TMI Blog2023 (5) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the impugned assessment framed by the ACIT, Circle 4(1), Raipur u/s. 143(3) dated 29.03.2016 is quashed for want of valid assumption of jurisdiction on his part. Decided in favour of assessee. - SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER For the Assessee : Shri Sunil Kumar Agrawal, CA For the Revenue : Shri Piyush Tripathi, 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 23.01.2020, which in turn arises from the order passed by the A.O under sec. 143(3) of the Income Tax Act, 1961 (for short the Act ) dated 29.03.2016 for assessment year 2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us: 1. Whether learned CIT(A) is correct in passing order without providing valid opportunity of being heard, which is against the principles of natural justice. 2. Whether learned CIT(A) is correct in making addition of Rs. 1,00,00,000.00 deposited in Punjab National bank. 3. Whether Learned CIT(A) is correct in disallowing cost of improvement of Rs. 1,11,02,013.00 without goi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the additional ground of appeal that has been raised before us. Ostensibly, the assessee by raising the additional ground of appeal has sought our indulgence for adjudicating the sustainability of the assessment order passed by the ACIT, Circle 4(1), Raipur u/s. 143(3), dated 29.03.2016. It is the claim of the assessee that as the ITO-1(3), Raipur, pursuant to the CBDT Instruction No. 1/2011, dated 31.01.2011 (effective from 01.04.2011) r.w Instruction No. 6/2011, dated 08.04.2011, was not vested with the pecuniary jurisdiction over the case of the assessee for the year under consideration i.e. AY 2013-14, therefore, the impugned assessment so framed by the ACIT, Circle-4(1), Raipur, on the basis of notice issued u/s 143(2) of the Act by the ITO-1(3), Raipur cannot be sustained and was liable to be struck down on the said count itself. As the adjudication of the aforesaid issue involves purely a question of law which would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and letter issued by the Chief CIT dated 30.05.2011. It was, thus, the claim of the Ld. AR that as the present assessee who was putting up in a mofussil area i.e. Raipur had filed his return of income for the year under consideration i.e. A.Y 2013-14, declaring an income of Rs. 19,12,120/-, therefore, pursuant to the aforesaid CBDT Instruction No. 1/2011, dated 31.01.2011 r.w Instruction No. 6/2011, dated 08.04.2011 r.w letter issued by the Chief CIT, Raipur to the CIT, Raipur dated 30.05.2011 the jurisdiction over his case was vested with the ACIT/DCIT. It was submitted by the Ld. AR that the notice u/s. 143(2) of the Act was issued by the ITO-1(3), Raipur who was not vested with the pecuniary jurisdiction over the case of the assessee to issue the same as on 08.09.2014. It was submitted by the Ld. AR that as the ACIT, Cicle 4(1), Raipur, had framed the assessment in the case of the assessee without issuing any notice u/s. 143(2) of the Act within the prescribed time period of six months from the end of the financial year in which the return was furnished, therefore, the assessment so framed by him was liable to quashed for want of valid assumption of jurisdiction by him. In sum a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. DCIT Vs. Proficient Commodities Pvt. Ltd. (2020) ITA 1346/Kol/2016 (Kol-Trib) dated 18-3-20 15. Soma Roy (2020) ITA No. 462/Kol/2019 (Kol-Trib) dt. 08-01-2020. 16. Sukumar Ch. Sahoo (2017) 60 ITR (T) 225 (Kol-Trib) dt. 27-09-2017 17. Krishnendu Chowdhury (2017) 78 taxmann.com 89 (Kol-Trib) date18-11-2016 18. Sudhir Kumar Agrawal Vs. ITO (2023) 221 TTJ 687 ( Raipur-Trib) 19. Durga Manikanta Traders Vs. ITO, ITA No. 59/RPR/2019 dated 12.12.2022 20. Chowaram Dhiwar Vs. ITO, ITA No. 31/RPR/2022 dated 28.12.2022 8. It was further submitted by the Ld. AR that as the aforesaid CBDT Instruction No. 1/2011, dated 31.01.2011 r.w Instruction No. 6/2011, dated 08.04.2011 were binding on the department, therefore, there was no escape from the same to justify the assessment framed by an officer who pursuant to the said binding instruction was not vested with the requisite jurisdiction to frame the assessment in the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was invalid and non-est, and thus, liable to be struck down on the said count itself. 9. Per contra, the Ld. Departmental Representative (for short DR ) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the A.O having the requisite jurisdiction over the case of the assessee i.e. ITO-1(3), Raipur had rightly issued notice u/s. 143(2) of the Act, dated 08.09.2014, which thereafter had culminated into an order u/s. 143(3), dated 29.03.2016, therefore, no infirmity did emerge from the same. Adverting to the fact that while for the assessment proceedings were initiated by the ITO-1(3), Raipur vide notice issued u/s. 143(2), dated 08.09.2014 but assessment was thereafter framed by the ACIT, Circle-4(1), Raipur vide his order passed u/s. 143(3) dated 29.03.2016, it was submitted by the Ld. DR that as both the officers were vested with concurrent jurisdiction over the assessee, therefore, the assessment having been validly framed could not be struck down as canvassed by the assessee s counsel. It was submitted by the Ld. DR that the assessee having not raised any objection with regard to issuance and service of a valid notice during assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Tribunal after relying on its order in the case of Shri Sudhir Kumar Agrawal Vs. ITO, ITA No. 158/RPR/2017 dated 17.10.2022, had observed as under: 11. Before proceeding any further we deem it fit to cull out the CBDT Instruction No. 1/2011, dated 31.01.2011, 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had filed his return of income for the A.Y.2012-13 declaring an income of Rs. 19,07,440/-, Page 7 to 12 of APB. 12. On the basis of the aforesaid facts, we are of the considered view that as stated by the Ld. AR and, rightly so, the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Raipur and had filed a noncorporate return for the year under consideration i.e. A.Y. 2012-13 declaring an income of Rs. 19,07,440/-, as per the CBDT Instruction No. 1/2011, dated 31.01.2011 was vested with the ACs/DCs. Although the notice u/s. 143(2) dated 24.09.2013 was rightly issued by the Dy. CIT, Circle-1, Bhilai who was vested with the requisite jurisdiction over the case of the assessee and had thereafter vide his notice u/s. 142(1), dated 20.08.2014 a/w. a query letter (of even date) rightly proceeded with the assessment, but then we cannot remain oblivion of the fact that as the assessment u/s. 143(3), dated 30.03.2015 had thereafter been framed by the Income-Tax Officer, Ward 2(2), Bhilai, who as per the aforesaid Instruction No. 1/2011 (supra) was divested of any jurisdiction over the case of the assessee for the year under consideration, therefore, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date on which he was served with the notice(s) u/s. 143(2) and 142(1), dated 03.03.2015, therefore, it was not permissible for him to challenge the same for the first time in the course of the proceeding before the tribunal. Having given a thoughtful consideration to the aforesaid claim of the ld. DR we are unable to persuade ourselves to subscribe to the same. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of territorial jurisdiction of an Assessing Officer. Ostensibly, subsection (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. On the other hand subsection (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdiction assumed by the Income Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No. 1/2011, dated 31.01.2011, therefore, the provisions of sub-section (3) of Section 124 would not assist the case of the revenue. 15. We shall now deal with the contention of the Ld. DR that as both the officers in question i.e. Dy. CIT, Circle-1, Bhilai and the Income Tax Officer, Ward-2(2), Bhilai as per sub-section (5) of Section 120 were vested with concurrent jurisdiction over the assessee, therefore, initiation of the assessment proceedings by the Dy. CIT, Circle-1, Bhilai vide notice issued u/s. 143(2) dated 24.09.2013, which thereafter had culminated into an assessment framed by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s. 143(3), dated 30.03.2015 does not suffer from any infirmity. In our considered view the aforesaid contention of the Ld. DR is absolutely misplaced and in fact devoid and bereft of any merit. As the aforesaid CBDT Instruction No. 1/2011, dated 31.01.2011 exclusively vests the pecuniary juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the considered view that now when in the present case the assessment proceedings were initiated by the Dy. CIT, Circle-1, Bhilai vide notice u/s. 143(2), dated 24.09.2013, which thereafter were taken up and culminated by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s. 143(3) dated 30.03.2015, then, as per the mandate of sub-section (1) of Section 127 of the Act, the specified authority i.e. Commissioner or above was obligated to have recorded his reasons for transferring the case from the aforesaid Dy. CIT, Circle-1, Bhilai to the Income-Tax Officer, Ward-2(2), Bhilai. However, nothing has been brought to our notice which would justify the transfer of jurisdiction over the assessee s case from the Dy. CIT, Circle-1, Bhilai to Income-Tax Officer, Ward-2(2), Bhilai. 16. Be that as it may, we are of the considered view that as in the case of the assessee the assessment order u/s. 143(3), dated 30.03.2015 had been passed by a non-jurisdictional officer i.e. the Income-Tax Officer, Ward-2(2), Bhilai, which is in clear contravention of the CBDT Instruction No. 1/2011 dated 31.01.2011, therefore, the same cannot be sustained and is liable to be struck down on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses 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, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil areas) Income Declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs. 30 lacs Upto Rs. 30 lacs Above Rs. 30 Lacs Noncorporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in a number of other decisions of the ITAT, Kolkata Bench on this issue. 5.3. Kolkata B Bench of the Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd.(supra) held as follows: 10. In this case, the ITO Ward-3(3), Kolkata, issued notice u/s 143(2) of the Act on 04/09/2014. In reply, on 22/09/2014, the assessee wrote to the ITO, Ward-3(3), Kolkata, stating that he has no jurisdiction over the assessee. Thereafter on 31/07/2015, the DCIT, Circle-11(1), Kolkata, 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ACIT in ITA No. 2073/Kol/2016 order dt. 27.09.2017, held as follows:- 5. From a perusal of the above Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the 'non corporate returns' filed where income declared is only upto Rs. 15 lacs ; and the ITO doesn't have the jurisdiction to conduct assessment if it is above Rs 15 lakhs. Above Rs. 15 lacs income declared by a non- corporate 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 Rs. 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 Rs. 15 lacs the case was transferred from the ITO, Ward1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed. 7. In the result, appeal of assessee is allowed. Apart from that, we find that a similar view had been taken by the ITAT, Cuttack Bench, Cuttack in the case of Kshirod Kumar Pattanaik Vs. ITO, Angul Ward, Angul, ITA No. 380/CTK/2019 dated 10.12.2020. 17. Consequent to our aforesaid deliberations, we are of the considered view that as in the present case before us the assessment had been framed by the Income Tax Officer, Ward-2(2), Bhilai u/s. 143(3), dated 30.03.2015 in clear contravention of the CBDT Instruction No. 1/2011, dated 31.01.2011, which divested him of his jurisdiction over the case of the assessee for the year under consideration i.e AY 2012-13, therefore, the same cannot be sustained and is liable to be struck down in terms of our aforesaid observations. We, thus, in terms of our aforesaid observations qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir 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, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil areas) Income Declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs. 30 lacs Upto Rs. 30 lacs Above Rs. 30 Lacs Noncorporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2014 was transferred to ITO-1(2), Raipur]. Although notice u/s. 148, dated 18.06.2013 was issued within the stipulated time period, however, the same was issued by the DCIT-1(1), Raipur, i.e., an A.O who pursuant to the CBDT Instruction No. 1 of 2011, dated 31.01.2011 was not vested with jurisdiction over the case of the assessee for the year under consideration. On the other hand as the ITO, Ward-1(3), Raipur [succeeded by ITO, Ward-1(2), Raipur w.e.f. 15.11.2014] who as per the aforesaid CBDT Instruction (supra) was at the relevant point of time vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had not issued any notice u/s. 148 of the Act, and had proceeded with on the basis of the notice u/s. 148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional Officer, therefore, no valid jurisdiction could have been assumed by him for framing the impugned assessment vide order passed u/s. 143(3)(sic), dated 31.03.2015. 13. On the basis of my aforesaid deliberations, I am in agreement with the Ld. AR that the ITO-1(2), Raipur could not have validly assumed jurisdiction and framed the assessment vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s. 148 of the Act, therefore, the Hon ble High Court treating the notice u/s 148 issued by the ITO(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O. Apart from that, a similar view had earlier been taken by the Hon ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s. 148 of the Act by him, therefore, the notice so issued by him would be without jurisdiction. Also, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No. 84/RPR/2022, dated 29.11.2022. Further, a similar view had been taken by the Hon ble High Court of Gujarat in the case of Pankajbhai Jaysukhlal Shah Vs. ACIT, Circle-2 (2019) 110 taxmann.com 51 (Guj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, which, thereafter, had validly been transferred to the ITO, Ward-2(1), Bhilai, therefore, as per Section 129 of the Act the assessment framed by the latter on the basis of notice u/s. 148 dated 23.03.2015 issued by the ITO, Ward-1(1), Raipur could not be faulted with. 13. On the basis of the aforesaid facts, I am of the considered view that as stated by Mr. R.B Doshi, the Ld. AR, and, rightly so, the framing of the impugned assessment u/s. 143(3)/147 dated 25.03.2016 by the ITO, Ward 2(1), Bhilai on the basis of notice issued u/s. 148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. an officer who at the relevant point of time was not vested with jurisdiction over the case of the assessee, was devoid and bereft of any force of law. I find that involving identical facts a similar issue had came up before the Hon ble High Court of Bombay in the case of Ashok Devichand Jain Vs. UOI in W.P. No. 3489 of 2019, dated 08.03.2022. In the case before the Hon ble High Court as the notice u/s. 148, dated 30.03.2019 was issued by the ITO, Ward 12(3)(1), Mumbai, i.e., a non-jurisdictional Officer, therefore, on a writ petition filed by the assessee assailing the validity of the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed by the Hon ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s. 148 of the Act by him, therefore, the notice so issued would be without jurisdiction. Further, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No. 84/RPR/2022, dated 29.11.2022. 14. Considering the aforesaid position of law, I find substance in the claim of the Ld. AR that the assessment framed in the case of the present assessee by the ITO-2(1), Bhilai vide his order passed u/ss.143(3)/147, dated 25.03.2016 on the basis of notice u/s. 148 of the Act, dated 23.03.2015 issued by the ITO-1(1), Raipur ,i.e., a non-jurisdictional A.O, being devoid and bereft of any of force of law cannot be sustained and is liable to be vacated on the said count itself. Thus, the Ground of appeal No. 1 (to the extent relevant) is allowed in terms of the aforesaid observations. 14. On the basis of my aforesaid deliberations, I am of the considered view that as the assessment framed in the case of the present assessee by the ITO-1(2), Raipur vide order u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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