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TMI Blog2024 (6) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no notice u/s 143(2) has been issued by the jurisdiction A.O. i.e. Assistant commissioner Circle), Bilaspur C.G. 3. That the Ld. DCIT Bilaspur Circle 2(1) passed the order, has no jurisdiction as the jurisdiction was with DCIT, Bilaspur Circle 1. The appellant being a company, the jurisdiction lies with DCIT Circle 1(1), Bilaspur vide notification no 1 of 2014 dated 15/11/2014. 4. That the Ld. CIT(Appeal) erred in confirming the Rs. 26,89,094/- out of Rs.1,43,62,114/- as development expenses which were calculated by AO on estimates, resumptions & surmises ignoring the audited books of accounts. 5. That the large other expenses were to be examined with the audited books of accounts, and bills and vouchers. The addition made on the basis of estimated report of SDM, Bilha is perverse and unwarranted. 6. That the Ld. CIT(A) is not justified to confirm addition of Development expense of Rs. 11673020/-, whereas most of the expenses are paid by cheques and without development expenses like road, drainage no plots can be sold. 7. That the Ld. CIT(A) is not justified in confirming the addition of Rs. 2765260/- being stamps expense incurred by the company, ignoring the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses Amount (in Rs.) Brokerage Exp. For sales 1,91,05,906/- Developing Expenses 1,43,62,114/- Stamp Expenses 27,65,260/- Registry Expenses 4,20,181/- Typing Expenses 88,000/- 3.2 Regarding genuineness of the above expenses, the assessee was show caused by the Ld AO, in response details and explanations were submitted by the assessee but the Ld AO did not find the explanations so offered as convincing, therefore, he made the following additions: Expenses Amount (in Rs.) Developing Expenses 1,16,73,020/- Stamp Expenses 27,65,260/- Registry Expenses 4,20,181/- Typing Expenses 88,000/- Total 1,49,46,491/- 4. Aggrieved by the aforesaid additions in the order of Ld. AO, assessee preferred an appeal before the Ld CIT(A) NFAC, Delhi, however the appeal of asseseee therein have been dismissed by the Ld CIT(A) with the following observations: DECISION: 6. I have carefully considered the grounds of appeal, statement of facts and the contents of assessment order along with written submission filed by the assessee. During the appellate proceedings, the assessee has filed copy of ledger account of developing expenses and written submission stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. At the outset, Ld. AR of the assessee has submitted a written synopsis the same is extracted as under: M/s Ananda Devcon Pvt. Ltd. A Y 2015/16 ITA No. 223/RPR/2023 1. Return of income filed on 29.09.2015, with returned income of Rs. 21,44,050/- 2. First notice u/s 143(2) required to be issued latest by 30.09.2016. 3. First notice u/s 143(2) cit. 17.03.2016 issued by ITO-1(1), Bilaspur, PN 49 of PB. 4. In view of returned income being more than Rs. 15 lakh, jurisdiction vested with AC/ DC. 5. ITO-1(1), Bilaspur himself transferred the case to ACIT-I(I), Bilaspur. Letter at PN 50 of PB. He admits that jurisdiction did not vest with him but with ACIT-I(I), Bilaspur. 6. No notice u/s 143(2) issued by ACIT-2(l ), Bilaspur, who passed the assessment order. 7. A case of pecuniary jurisdiction. Reliance on: - i) Mata Road Carriers vs DCIT, at PN 84 to 101 of PB, relevant finding at PN 100 of PB, para no. 19. ii) Durga Manikanta Traders. 7. Elaborating the above synopsis, Ld. AR on behalf of the assessee submitted that order passed by the Ld. AO itself was bad in law, de hors valid assumption of jurisdiction and therefore the same deserves to be quashed. In order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Act, instructions of CBDT and the revenue authorities. Accordingly, the order passed u/s 143(3) dated 23.12.2017 was illegal, void-ab-initio and therefore, the same should be considered as non-est. To strengthen the contentions raised by way of drawing support from legal pronouncements, Ld. AR submitted that the present case is squarely covered by the following judgments, wherein similar issue have been deliberated upon by the coordinate bench of the ITAT, Raipur and has held as under: i) Mata Road Carriers vs DCIT, ITA No. 79/BIL/2016 vide order dated 10.07.2023 19. The coordinate bench of the Tribunal under the similar facts and circumstances, in the case of Ravi Sherwani, passed in ITA No.64/RPR/2020, order dated 29.05.2023, observations of which have been reproduced in the foregoing paragraphs, which has already been followed in the case of Amarjeet Singh Bhatia (supra), considering the observations made in the case of Durga Manikanta Traders (supra), held that the assessment framed by the AO on the basis of notice issued u/s.143(2) of the Act by the non-jurisdictional officer is void ab initio. In the present case, the ITO-1(1), Raipur having no jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in agreement with the Ld. AR that the ITO-1(1), Bhilai could not have validly assumed jurisdiction and framed the assessment vide his order passed u/s. 143(3) of the Act, dated 29.12.2016 on the basis of the notice issued u/s. 143(2), dated 24.09.2015 by the DCIT-1(1), Bhilai i.e. a non-jurisdictional A.O. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Ashok Deckhand Jain Vs. UOI in W.P. No. 3489 of 2019, dated 08.03.2022. In the said case the Hon'ble High Court by referring to the CBDT Instruction No.1 of 2011, dated 31.01.2011, had observed, that as the pecuniary jurisdiction over the case of the assessee before them who had returned an income of Rs. 64.34 lacs was vested with the DCs/ACs, therefore, the notice issued u/s. 148 of the Act by the ITO who during the year under consideration had no pecuniary jurisdiction over the Assessee's case was bad in the eyes of law. Considering the aforesaid lapse in the assumption of jurisdiction the Hon'ble High Court had quashed the notice that was issued by the ITO u/s. 148 of the Act. Also, a similar view had been taken by the Hon'ble High Court of Gujarat in the case of Pankajbhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in the case of Dy. CIT Vs. Sunita Finlease Ltd. [2011] 330 ITR 491 (Chhattisgarh). In its said order it was observed by the Hon'ble Jurisdictional High Court that the administrative instructions issued by CBDT are binding on the Income-tax authorities. On the basis of our aforesaid observations, we are of the considered view that as the framing of the assessment in the case of the present assessee by the Income- Tax Officer, Ward-2(2), Bhilai is clearly found to be in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the same cannot be justified. 14. We shall now deal with the objection raised by the Ld. DR that as the assessee had not called in question the jurisdiction of the Income-Tax Officer, Ward-2(2), Bhilai within the stipulated time period of one month from the date on which he was served with the notice(s) u/ss.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g notice u/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant point of time, the Hon'ble High Court quashed the assessment. Apart from that, the aforesaid view is also supported by the order of the ITAT, Kolkata 'B' Bench in the case of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee's objection to the validity 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." On a careful perusal of the aforesaid mandate of law, it transpires, that even in a case where jurisdiction over the case of an assessee that is vested with one A.O (having concurrent jurisdiction over the case of the assessee) is to be transferred to another A.O (having concurrent jurisdiction over the case of the assessee), even then the authority specified under sub-section (1) of Section 127 is obligated to record his reasons for doing so. Considering the aforesaid position of law, we are of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016-17 Anderson Printing House Pvt. Ltd having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers. 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 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, when the present income limits were introduced. It has therefore been decided to increase the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving pecuniary jurisdiction to frame such assessment was bad in law. The relevant part of the order dated 03.02.2021 passed in ITA No.2517/Kol/2019 and Others is reproduced as under: "5.2. The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, in ITA No. 2634/Kol/2019, order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Later, the case was transferred to the jurisdiction of the ACIT on 11/08/2017. Thereafter, no notice u/s 143(2) of the Act was issued by the Assessing Officer having jurisdiction of this case and who had completed the assessment on 26/12/2017 i.e., ACIT, Circle- 1(1), Durgapur. Under these circumstances, the question is whether the assessment is bad in law for want of issual of notice u/s 143(2) of the Act. This Bench of the Tribunal in the case of Shri Sukumar Ch. Sahoo 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 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, 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. 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the foundation of a notice issued by the officer who is not the jurisdictional AO of the assessee and no notice by the jurisdictional AO, shall be liable to be rendered as illegal and unsustainable. It is, therefore, the prayer that the impugned order passed u/s 143(3) of the Act should be treated as illegal and the entire assessment should be quashed. 10. In rebuttal, Ld. Sr DR, on the issue has submitted a written submission by the department the same is extracted as under: 11. Baked by aforesaid submissions, it was the contention of Ld. Sr. DR that the notice u/s 143(2) of the Act was issued by the ITO Ward 1(1), Bilaspur, since the PAN of the assessee was lying with him at the time of issuance of notice. As soon as ITO 1(1) has realized that the amount of returned income filed by the assessee exceeds Rs. 15 Lacs, he transferred the said case to DCIT-1(1) Bilaspur. It is further submitted that the assessee at no earlier point of time either before the Ld. AO or before the Ld. CIT(A) had raised such plea of incorrect jurisdiction on account of the defect in issuing of notice u/s 143(2), therefore, as per provisions of section 124(3) such contentions at this juncture are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was passed by the ITO, Ward-4 without issuing notice u/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant point of time, the Hon'ble High Court quashed the assessment. Apart from that, the aforesaid view is also supported by the order of the ITAT, Kolkata 'B' Bench in the case of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee's objection to the validity 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, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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