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TMI Blog2020 (11) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... -3, Gauhati by intimation u/s. 143(1) of the Act for earlier as well as this assessment year and subsequent assessment years. According to the Ld. Counsel, for this relevant assessment year, the ITO Ward-1 Shillong issued notice on 13 August 2012 u/s 143(2) of the Act and it was objected to by the assessee before the ITO Shillong that since its principal place of business as envisaged u/s. 124(1) of the Act since is at Gauhati,[i.e, the assessee's territorial jurisdiction] jurisdiction to assess lies with the Income Tax Authorities at Gauhati and not at Shillong, the ITO understanding his mistake transferred the file to Addl. CIT, Range-3, Gauhati, and the AO framed the assessment U/s 143 (3) of the Act without issuing notice u/s. 143(2) of the Act, which omission on the part of AO was without jurisdiction as held by by the Hon'ble Supreme Court in ACIT Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC) and according to Ld AR, the non-issue of legally valid notice u/s. 143(2) is not a curable defect. And when this legal issue was raised before the Ld. CIT(A) he has rejected it on the ground that as per sub-section 3 of section 124 of the Act, the assessee was not entitled to call in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and thereafter, the ITO, Ward-1, Shillong transferred the file to the Addl. CIT, Range-3, Guwahati who passed the order citing section 120(4)(b) of the Act. The Ld. AR brought to our notice that the Ld. CIT(A) has erroneously brushed aside the jurisdictional issue raised by the assessee by simply stating that since the assessee has not objected to the jurisdiction when it received the sec. 143(2) notice within thirty days or completion of assessment whichever is earlier, he dismissed the legal issue raised before him, which action of Ld. CIT(A) cannot be accepted and is arbitrary and illegal, so according to him, since the AO-Shillong did not enjoy jurisdiction in any manner, he could not have issued notice u/s 143(2) of the Act, whereas the AO/Range-3 officer of Income Tax department enjoyed jurisdiction u/s 124 of the Act since the assessee's place of business was under their territorial jurisdiction and therefore since the mandatory notice was issued by an officer who did not enjoy jurisdiction all consequent action is non-est in the eyes of law and so it should be quashed. 4. Per contra, the Ld. DR for the revenue vehemently opposed the legal issue raised by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdiction of the Income Tax Authorities it is pertinent to make a reference to provisions of sections 120, 124, 127 and 129 of the Act which are reproduced herein below: 120. Jurisdiction of income- tax authorities (1) Income- tax authorities shall exercise all or any of the powers and perform all or any of the functions Conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. (2) The directions of the Board under sub- section (1) may authorise any other income- tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income- tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub- sections (1) and (2), the Board or other income- tax authority authorised by it may have regard to any one or more of the following criteria, namely:- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , within the limits of such area, he shall have jurisdiction- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. (2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or where the question is one relating to areas within the jurisdiction of different Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify. (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner,- (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act confers jurisdiction on an AO, by virtue of jurisdiction vested by any direction or order issued by CBDT under sub-section (1) and / or (2) of section 120 of the Act. The AO is vested with the jurisdiction u/s. 124 of the Act, over any area within the limits of such area, he shall have jurisdiction over any person (assessee) carrying on a business or profession and if the place at which he (assessee) carries on his business or profession is situated within the area ear-marked for him (AO); or if that person's (assessee's) business or profession is carried on in more places than one, then if the principal place of his business or profession is situated within the jurisdictional territorial area, the AO gets jurisdiction. Other than the assessee's who are not in Business or Profession, in their cases, the AO will be vested with the jurisdiction if the person (assessee) is residing within the territorial area ear-marked by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120 of the Act speaks about. However, when there is a question to be determined as to whether an AO has jurisdiction to assess any person then it would be deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner or Commissioner, as stipulated therein, to transfer any case from one or more AO subordinate to him. In other words, under Section 127(1) the Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner, as stipulated therein, can transfer the case records of an assessee from one AO to another functioning under his own charge. On the contrary, Section 127(2) empowers the foregoing authorities to transfer of cases from the AOs from his jurisdiction to the AOs who are not functioning under his jurisdiction and therefore who are not subordinate to such authority. In the cases covered u/s 127(2) therefore, if the Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner, of the AO to whom the case of an assessee is proposed to be transferred, agrees for the transfer, then the transfer can made u/s. 127(2)(a) of the Act. In case however there is any disagreement between such stipulated authorities, the matter is required to be referred to the Board which in turn decides the issue of transfer or the Board can then authorize an Income Tax authority by a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r have to be undertaken by the transferred new AO. 8. In the light of the above discussion, when I examine the facts involved in the assessee's case it is noted that as per section 124(1) of the Act since the assessee's place of business is located at Centre Point 1st floor, G. S. Road, Ulubari, Gauhati-781007 the Income Tax Authorities, Range-3 enjoyed the jurisdiction over the assessee's case for the year under consideration i.e. AY 2011-12 and would have enabled the competent income tax authority (depending on the pecuniary jurisdiction vested in them) , Range-3 could have validly issued notice u/s. 143(2) of the Act as noted from the acknowledgment (ITR-V) and return of income (ROI) filed by the assessee from AYs 2009-10 to 2013-14. It is evident from a perusal of the ROI / ITR-V that assessee has duly shown its address at Centre Point, 1st floor, G. S. Road, Ulubari, Gauhati-781007 which falls under the Income Tax Authorities in Range-3, Guwahati since the territorial jurisdiction over the assessee firm falls under it because its principal place of business as per section 124(1) of the Act lies with the Income Tax Authorities at Range-3. Vesting of jurisdiction with the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) or (2) of sec. 120 of the Act respectively. It is true that when a question of jurisdiction arises in the event an AO assumes jurisdiction u/s. 124 of the Act by virtue of the jurisdiction vested by direction or order issued by CBDT and/or other authorities under sub-section (1) or (2) of sec. 120 of the Act respectively, then assessee is estopped from raising an objection to the jurisdiction, after the time period prescribed under sub-section (3) of sec. 124 of the Act lapses. This however is not the fact of the appellant's case. Admittedly the AO at Gauhati had enjoyed jurisdiction u/s. 124 of the Act since its place of business was at Ulubari at Gauhati and the Shillong Assessing Officer did not enjoy jurisdiction u/s 124 or u/s 127 of the Act. Therefore, in our opinion as far as in the appellant's case is concerned, the provision of section 124(3) does not come into play since the Shillong Assessing Officer never had jurisdiction u/s 124 of the Act. In my considered opinion Section 124(3) of the Act does not in any way help the Department to justify the action of AO at Shillong in issuing notice under Section 143(2) to the assessee, which is an action done by him without ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of jurisdiction came before the Hon'ble High Court, it was held that where the assessee shifts his residence etc., the AO of the place where the assessee has shifted or otherwise will have jurisdiction and it is not necessary that in such case an order u/s 127 is required to be passed. While going through the decision, we note that there was also an order u/s 127 of the Act and the case was transferred to ITO, Ward 20, New Delhi. Thus, the case of S.S. Ahluwalia (supra) cannot be of any assistance to the Revenue.12. Coming back to the admitted facts in the present case, I hold that, without there being valid issuance of notice u/s 143(2) of the Act, the framing of assessment order u/s 143(3) of the Act by AO Gauhati is bad in law as held by the Hon'ble Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (S.C) wherein the Hon'ble Supreme Court has held that issue of a legally valid notice u/s. 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s. 143(3) of the Act and absence of a valid notice u/s 143(2) is not a curable defect. This view was reiterated by the Hon'ble Apex Court in the case of CIT Vs Laxman Das Khandelwal(108 taxmann.com 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression "so far as may be, apply". In our view, where the assessing officer in repudiation of the return filed under Section 158-BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143." 6. The question, however, remains whether Section 292BB which came into effect on and from 01.04.2008 has effected any change. Said Section 292BB is to the following effect:- "292BB. Notice deemed to be valid in certain circumstances.-Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - (a) Not served upon him; or (b) Not served upon him in time; or (c) Served upon him in an improper manner: Provided that nothing contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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