TMI Blog2021 (5) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... ground nos. 1-4 in favour of the assessee and quash the assessment order passed u/s 143(3) of the Act - Decided in favour of assessee. - I.T.A. No. 604/Kol/2020 - - - Dated:- 30-4-2021 - Sri J. Sudhakar Reddy, Accountant Member And Sri Aby T. Varkey, Judicial Member For the Assessee : Sh. Miraj D. Shah, A/R For the Revenue : Sh. Praveen Kishor, CIT (Sr. D/R), appeared ORDER PER J. SUDHAKAR REDDY, AM: This is an appeal filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals)-13, Kolkata [hereinafter the CIT(A) ], passed u/s 250 of the Income Tax Act, 1961 (hereinafter the Act ), dated 27.03.2019 for the Assessment Year 2012-13. 2. The assessee is a company and is in the business of investment in share and securities. It filed its original return of income for the AY 2012-13 on 18.09.2012 declaring total income of ₹1060/-. The case was selected for scrutiny and the AO completed the assessment u/s 143(3) of the Act on 14.03.2015 determining the total income of the assessee at ₹14,48,45,000/-, inter alia making an addition on account of unexplained share application money with high premium u/s 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that, ITO, Ward-5(3), Kolkata did not issue any notice u/s 143(2) of the Act to the assessee as required by law. Hence he argued that the assessment order passed by ITO, Ward-5(3), Kolkata u/s 143(3) of the Act on 14.03.2015 is bad in law. 4.3. For this proposition that the assessment order passed u/s 143(3) of the Act without issuance of notice u/s 143(2) of the Act by the AO having jurisdiction over the assessee is bad in law he relied on the following judgements: i) Pr. CIT vs. Oberoi Hotels Pvt. Ltd. 409 ITR 132 (Cal). ii) ACIT vs. Hotel Blue Moon 321 ITR 328 (SC). 4.4. He further relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal reported in [2019] 108 taxmann.com 183 (SC) for the proposition that non-issuance of notice u/s 143(2) of the Act is a jurisdictional issue and it cannot be cured by having recourse to Section 292BB of the Act. 4.5. He argued that it is well settled in law that, if the AO is not having jurisdiction over the case of the assessee and issues notice u /s 143(2) of the Act, then all the subsequent acts including the assessment order passed based on such notice is bad in law and void-ab-ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee. He submitted that jurisdiction based on certain criteria is conferred by the CBDT on an officer and simply because PAN data is with a particular officer, jurisdiction of an assessee cannot be said to have been conferred on that officer. He argued that computer system cannot confer jurisdiction under the Act. He also referred to the letter written by the ITO, Ward-5(1), Kolkata dated 17.03.2021 to the Pr. CIT-2, Kolkata, where he had acknowledged that ITO, Ward-4(3), Kolkata has no jurisdiction over the case. He further pointed out that in this report dated 17.03.2021 the ITO clearly states that the notice issued by ITO, Ward-5(3), Kolkata is not traceable and it could not located in the system also. Thus he submits that this is a clear admission on the part of the Revenue on the facts of this case. 7. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows. 8. We first take up the issue of jurisdiction. ITO, Ward-4(3), Kolkata issued notice u/s 143(2) of the Act on 12.08.2013 to the assessee. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, had issued notice u/s 142(1) of the Act to the assessee. The DCIT, Circle-11(1), Kolkata, completed assessment u/s 143(3) of the Act on 14/03/2016. The issue is whether an assessment order passed by DCIT, Circle-11(1), Kolkata, is valid as admittedly, he did not issue a notice u/s 143(2) of the Act, to the assessee. This issue is no more res-integra. This Bench of the Tribunal in the case of Soma Roy vs. ACIT in ITA No. 462/Kol/2019; Assessment Year 2015-16, order dt. 8th January, 2020, under identical circumstances, held as under:- 5. After hearing rival contentions, I admit this additional ground as it is a legal ground, raising a jurisdictional issue and does not require any investigation into the facts. The ld. Counsel for the assessee submitted that as per Board Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dt. 31/01/2011, the jurisdiction of the assessee is with the Assistant Commissioner of Income Tax, Circle-1, Durgapur, as the assessee is a non-corporate assessee and the income returned is above ₹ 15,00,000/- and whereas, the statutory notice u/s 143(2) of the Act, was issued on 29/09/2016, by the Income Tax Officer, ward-1(1), Durgapur, who had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a noncorporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC. In this case, admittedly, the assessee an individual (non corporate person) who undisputedly declared income of ₹ 50,28,040/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the assessment order, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward-1, Haldia on 06.09.2013 and the same was served on the assessee on 19.09.2013 as noted by the AO. The AO noted that since the returned income is more than ₹ 15 lacs the case was transferred from the ITO, Ward-1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia on 24.09.2014 and immediately ACIT issued notice u/s. 142(1) of the Act on the same day. From the aforesaid facts the following facts emerged: i) The assessee had filed return of income declaring ₹ 50,28,040/-. The ITO issued notice under section 143(2) of the Act on 06.09.2013. ii) The ITO, Ward-1, Haldia taking note that the income returned was above ₹ 15 lacs transferred the case to ACIT, Circle-27, Haldia on 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. 9.1. This Bench of the Tribunal in the case of Krishnendu Chowdhury vs. ITO reported in [2017] 78 taxmann.com 89 (Kolkata-Trib.) held as follows:- Return of income of assessee was ₹ 12 lakhs - As per CBDT instruction, jurisdiction for scrutiny assessment vested in Income-tax Officer and notice under section 143(2) must be issued by Income-tax Officer, Ward-I, Haldia and none other - But, notice was issued by Asstt. Commissioner, Circle Haldia much after CBDT's instruction and knowing fully well that he had no jurisdiction over assessee - Whether, therefore, notice issued by Asstt. Commissioner was invalid and consequently assessment framed by Income-tax Officers becomes void since issue of notice under section 143(2) was not done by Income-tax Officers as specified in CBDT instruction No. 1/2011. 9.2. The Hon'ble High Court of Calcutta in the case of West Bengal State Electricity Board vs. Deputy Commissioner of Income Tax, Special Range - I, reported in [2005] 278 ITR 218 (Cal.) has held as follows:- Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment years 1983-84 to 1987-88 - Whether a question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. 10. Respectfully following the propositions of law laid down in all these case-law and applying the same to the facts of the case, we hold that the assessment order is bad in law for the reason that the Assessing Officer having jurisdiction over the assessee, has not issued a notice u/s 143(2) of the Act as required by the statute. Notice issue by the officer having no jurisdiction of the assessee is null and void. When a notice is issued by an officer having no jurisdiction, Section 292BB of the Act, does not comes into play. Coming to the argument of the ld. D/R that objection u/s 124(3) of the Act has to be taken by the assessee on rectifying notice u/s 143(2) of the Act from a non-jurisdictional assessing officer, I am of the view that I need not adjudicate this issue, as I have held that non-issual of statutory notice/s 143(2) of the Act by the jurisdictional Assessing Officer makes the assessment bad in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction over the assessee makes the assessment bad in law. 8. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 8.1. Jurisdiction of the Income Tax Authorities is conferred by the Board (Central Board of Direct Tax) u/s. 120(1) (2) of the LT. Act, 1961. The Section reads as follows: 120. (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. Explanation. - For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1). (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Principal Director General or Director General or the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner; or where the question is one relating to areas within the jurisdiction of different Principal Director General or Directors General or Principal Chief Commissioners or] Chief Commissioners or Principal Commissioners or Commissioners, by the Principal Director General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or] Commissioners concerned or, if they are not in agreement, by the Board or by such Principal Director General or] Director General or Principal Chief Commissioner or Chief Commissioner or Principal 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 under sub-section (1) of section 115WD or under sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Jurisdiction u/ s. 124(1) of the Act, by the Board, yet the assessee may dispute such jurisdiction vested u/s 124(1) of the Act, in the Assessing Officer. Such dispute can be raised u/s. 124(3) of the Act, within one month of the issue of notice u/s. 143(2) of the Act. This sub section, therefore, clearly stipulates that the assessee can dispute the jurisdiction of the Assessing Officer to issue notice even though such jurisdiction was vested in him by the direction or order issued u/ s. 120(1) or 120(2) of the Act, for some reasons. 8.8. In this case, the jurisdiction of the assessee was never vested with the Assessing Officer, Ward 33(1) , (non corporate assessee ward) who issued notice u/s. 143(2) of the Act. In fact, the assessee also filed return before ITO, Ward-8(3), KoIkata who was having jurisdiction over the assessee as per the Boards Notification, which fact is evident from the copy of acknowledgements of return of income for the last few years. The notice under sec. 143(2), however, was issued in this case by ITO, Ward 33(1), Kol who has not been vested with the jurisdiction over the assessee company by CBDT. 8.9. Under the scheme of e filing of return, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by non-jurisdictional AO was bad in law and without jurisdiction. 8.13. The Ld DR argued that the assessee did not dispute the jurisdiction u/ s 124(3) of the Act and hence by not disputing the same, the right to challenge the jurisdiction is lost forever. This would have been so, had the ITO, Ward-33(1), Kolkata, had original jurisdiction over the assessee. This is not the case. When an authority does not have jurisdiction, then the act done by such authority is bad in law and is void ab-initio 8.14. This issue came up for consideration in the following cases: (i) Rungta Irrigation Ltd. referred to above with relevant paragraphs and paragraph 36. (ii) Smriti Kedia Calcutta High Court 339ITR page 37 (iii) Indorama Software Solutions Ltd. Mumbai Bench ITA No. 5211 and 5290(Mum) of 2011 dated 7.9.2012 8.15. In the case of Mahalchand Motilal Kothari Co (ITA No. 1851/1852/Kolj2002, ITAT, DBench, Kol dated 28.7.2006 wherein the Tribunal considered the notification dated 30.7.2002 and held that after issue of the notification the Assessing Officer who was earlier vested the jurisdiction lost the jurisdiction and even though the order of the CIT(A) was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 dated 1.3.2017 has also taken similar view wherein the provisions of sec. 124(3) were also referred to. It was held that when the notice was not issued by the competent authority, i.e an Assessing Officer having jurisdiction, then the assessment is a nullity. 8.18. In the case of Deepchand Kothari reported in 171 ITR 381(Raj) it was held that the Assessing Officer who was having no jurisdiction to initiate the proceedings then such proceedings are ab-intio- void. Further the Hon'ble High Court relying on the Judgement of the Hon ble Supreme Court in the case of Kiran Singh Vs Chaman Paswan, it was held that the Jurisdictional issue can be taken up at any stage of the proceedings, even at the time of execution of decree. 8.19. The ITAT, Kolkata in the case of Ganesh Reality and Mall in ITA No. 581/Kol/2017 held that if no jurisdiction was conferred on a particular authority the issue of notice or completion of assessment by such authority is illegal. 8.20. In the case of P.V. Doshi Vs CITthe Gujarat High Court held that the jurisdictional issue can be taken up at any stage of the proceedings. 8.21. In the case of Rajmandir Estates (386 ITR 162) the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed by an officer who has no jurisdiction to file the appeal is non est. 8.24. The Hon'ble Gujarat High Court in the case of Jolly Fantasy World Ltd., Tax appeal no. 1254 of 2014,judgement dated 9.3.2015 held that there cannot be waiver of Jurisdiction, even if the assessee has participated in the proceedings. 8.25. Consent cannot confer jurisdiction and if the notice issued is without jurisdiction it is invalid as was held in Resham Petrotech Ltd. ITA O. 2777/ Ahd/2011 dated 10.2.2012. 8.26. The Hon'ble Bombay High Court in ITA No.127 OF 2006 in the case of The Commissioner of Income Tax-I, Lalit Kumar Bardia, judgement dt. 11.7.2017, held that the transfer of jurisdiction subsequently cannot validate the action already taken. 8.27. The Ld. DR cited the judgement of the Hon'ble Supreme Court in the case of I -Ven Interactive Limited (Civil Appeal No. 8132 of 2019 dated 18.10.2019). This judgement is not on the issue of jurisdiction of the Assessing Officer. In that case, there is no dispute that the assessing officer issuing notice had jurisdiction over the assessee. In that case the selection of the return for scrutiny was gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional Assessing Officer. It is therefore clear that the issue in the case before the Hon'ble Supreme Court was not with regard to the jurisdiction of the officer in issuing the notice but was with regard to the service of notice on the proper address. The said judgement therefore does not help the department on this issue of jurisdiction now before us. Jurisdiction has to be conferred u/s 120 of the Act. Any act by an authority without jurisdiction is ab-initio void. 8.28. In view of the above discussion, as the Assessing Officer who had jurisdiction over the assessee i.e., ITO Ward - 8(3), Kolkata had not issued the notice to the assessee u/s 143(2) of the Act as mandatorily required under the Act, the assessment framed u/s 143(3) of the Act, is bad in law as held by the Hon'ble Supreme Court in the case of ACIT Anr. Vs. Hotel Blue Moon: 321ITR 362 (SC) . Hence we quash the same. 9. As we have held that the assessment is bad in law, in view of the non-issual of the statutory notice u/s 143(2) of the Act by the Assessing Officer, having jurisdiction over the assessee, we would not go into the merits of the case as it would be an academic exercise. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
