TMI Blog2021 (7) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... that too, in the hands of the assessee who is not an appellant before the Income Tax Settlement Commission. Therefore, we see no reason but to agree with the ld CIT(A), who after going through the order passed by the AO as well as by Income Tax Settlement Commission, has recorded a finding that the assessee was not an applicant before Income Tax Settlement Commission and there being no direction by the Income Tax Settlement Commission in respect of the assessee by way of modification of the original assessment order passed u/s 143(3) r/w section 153A dated 29.12.2016, the order so passed by the AO purportedly giving effect to the order of ITSC u/s 245D(4) is without jurisdiction. As apparent from the original assessment order passed u/s 143(3) r/w section 153A the department has claimed the undisclosed investment in impugned land purchase in the hands of Indian Medical Trust and substantive addition was thus proposed by the department before the Income Tax Settlement Commission in the hands of Indian Medical Trust. There was thus a proposal to make substantive addition in the hands of Indian Medical Trust, however, in the order so passed by the Income Tax Settlement Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or want of jurisdiction and requisite sanction under law. Given the fact that the order so passed by the AO whereby protective assessment u/s 153A r/w 143(3) has been converted into substantive assessment alongwith raising the demand notice on the assessee u/s 156 and initiating the recovery proceedings, the order so passed is clearly an order against which the assessee can appeal before the ld CIT(A) u/s 246A which clearly provides that the assessee can appeal against an order where the assessee denies his liability to be assessed under the Act. Therefore, there is no infirmity in the action of ld CIT(A) in assuming jurisdiction u/s 246A in the instant case and passing the impugned order after calling for the remand report from the AO and providing adequate opportunity to both the parties. All the additional grounds of appeal as well as original ground of appeal no. 3 taken by the Revenue are hereby dismissed. - ITA. No. 1065/JP/2019, C.O. No. 23/JP/2019 (Arising out of /ITA No. 1065/JP/2019) - - - Dated:- 14-7-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri G.M. Mehta (FCA) For the Revenue : Shri B.K. Gupta (CIT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal challenging the same before the ld CIT(A). During the pendency of the appellate proceedings before the ld CIT(A), the Assessing Officer passed another order dated 15.09.2017 u/s 143(3)/153A/245D(4) of the Act, referred to as order passed to give effect to the order of Settlement Commission u/s 245D(4) dated 30/06/2017 of the Act, wherein the AO converted the earlier protective addition made in the hands of the assessee on account of undisclosed investment in the land situated at village Jugalpura, Chitanukalan, Teh. Amer, Jaipur into substantive addition. The said order passed by the AO u/s 143(3)/153A/245D(4) of the Act was brought to knowledge of ld. CIT(A) and it was submitted that the assessee shall be filing a separate appeal against the said order passed by the AO dated 15.09.2017 as required by law. The ld. CIT(A) considering the submissions of the assessee held that since the protective addition has been converted and treated as substantive addition by the Assessing Officer, the ground of appeal so taken by the assessee has become infructuous and ground of appeal so taken by the assessee was treated as dismissed. 5. Against the order u/s 143(3)/153A/245D( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the order under section 245D(4) of the Act passed by the Income Tax Settlement Commission, New Delhi D. Whether the ld. CIT(A) was justified in passing the order without Remand Report of the AO. The ld. CIT(A) has not provided proper opportunity of hearing, which is against the principles of natural justice, and which is a specific requirement of IT Act, 1961. E. After the search the NIMS group/IMT was centralized with the AO i.e. ACIT, Central Circle-1, Jaipur. The assessee Smt. Pallavi Tomar is also one of the members of this group and her residence was also covered in search and her case was also centralized with the AO, Central Circle-1, Jaipur. Therefore, the AO has jurisdiction over the case of the Smt. Pallavi Tomar. The AO has passed the order well within its jurisdiction. Whether the CIT(A) was justified in holding that After framing of original order the Assessing Officer exhausted his jurisdictional over the appellant. Any modification in the original order would have been resorted to only if the jurisdiction for the same is validly assumed. In absence of assumption of jurisdiction as per know provision of law, the impugned order is nullity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of ld. CIT(A) in admitting and deciding the appeal. It was submitted that in demand notice dated 15.09.2017 issued u/s 156 of the Act pursuant to which the demand was raised on the assessee, the AO herself had directed that if assessee intends to challenge the assessment of income/fine/penalty, appeal can be presented within 30 days to ld. CIT(A)-4, Jaipur. It was submitted that as per the directions of the ld. AO herself, the assessee had presented the appeal before the ld. CIT(A)-4, Jaipur and therefore, challenging jurisdiction of the ld. CIT(A) through these additional grounds of appeal is against the principle of natural justice and such grounds of appeal should be dismissed as void ab initio. It was further submitted that as per the provisions of section 246A(1)(a) of the Act where the assessee denies his liability to be assessed under the Act, he can prefer appeal to the ld. CIT(A) and accordingly, the assessee had preferred the present appeal within time allowed under the law. 10. Regarding fourth additional ground of appeal taken by the Revenue, it was submitted that the said ground of appeal has been taken without considering the order of the ld. CIT(A) as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and jurisdiction of the AO for which ld. CIT(A) at para 7.4 of his order has giving a finding that after completion of assessment, the Assessing Officer becomes functus officio and he no longer remains in jurisdiction to redo or re-compute such assessment. Such an assessment once framed can be modified either u/s 154 or u/s 147 or to give a give effect to an order in appeal u/s 250 or s. 254 or revision u/s 263/264 of the Act. It was accordingly submitted that the finding of the ld. CIT(A) that Assessing Officer has become functus officio after completion of the assessment order is as per the provisions of the Act and therefore, the additional grounds of appeal so taken by the Revenue may not be admitted. 13. After hearing both the parties and considering the grounds so sought to be raised by the Revenue, we find that these grounds of appeal relating to challenging the jurisdiction of the ld CIT(A) to pass the impugned order, not providing adequate opportunity to the Revenue and challenging the findings of the ld CIT(A) wherein he has set-aside the assumption of the AO in passing the order dated 15.09.2017 are purely legal grounds of appeal which can be raised for the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order is in nullity and is required to be set aside. 7.3 Further, I have perused the order impugned in the present appeal. The said order is passed purportedly giving effect to the order of Income Tax Settlement Commission in the case of Indian medical trust. An order giving effect to the order of settlement commission can be passed provided the person is an applicant before the settlement commission. Admittedly, in the present case the present appellant was not an applicant to settle his case before the Settlement Commission. In the case of the appellant, the Assessing Officer passed original assessment on 29-12-2016 u/s 143(3) r.w.s 153A of the Act. Such an order could have been modified provided the Assessing Officer has achieved jurisdiction for the same. Since the order impugned in the present appeal dated 15 September 2017 is to give effect to the order passed by Settlement Commission u/s 245D(4) dated 30/06/2017 of the Act, the pre-condition is that the Settlement Commission should have passed some order directing the assessing officer to do so. Since the applicant before the Settlement Commission was not the present appellant, but Indian Medical Trust w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional grounds raised by the appellant is valid and is allowed. The order passed by the Ld. AO is invalid and the additions are liable to be deleted ab-initio. 15. We now refer to the order passed by the AO dated 15.09.2017 with the heading order giving effect to the order u/s 245D(4) of the Act passed by the Income Tax Settlement Commission, New Delhi and the contents thereof read as under: 2. Now, the order u/s 245D(4) dated 30-06-2017 on the Settlement Application no. RJ/JP-51/15-16/16-IT passed by the ITSC, Additional Bench-II, New Delhi, has been received in the case of M/s Indian Medical Trust. On going through this order, it has been found that there is no discussion of the undisclosed investment in the land at Jugalpura for which substantive-addition was proposed by the department in the hands of M/s Indian Medical Trust. The issue of investment in the land at Jugalpura has not been discussed at all in the order u/s 245D(4) of the Act meaning thereby that this issue has not been considered by the ITSC in the hands of M/s Indian Medical Trust. Therefore, the protective addition of ₹ 3,27,83,846/- made on account of undisclosed investment in the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the assessee who is not an appellant before the Income Tax Settlement Commission. Therefore, we see no reason but to agree with the ld CIT(A), who after going through the order passed by the AO as well as by Income Tax Settlement Commission, has recorded a finding that the assessee was not an applicant before Income Tax Settlement Commission and there being no direction by the Income Tax Settlement Commission in respect of the assessee by way of modification of the original assessment order passed u/s 143(3) r/w section 153A dated 29.12.2016, the order so passed by the AO purportedly giving effect to the order of ITSC u/s 245D(4) is without jurisdiction. 17. Here, it is relevant to note, as apparent from the original assessment order passed u/s 143(3) r/w section 153A dated 29.12.2016 and in particular, from reading of para 6.8 and 6.9 of the said order, the department has claimed the undisclosed investment in impugned land purchase amounting to ₹ 327.83 crores in the hands of Indian Medical Trust and substantive addition was thus proposed by the department before the Income Tax Settlement Commission in the hands of Indian Medical Trust. There was thus a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assumed such jurisdiction and passed the impugned order dated 15.09.2017. 21. The concept of substantive and protective assessment though not defined in the Income Tax Act has the necessary legal recognition by the Courts. It has been held by the Courts that in cases where it appears to the income tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie, it appears that the income may have been received either by A or by B, it would be open to the relevant income tax authorities to determine the said question by taking appropriate proceedings both against A and B by way of substantive and protective assessment. Once an assessment has been made, the veracity of the additions are to be adjudicated by the appellate authorities in both the cases and the appellate authority has to give a specific finding in whose hands the income on account of impugned addition is to be finally assessed. Therefore, to safeguard the interest of Revenue, the AO can assess the income in more than one hand but this procedure can be permitted at the stage of assessment and once the assessment is done, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in not an order to give effect to the directions contained in any order passed u/s 250/254/263/264 of the Act, thus, the action of the AO doesn t have the necessary sanction of the relevant provisions and the order so passed has been rightly set-aside by the ld CIT(A) for want of jurisdiction and requisite sanction under law. 22. Further, given the fact that the order so passed by the AO whereby protective assessment u/s 153A r/w 143(3) has been converted into substantive assessment alongwith raising the demand notice on the assessee u/s 156 and initiating the recovery proceedings, the order so passed is clearly an order against which the assessee can appeal before the ld CIT(A) u/s 246A which clearly provides that the assessee can appeal against an order where the assessee denies his liability to be assessed under the Act. Therefore, there is no infirmity in the action of ld CIT(A) in assuming jurisdiction u/s 246A in the instant case and passing the impugned order after calling for the remand report from the AO and providing adequate opportunity to both the parties. 22. In the result, all the additional grounds of appeal as well as original ground of appeal no. 3 taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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