TMI Blog2023 (1) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO- Ward 1(1), Bhilai de-hors the issuance of a valid notice u/s. 143(2) of the Act, therefore, the same cannot be sustained is liable to quashed. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O u/s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed. - ITA No. 59/RPR/2019 - - - Dated:- 12-12-2022 - Shri Ravish Sood, Judicial Member And Shri G D Padmahshali, Accountant Member For the Assessee : Shri Nikhilesh Begani, CA. For the Revenue : Shri G.N Singh, Sr. DR. ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 20.12.2018, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short the Act ) dated 29.12.2016 for assessment year 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before us: GROUND NO.I. 1. That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax (Appeals)-II, Raipur ( the Ld.CIT(A) ) is highly unjustified, bad in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31.01.2011 by the Hon ble CBDT whereas in the present case, mandatory notice u/s.143(2) dated 24.09.2015 was issued by the Ld. DCIT, Circle-2(1), Bhilai accordingly, the impugned assessment framed u/s.143(3) by the Ld. ITO, Ward-1(1), Bhilai ( Ld. AO) is without timely issuance of mandatory notice u/s.143(2) ( as the notice u/s. 143(2) had been issued by the Ld. AO only on 05.05.2016 i.e. after the expiry of six months from the end of the financial year in which the return was furnished i.e. 30.09.2015), accordingly, the Assessment order is bad in law legally unsustainable hence, it is earnestly prayed that the Assessment order passed u/s. 143(3) may please be quashed and cancelled in limine. 2. We shall first deal with the admissibility of the additional ground of appeal that has been raised by the assessee-appellant before us. As the assessee by raising the aforesaid additional ground had assailed the validity of the jurisdiction that was assumed by the A.O for framing of the assessment vide his order passed u/s. 143(3) dated 29.12.2016, which involves purely a question of law that would require looking no further beyond the facts available on record, therefore, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be struck down for want of valid assumption of jurisdiction. Our attention was drawn by the Ld. AR to the aforesaid CBDT Instruction No.1 of 2011 dated 31.01.2011, Page 1 of APB. 9. On being queried by the Bench that now when the assessee was in receipt of a notice u/s.143(2) dated 24.09.2015 from the DCIT-2(1), Bhilai, who was vested with the concurrent jurisdiction over its case, then, on what basis the validity of the assessment was being assailed, it was submitted by the Ld. AR that as per the CBDT Instruction No.1/2011 dated 31.01.2011 the exclusive jurisdiction over the case of the assessee was vested with ITO, Ward-1(1), Bhilai, therefore, no valid jurisdiction could have been assumed on the basis of the notice issued u/s.143(2) of the Act by the DCIT-2(1), Bhilai i.e. a non jurisdictional officer. On being further queried as to whether the assessee had called in question the jurisdiction of the DCIT-2(1), Bhilai on receipt of notice u/s. 143(2), dated 24.09.2015 i.e. as per the mandate of sub-section (3) of Section 124 of the Act, the Ld. AR answered in negative. Elaborating on the aforesaid issue, it was submitted by the Ld. AR that as the assessee had not challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad quashed the said notice by treating the same as being bad in law. It was submitted by the Ld. AR that the aforesaid judgment of the Hon ble High Court had thereafter been upheld by the Hon ble Supreme Court in the case of ACIT, Circle-1 Vs. Pankajbhai Jay sukhlal Shah[2020] 120 taxmann.com 318 (SC) and the SLP filed by the department was dismissed. It was, thus, the claim of the Ld. AR that as the notice u/s. 143(2), dated 24.09.2015 was issued by the DCIT-1(1), Bhilai i.e. a non jurisdiction A.O, therefore, no valid jurisdiction on the basis of the same could have been assumed for framing of the impugned assessment u/s.143(3), dated 29.12.2016 by the ITO-1(1), Bhilai i.e. the jurisdictional A.O. 11. Adverting to the notice u/s. 143(2), dated 05.05.2016 that was issued by the ITO, Ward-1(1), Bhilai i.e. jurisdictional Officer, it was submitted by the Ld. AR that as the said notice was issued after lapse of the stipulated time period, i.e., beyond a period of six months from the end of the relevant assessment year which expired on 30.09.2015, therefore, no valid jurisdiction could have been assumed on the basis of the same for framing the impugned assessment u/s 143(3), dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 14. Admittedly, it is a matter of fact borne from record that the CBDT vide Instruction No. 1/2011, dated 31.01.2011 had, inter alia, revised the existing monetary limits for assigning cases to ITOs and DCs/ACs. For the sake of clarity, we deem it fit to cull out the CBDT Instruction No.1/2011 dated 31.01.2011, Page 1 of APB, which reads as under: INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31.01.2011 the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Bhilai and had filed a non-corporate return for the year under consideration, i.e., A.Y.2014-15 declaring an income of Rs.6,57,380/- was vested with the ITO, Ward 1(1), Bhilai. Although notice u/s. 143(2), dated 24.09.2015 had been issued within the stipulated time period, i.e., within six months from the end of the relevant assessment year which would have expired as on 30.09.2015, however, the same was issued by the DCIT-1(1), Bhilai, i.e., an A.O who pursuant to the CBDT Instruction No.1 of 2011, dated 31.01.2011 was not vested with the jurisdiction over the case of the assessee for the year under consideration. On the other hand the ITO-1(1), Bhilai, who as per the aforesaid CBDT Instruction (supra) was vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had issued the notice u/s. 143(2) of the Act, dated 05.05.2016, i.e., beyond the stipulated time period, therefore, no valid jurisdiction could have been assumed on the basis of the same for framing the assessment vide order under Sec. 143(3), dated 29.12.2016. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction over the case of the assessee, but the same thereafter had wrongly been framed by an officer who as observed by us hereinabove did not have jurisdiction over the case of the assessee in so far the year under consideration was concerned. As the criteria laid down vide the CBDT Instruction No.1/2011, dated 31.01.2011 for conferring the varied jurisdictions with the ITOs/DCs/ACs on the basis of income declared by the assessee in his return of income is binding upon the department and has to be scrupulously followed, therefore, there can be no escape from the same for justifying assumption of jurisdiction by an officer other than that prescribed in the said instruction. Our aforesaid view is fortified by the Judgments of the Hon ble Supreme Court in the case of UCO Bank Vs. CIT (1999) 237 ITR 889 (SC) and Commissioner of Customs etc. Vs. Indian Oil Corporation Ltd. Anr. (2004) 267 ITR 272 (SC). In the aforesaid judgments it was held by the Hon ble Apex Court that though the CBDT/CBEC circulars are not binding on court or the assessee, but the departmental authorities are bound by them and cannot act in contravention of the same. Also, support is drawn from the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said view is fortified by the judgment of the Hon ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Tax Appeal Nos. 19 to 30 of 2017, dated 05.04.2021 and that of the Hon ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR492 (Guj.). In the aforesaid cases the Hon ble High Courts have held that as Section 124 of the Act pertains to territorial jurisdiction vested with an AO under subsection (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which places an embargo on an assessee to raise an objection as regards the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and would have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Also, support is drawn from a recent judgment of the Hon ble High Court of Calcutta in the case of Principal Commissioner of Income-tax Vs. Nopany Sons (2022) 136 taxmann.com 414 (Cal). In the case before the Hon ble High Court the case of the assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Dy. CIT, Circle-1, Bhilai. Neither is there any reason discernible from the orders of the lower authorities nor demonstrated before us by the ld. DR which would by any means justify framing of the assessment vide impugned order u/s 143(3), dated 30.03.2015 by the Income-Tax Officer, Ward-2(2), Bhilai. Apart from that, we find that as per the mandate of sub-section (1) of section 127 of the Act, where a case is to be transferred by authorities therein specified from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him, then he is under an obligation to record his reasons for doing so after giving the assessee a reasonable opportunity of being heard in the matter wherever it is possible to do so. For the sake of clarity sub-section (1) of Section 127 is culled out as under: (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] commissioner may, after giving the assessee a reasonable opportunity of being heard in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were struck down, for the reason that the same were passed by officers who were not vested with the requisite jurisdiction as per the CBDT Instruction No.1/2011, dated 31.01.2011. Our aforesaid view is fortified by the order of the ITAT, Kolkata Bench SMC in the case of Anderson Printing House (P) Ltd. Vs. ACIT (2022) 192 ITD 548 (Kolkata-Trib.). In its order the Tribunal had after drawing support from the order of the ITAT, Kolkata in the case of Bhagyalaxmi Conclave (P) Ltd. Vs. DCIT, ITA No.2517 (Kol) of 2019, dated 03.02.2021 which in turn had relied on the earlier orders passed in the case of Hillman Hosiery Mills Pvt.Ltd. Vs. DCIT, ITA No.2634/Kol/2019; Soma Roy Vs. ACIT, ITA No.463/Kol/2019 dated 08.01.2020; and Shri Sukumar Ch. Sahoo Vs. ACIT, ITA No.2073/Kol/2016 dated 27.09.2017, had struck down the assessment for want of valid assumption of jurisdiction by the A.O who had framed the assessment in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, observing as under: 5. A perusal of the aforesaid statutory provisions would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also I.T.A. No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral or [Principal Chief Commissioner or] Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. 7. A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the assessment. The issue relating to the pecuniary jurisdiction also came into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory 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 no jurisdiction of the case. He submitted that the assessment order was passed by the ACIT, Circle-1(1), Durgapur, who had the jurisdiction over the assessee, but he had not issued the notice u/s 143(2) of the Act, within the statutory period prescribed under the Act. Thus, he submits that the assessment is bad in law. 5.1. On merits, he rebutted the findings of the lower authorities. The ld. Counsel for the assessee relied on certain case-law, which I would be referring to as and when necessary. 6. The ld. D/R, on the other hand, submitted that the concurrent jurisdiction vests with the ITO as well as the ACIT and hence the assessment cannot be annulled simply because the statutory notice u/s 143(2) of the Act, was issued by the ITO and the assessment was completed by the ACIT. He further submitted that the assessee did not object to the issue of notice before the jurisdictional Assessing Officer and even otherwise, Section 292BB of the Act, comes into play and the assessment cannot be annulled. On merits, he relied on the orders of the lower authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as above Rs. 15 lacs transferred the case to ACIT, Circle-27, Haldia on 24.09.2014. iii) On 24.09.2014 statutory notices for scrutiny were issued by ACIT, Circle-27, Haldia. 6. We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return of income on 29.03.2013 declaring total income of Rs.50,28,040/-. As per the CBDT Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of 'non corporate returns' the ITO's increased monetary limit was upto Rs.15 lacs; and if the returned income is above Rs. 15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs.15 lakh, then the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of a notice u/s. 143(2), dated 24.09.2015 that was issued by the DCIT-1(1), Bhilai, i.e., an A.O who at the relevant point of time was not vested with jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be struck down on the said count itself. Apropos the notice issued u/s.143(2) of the Act, dated 05.05.2016 by the ITO-Ward 1(1), Bhilai, we are of the considered view that as the said notice was issued after the lapse of the stipulated time period, i.e., beyond the specified time frame which expired as on 30.09.2015, therefore, the assessment order so framed would also not be saved on the said basis. To sum up, as the impugned assessment u/s. 143(3), dated 29.12.2016 had been framed by the ITO- Ward 1(1), Bhilai de-hors the issuance of a valid notice u/s. 143(2) of the Act, therefore, the same cannot be sustained is liable to quashed. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O u/s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part. 18. As we have quashed the assessment for want of valid assumption of jurisdiction by the A.O, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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