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TMI Blog2023 (10) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... r who did not have jurisdiction over the assessee in view of monetary threshold limit laid down vide CBDT Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)] dated 31.01.2011 read together with instruction No. 6/2011 dated 08.04.2011, therefore, the assessment order passed by non-jurisdictional income tax authority may kindly be held to be illegal, bad in law and the entire proceedings may kindly be quashed and consequential addition of Rs. 21,75,000/- made to the total income may kindly be directed to be deleted. 2. On the facts and in the circumstances of the case, the assessment order passed by the Learned ACIT-3(1), Raipur u/s. 147 r.w.s. 143(3) is bad in law inasmuch as the assessment ought to have been framed under Section 153C of the Income Tax Act, 1961 inasmuch as Section 153C overrides the provisions of Section 147 and 148, hence, the assessment order passed u/s 147 r.w.s. 143(3) is bad in law, illegal and void ab initio. Hence it is prayed that the assessment order passed u/s 147 r.w.s. 143(3) may kindly be declared as illegal, bad in law and consequential enhancement of Rs. 21,75,000/- made to the total income may kindly be directed to be deleted. 3. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced. Observing that the cash transactions aggregating to Rs. 21.75 lacs were not accounted for by the assessee in his books of accounts, the A.O. held the same as the assessee's deemed income u/s. 69 of the Act. Accordingly, the A.O. vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 28.10.2016 assessed the income of the assessee at Rs. 21,26,700/-. 4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. 5. The assessee, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before me. 6. At the threshold of hearing of the appeal, it was submitted by the Ld. Authorized Representative (for short 'AR') for the assessee that the A.O, i.e., ACIT, Circle-3(1), Raipur, had wrongly assumed jurisdiction and framed the impugned assessment in the case of the assessee. Elaborating on his aforesaid contention, it was averred by the Ld. AR that as the assessee had e-filed his return of income on 15.10.2010, declaring an income of Rs. Nil, therefore, the ACIT, Circle-3(1), Raipur had wrongly assumed jurisdiction and framed the assessment vide his order passed u/s. 147 r.w.s. 143(3) dated 28.10.2016. Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act dated 28.10.2016, i.e., by invoking a wrong statutory provision, the same, thus, could not be sustained and was liable to be quashed. 6.2 On being queried by the Bench that as the document that was seized in the course of the search proceeding conducted on 'Sharma Group", viz. LPS-1/1, Page 41 did not "belong" to the assessee but to the most contents of the same "pertained" to him, therefore, as per the pre-amended section 153C of the Act, i.e., prior to the amendment vide Finance Act, 2015 w.e.f. 01.06.2015 how any infirmity could be attributed to the assumption of jurisdiction by the A.O. for framing the assessment, vide his order passed u/s. 147 r.w.w. 143(3) of the Act dated 28.10.2016, Shri Veekaas S Sharma, the Ld. AR submitted that the aforementioned amendment to Section 153C vide the Finance Act, 2015 shall be applicable to the searches conducted u/s. 132 of the Act before 01.06.2015, i.e., the date of the amendment. Ld. AR, to fortify his aforesaid claim, had drawn my attention to the judgment of the Hon'ble Supreme Court in the case of ITO Vs. Vikram Sujitkumar Bhatia, (2023) 149 taxmann.com 123 (SC). The Ld. AR submitted that the Hon'ble Apex Court had observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of the Assessing Officer, if he does not do so within 30 days of receipt of notice under section 142(1). f) Reliance is placed on the following judgements : (i) In the case of Abhishek Jain Vs. ITO, It is held by Hon'ble Delhi HC that "In terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148." [2018] 94 taxmann.com 355 (Delhi) (ii) In the vase of Vaishal Builders & Colonizers Vs. Addl CIT, it is held by Hon'ble ITAT, Jodhpur that "Where assessee did not raise objection relating to jurisdiction of AO to pass assessment order in course of assessment proceedings within specified time period, such an objection could not be raised for first time in appellate proceedings." [2012] 25 taxmann.com 464 (Jodh.) (ii) In the case of Subhash Chander Vs. CIT, Rohtak, it is held by Hon'ble Punjab & Haryana HC that "Jurisdiction of - Assessment year 1992-93 - Whether in terms of section 124(3) (b), jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision for obtaining sanction of higher authority in certain circumstances. d) The AO had supplied the reasons recorded and the evidences collected during the search enquiries to the Ld. AR of the assessee during the assessment proceedings. The completion of assessment under the provisions of sec. 147 instead of sec. 153C does not disentitle the AO to forgo the powers vested u/s 147 and 148 and therefore the AO rightly invoked the jurisdiction u/s 147 for reopening the assessment. e) The assessee during assessment proceedings complied but had not challenged the section under which the assessment proceedings were carrying on. f) Reliance is placed on the following judgements : (i) In the case of Raymond Woolen Mills Vs. ITO & Others, Hon'ble SC held that "In determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage." [1999] 236 ITR 34 (SC)/[1999] 152 CTR 418 (SC)] (ii) In the case of Yogendra Kumar Gupta Vs. ITO, Hon'ble SC held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urga Manikanta Traders Vs. ITO, ITA No. 59/RPR/2019 dated 12.12.2022. Also, the objections that have been raised by the A.O as regards the validity of the jurisdiction assumed by the A.O, i.e., ACIT, Circle-3(1), Raipur, without raising of any objection by the assessee within the stipulated time period contemplated in Section 124(3)(a) of the Act had also been looked into at length in the aforementioned order. For the sake of clarity, the relevant observations of the Tribunal are culled out as follows: "13. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as 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. 187/12/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate assessee who is located in a mofussil area. Also, as is borne from the record the assessee had filed his return of income for the A.Y. 2014-15 declaring an income of Rs. 6,57,380/-. 15. On the basis of the aforesaid facts, we are of the considered view, that as stated by the Ld. AR, and, rightly so, as per the CBDT Instruction No. 1/2011, 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 exclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein dealing with the multi-facet contentions that were raised by the department, the Tribunal had observed as under: "13. On the basis of our aforesaid deliberations, we are in agreement with the Ld. AR that though the assessment proceedings were rightly initiated and initially embarked upon by Dy. CIT, Circle1, Bhilai i.e. the officer who was vested with 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 Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (1) of Section 142 or sub-section (2) of Section 143. In sum and substance, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where the assessee objects to the assumption of territorial jurisdiction by the A.O, and not otherwise. Our aforesaid 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 sub-section (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 fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecuniary jurisdiction over the case of the assessee for the year under consideration i.e. A.Y. 2012-13 with the ACs/DCs, therefore, in our considered view despite vesting of concurrent jurisdiction with the Income- Tax Officer, Ward-2(2), Bhilai and the Dy. CIT, Circle-1, Bhilai the assessment in his case for the year under consideration could only have been framed by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down on the said count itself. Before parting, we may herein observe that a similar issue as regards the validity of an assessment framed by an A.O who had invalidly assumed jurisdiction in contravention to the CBDT Instruction No. 1/2011, dated 31.01.2011 had came up in a host of cases before the various benches of the Tribunal, wherein the respective assessments framed 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) The [Principal Director General or] Director General 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned is above Rs. 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 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldia taking note that the income returned was 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed u/s. 143(3) dated 29.12.2016 on the basis of a notice u/s. 143(2), dated 24.09.2015 that was issued by the DCIT1(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." 11. As the facts and the issues based on which jurisdiction h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer under the aforesaid statutory provision is required and the same cannot be dispensed with. I may further observe that the order of transfer of the assessee's case by the ITO-Ward 1(2), Raipur to DCIT-Circle 1(1), Raipur on 05.02.104 was much prior to Notifications No. 1/2014-15, dated 15.11.2014 and Notification No. 1/2014-15, dated 15.11.2014, based on which jurisdiction over the case of the assessee was vested with the DCIT/ACIT-3(1), Raipur, as brought to our notice by the A.O. 14. Be that as it may, I am of the view that as the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No. 1/2011 (supra) r.w. CBDT Instruction No. 6/2011 (supra )was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus, the Ground of Appeal No. 1 raised by the assessee is allowed in terms of my aforesaid observations. 15. As I have quashed the assessment for want of valid assumption of jurisdiction by the A.O, I refrain from adverting to and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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