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TMI Blog2024 (4) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity transactions, erred in confirming the action of the Assessing Officer not to treat Rs. 4227500/- as genuine long Term Capital Gain, but income of the Appellant under section 68 of the Income-tax Act, 1961. 3. That on the facts and in the circumstances of the case, the ld. Commissioner of Income Tax {Appeals}-10, Kolkata, erred in confirming the Addition of Rs. 148657/- made on account of Bogus Commission. 4. That the ld. ClT{A}-10, Kolkata, erred in confirming to the extent of Rs. 1626558/- made by the Assessing Officer under Section 14A of the Act. 5. That the Assessment Order passed by the ld. Commissioner of Income Tax, is bad in law." 2.1. However, assessee has also taken additional ground which is reproduced as under: "For that the AO passing the assessment order did not have jurisdiction over the case of the assessee. Hence, the notice is bad in law and assessment order passed on the basis of such notice is bad in law and should be quashed." 3. Assessee submitted that this additional ground is pure legal ground which goes to the root of the matter and no new facts are required to be investigated or placed on record for adjudicating the same. He placed relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the Act dated 31.08.2015 was issued and served upon the assessee on 10.09.2015. thereafter, notice u/s. 142(1) of the Act dated 13.06.2016 along with questionnaire were issued and duly served upon the assessee." 6. From the above, it is noted that return of income filed by the assessee is at Rs. Nil. Notice u/s. 143(2) has been issued and served on the assessee on 10.09.2015. Notice u/s. 142(1) dated 13.06.2016 along with questionnaire has also been issued and served on the assessee. The important fact Ld. Counsel asserted is that both, the notice as well as the assessment order has been issued by the Assistant Commissioner of Income Tax, Circle-36, Kolkata, who did not have jurisdiction over the assessee owing to the pecuniary jurisdiction mandated by CBDT in its Instruction No. 1/2011 (F. No. 187/12/2010-ITA-1) dated 31.01.2011. According to him, since the assessee has disclosed nil income, the jurisdiction for framing the assessment vide CBDT Instruction No. 1/2011 vests with the Income Tax Officer whereas the assessment order in question has been framed by the ACIT, therefore, assessment order is without jurisdiction and deserves to be quashed. 6.1. He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies who are subordinate to it. (3) In issuing the directions or orders referred to in sub- sections (1) and (2), the Board or other income- tax authority authorised by it may have regard to any one or more of the following criteria, namely:- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases ...... 8.1. A perusal of the aforesaid statutory provision would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also having regard to a person or classes of persons and income or classes of income. Therefore, CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers for class of cases with prescribed pecuniary limits based on income declared by the assessees. 8.2. The ld. Counsel in this respect has relied upon the CBDT Instruction No.1/2011 [F.No.187/12/2010-IT(A-I), for the sake of convenience is reproduced 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) before proceeding to frame the assessment, then such an assessment order was bad in law. 9. On the above observations, the short issue which falls for consideration in the instant case is whether there is valid notice issued u/s. 143(2) of the Act in commencing the scrutiny assessment and thereafter framing the assessment order u/s. 143(3) of the Act. In this respect, it is not in dispute that on the date of selecting the case for scrutiny, the very basis for having jurisdiction over the assessee is the returned income which in the present case is less than the prescribed limit in CBDT Instruction no. 1/2011 and, therefore, the same lay with ITO. However, the notice u/s. 143(2) was issued by ACIT, Circle-36, Kolkata. It is also a fact that subsequently the assessment has been framed by ACIT, Circle-36, Kolkata only. Since a valid notice u/s. 143(2) has not been issued, the assessment proceeding carried thereafter can also not be held to be valid. We note that the assessment has been framed by the AO who is not having the prima facie jurisdiction to frame the impugned assessment, accordingly, the assessment is invalid. Case of the assessee finds support from the decision of Coord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... call in question the jurisdiction of an Assessing Officer- (a) where he has made a return 1 [under sub-section (1) of section 115WD or under sub-section (1) of section 139], after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or 2 [subsection (2) of section 115WE or sub-section (2) of section 143] or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under 3 [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144] to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; 4 [(c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to complete the assessment if the assessment order is not issued. 12.1. On perusing the order of Hon'ble High court, it is noted that it did not express its opinion on the order of assessment and the demand u/s. 156. It dealt only with the issue of notice u/s. 143(2) for which also it was kept open for the competent authority to issue appropriate notice to the assessee as per law. 12.2. Facts in the case of Kalinga Institute of Industrial Technology (supra) are distinguishable from the facts of the present case as noted above. 13. Accordingly, we allow the additional ground raised by the assessee and hold that the assessment order framed in the case of the assessee is without jurisdiction and is a nullity. The impugned assessment order is hereby quashed since the AO i.e. ACIT, Circle-36, Kolkata framed the said assessment did not have jurisdiction over the assessee as mandated by CBDT Instruction No. 1/2011. Since the additional ground has been allowed and the assessment order being quashed, the grounds on merits raised by the assessee in Form 36 are not adjudicated upon since they have been rendered academic in nature. 14. In the result, appeal of the assessee is allowed. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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