification to issue the orders in writing for the exercise of the powers and performance of the functions of C the 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 Schedule-I and Schedule -II of such persons or classes of persons specified in the corresponding entries in column(5) of the said Schedules, in such territorial areas specified in the corresponding entries in column (4) of the said Schedules, and in respect all of incomes or classes of income. ..(d) authorises the Joint Commissioner of Income Tax referred to in clause (c) of this notification, to issue orders in witing for the exercise of the powers and performance of functions by the Assessing Officers, who are subordinate to them, in respect of such specified 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 under clause (c) of this notification........... 3.31. Thus, in view of the aforesaid notification it beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Director 4 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 (l)or sub-section (2) of Section 120 or any other provision of this Act, and the [Additional Commissioner or]6 7[Additional Director or]7 5 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 onf or assigned to, an Assessing Officer under this Act; 5.2 A plain reading of the aforesaid provision would show that it is in two parts. The first part provides that Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or Income Tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under section 120(1) or 120(2) or any other provision of this Act. The second part provides that Assessing Officer means the Additional Commissioner or Additional Director Or Joint Commissioner or Joint Director who is under section 120(4)(b) of the Act to exercise or perform all or any of the powers and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, reference 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. 54 The position which emerges thus is that an Additional 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. 3.33. Similar issue has been decided by the Lucknovv bench of ITAT in the case of Prachi Leather Put. Ltd Vs. Additional CIT in ITA No. 26(L)/2010 dated 8.12.2010 relying upon its earlier ITA No.744/2004/Lucknow for assessment year 2001-02 decided this issue on the similar lines after considering and fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 alt 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 delegating authority. He, unless the statute expressly states; cannot sub-delegate his power to any other authority. In any event, if an authority, which had no jurisdiction to issue such an authorization, did so, the same would be liable to be quashed as ultra vires. Thus, unless and until an amendment is carried out, by reason of the redesignation itself, read with the provisions of the General Clauses Act, the Addl. Director does not get any statutory power to issue authorization to issue warrant. Therefore, the Addl. Director (Investigation) cannot be said to have any power to issue any authorization or warrant to Joint Director. Consequently, notification dt. 6th Sep. 1989 is not valid in law to the said extent 18.2 So far as the present case is concerned, though we are concerned w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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. Accordingly, the ground of appeal of the assessee is allowed. 3.37. In the case of Bindal Apparels Ltd vs. ACIT, Delhi Bench of ITAT took a similar view and held that in view of definition of Assessing Officer contained u/s 2(7A), an Additional Commissioner cannot be an authority to exercise and perform all or any of the powers of the functions of the Assessing Officer to make assessment of Income. The Bench analysed the provisions of Sect/on 2(7A) as it existed prior to amendment made by Finance Act, 2007. 3.38. During the course of hearing, it was also submitted by id. CIT-DR to defend the impugned assessment order that in any case the assessment order has been passed by an officer of the rank of Additional Commissioner which is much superior to the rank of Assistant Commissioner and thus no prejudice-can be presumed to have been do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed without authority of law, 16. The ratio laid down in the decision of Tata Sons Ltd (supra) and other decisions relied upon by the Bench therein, clearly applies to the facts of the present case. Therefore, adhering to the, principle of judicial discipline we follow the decisions of the Tribunal referred to the above and hold that in the facts of the present case, the Addl. CIT in the absence of a valid order under section 120(4)(b) as well as section 127(1) of the Act could not have exercised powers of on Assessing Officer to pass the impugned assessment order. Accordingly, the impugned assessment order passed being wholly without jurisdiction is void ab initio, hence, deserves to be annulled] quashed. Accordingly, we do so. At ..... X X X X Extracts X X X X X X X X Extracts X X X X
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