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TMI Blog2023 (7) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... e other grounds also. The assessment was made on ''one sided approach" and not made on "best judged assessment principle". 2. Further, vide letter dated 04.11.2022, the assessee has filed revised grounds of appeal, including the additional ground, which read as under:- Revised Gr. No. l "1. On the facts and circumstances of the case and in law. Id CI'f(A) has erred in sustaining the addition of Rs. 29,37,587 & Rs. 2,21,050 on the count of estimation of 5% & 25% on adhoc basis, on 'Direct expenses' on "repairs & maintenance' & 'labour charges' of Rs. 5,87,51,733 & Rs. 8.84.200 respectively, since no bills & vouchers produced for verification before the Id AO on 'gross receipts' of Rs. 17.09 crores; while. GP/NP shown in the year, is much higher than the GP/ NP of AY 10-11 which has been accepted by the Id AO; addition of Rs. 29,37,587 & 2,21,050. is not sustainable in the eyes of law even if the books of account is to be rejected & sec 145(3) be applied; is liable to be deleted." Additional Gr. No. l "1. On the facts and circumstances of the case and in law, assessment order u/s 143(3) dt. 27-3-14 by DClT-l(l), Raipur is invalid, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not substantiated or explained. Further the AO noted that the assessee has failed to discharge its onus. It was also observed by the AO that repair and maintenance expenses may be inevitable and incidental to the nature of business however due to non-submission of bills/vouchers inflating of these expenses cannot be ruled out. Accordingly, the AO disallowed 5 % of the said expenses i.e. Rs. 29,37,587/- and added back to the total income of the assessee. Further, the AO on verification of profit and loss account, found that repair and maintenance expenses were claimed at Rs. 2,16,695/-. No bills and vouchers were produced to support these claims. During the course of assessment proceedings, the AR of the assessee has admitted that no log book for personal use of these expenses is maintained. On account of non-production of any bills and vouchers and the personal use due to nature of these expenses 1/4th of these expenses i.e 54,173/- disallowed by the AO and added to the total income. It was also noted by the AO that labour charges are shown at Rs. 8,84,200/-. As per the AO no bills and vouchers were produced by the assessee in this regard. Accordingly, the AO disallowed l/4th of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacsq 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 issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011. 10. Further, the ld. AR relied on the CBDT Instruction No. 6/2011, dated 08.04.2011, wherein the Board has instructed the CCIT/DGIT to adjust the limits by an amount upto Rs. 5 lakhs to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. The said Instruction No. 6/2011 is as under :- INSTRUCTION NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29.05.2023; vi) Sudhir Kumar Agrawal, ITA No. 158/RPR/2017, order dated 17.10.2022/[2023] 221 TTJ 687 (Raipur-Trib); and vii) Durga Manikanta Traders, ITA No. 59/RPR/2019, order dated 12.12.2022; 13. In view of the above submissions, it was the prayer of the ld. AR that since the notice u/s. 143(2) of the Act itself was invalid, the assessment order u/s. 143(3) of the Act, dated 27.03.2014, is illegal, non-est, bad in law, and deserves to be quashed. 14. On the contrary, ld.Sr.DR vehemently supported the order of the authorities below and produced the clarification sought from the ACIT, Circle-1(1), Raipur, which reads as under :- GOVERNMENT OF INDIA MINISTRY OF FINANCE: DEPARTMENT OF REVENUE, OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, 1(1) C. R. BUILDING, CIVIL LINES, RAIPUR (C.G.) - 92001 F. No. ACIT-l(l)/RPR/Misc./MA/2022-23 Dated : 15-11-2022 To. The Joint Commissioner of Income-tax, Sr. DR, ITAT, Raipur Sir,. Sub: Clarification in case of M/s Mata Road Carrier -PAN: AAJFM0294R- ITA 79/RPR/2016 -A.Y.2011-12 - Regarding - ----------------------- Kindly refer to your letter F. No. JCIT-ITAT/RPR/Clarification/2022-23 dated 21-11-2022 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eases their cost of compliance. The Board therefore considered the matter and opined that the existing limit needs to be revised to remove the hardship referred to therein. Further, the Board opined that increase in their monetary limit is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the earlier income limits were introduced. Therefore, for non-corporate returns in mofussil area, the ITOs were assigned cases upto Rs. 15,00,000/- and the Assistant Commissioners and Deputy Commissioners above Rs. 15,00,000/-. Subsequently, by another instruction dated 08.04.2011, the earlier instruction was reconsidered and it was decided that if the application of the limits mentioned in the instruction dated 31.01.2011, leads to substantially uneven distribution of workload between DCs/ACs and ITOs, the CCIT/DGIT may adjust the limits by an amount upto Rs. 5,00,000/- to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. (5) The Hon'ble Supreme Court in the case of Kerala Financial Corporation vs. CIT, reported in [1994] 210 ITR 129 (SC), and in UCO Bank vs. CIT report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount upto Rs. 5,00,0007-, and the purpose for giving such discretion is to ensure that the workload is equitably distributed amongs the Assessing Officer. Therefore, the monetary limit fixed in the instruction dated 31.01.2011, was not a rigid limit. This is manifest from the subsequent instruction dated 08.04.2011, which has given discretion to the Chief Commissioner and Director General to adjust the limits. The underlining object of the instructions is equitable distribution of work. It is seen that the amended instruction dated 08.04.2011 itself, came to be issued, as Chief Commissioners have expressed the view that the limits fixed in the instruction dated 31.01.2011, if strictly enforced would lead to unequal distribution of workload between Assistant Commissioner and Income Tax Officers. Therefore, the Board re-considered the matter. d. Inadvertently, in the assessment order u/s 143(3) dated 27-03-2014, date of filing of return is mentioned as 26-09-2011 (date of filing of original return) whereas it should have been mentioned as 22-03-2013 (date of filing of revised return). However, returned income remains the same i.e. Rs. 23,44,310/-. 5. Case record in one volume is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore AO, hence, Rs. 29,37,587/-, 5% of direct expenses of Rs. 5,87,51,173/( Para-5 page3) Rs. 54,173, Y» of Rs. 2,16,695)under head repair and maintenance/-( Para-6 page -3) and Rs. 2,21,050/-,l/4 of Rs. 8,84,200/- under head labor charges( Para -7 Page 4) was disallowed and added to the Income of the assessee. Interest paid of Rs. 70,120/- was paid to Magma finance company is disallowed and added under section 40a(ia) of the Act.( Para-8 page-4) 9. CIT observation: - The CIT appeal confirmed the above addition Para 2.3 Page 4 10. The assessee has challenge the notice under section 143(2) and assessment order passed under section 143(3) by the DCIT Circle-1, Raipur. Apart from the above submissions, ld. DR relied on the following case laws and submitted that the assessee's objection may not be acceptable:- 1. CIT vs SS Ahluvalia ITA no 255.2002 dated 14-03-2014, Delhi High court, Page 29 to 65 2. Panna lal BIN] Raj Vs union of India 31 ITR 565(SC) page 66 to 88. 3. Deepak Agro Food vs state of Rajsthan 2008 TIOL 134 SC CT Page 89 to 94, 4. Abhishek Jain writ petition Civil 11844/23-04-2011 Delhi HC page 95 To 111. 5. Hindustan Transport CO. vs IAC and Anr 1991) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer. Ostensibly, sub-section (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 sub-section (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) 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 Shri Sudhir Kumar Agrawal, Durg Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (3) of Section 124 would not assist the case of the revenue. 18. Admittedly, the assessee has filed its return of income for the assessment year 2011-2012 with a returned income of Rs. 23,44,310/-, which is above Rs. 15 lakhs. As per the CBDT Instruction No. 1/2011, dated 31.01.2011 and Instruction No. 6/2011, dated 08.04.2011 and the Notification of the CCIT, Raipur, dated 30.05.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh was vested with an officer in the rank of ACIT/DCIT, whereas the notice u/s. 143(2) of the Act was issued by the ITO-1(1), Raipur. Though, subsequently the case was transferred to DCIT-1(1), Raipur, however, the jurisdiction assumed by the ITO-1(1), Raipur, who has issued notice u/s. 143(2) of the Act was not in accordance with the CBDT Instruction No. 01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011. Therefore, the notice issued u/s. 143(2) of the Act was invalid in terms of non-following the binding instructions issued by the CBDT and, therefore, the framing of assessment on the basis of such invalid notice was also void ab initio and needs to be struck down. This issue has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E 1996 (8) ELT 19 : 1996 (10) SCC 387; Collector of Centra Excise vs. Jayant Dalai (P) Ltd. 1998 (100) ELT 10 : 1997 (10) SCC 402; Collector of Centra. Excise vs. Kores India Ltd. 1997 (89) ELT 441 : 1997 (10) SCC 338; Paper Products Ltd. vs. Collector of Central Excise 1999 (112) ELT 765 : 1997 (7) SCC 84; Dabur India Ltd. vs. CCE 2003 (157) ELT 129). 8. The somewhat different approach in M/s. Hindustan Aeroneutics V. Commissioner of Income Tax, Karnataka, Bangalore 2000 (5) SCC 365 by two learned Judges of this Court, apart from being contrary to the stream of authority cannot be taken to have laid down good law in view of the subsequent decision of the Constitution Bench in Collector of Central Excise, Vadodara V. Dhiren Chemical Industries. After this Court had construed an exemption notification in a particular manner, it said (p. 130 of SCC and p. 557 of ITR) :: "We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue".. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 20. Further, the coordinate bench of the Tribunal in the case of Ravi Sherwani, in ITA No. 64/RPR/2020, vide order dated 29.05.2023, in para 11 has held that, "controversy involved in the present appeal lies in a narrow compass, i.e, sustainability of the assessment framed by the ACIT, Circle 4(1), Raipur vide his order passed u/s 143(3) of the Act, dated 29.03.2016, which in turn was based on a notice u/s 143(2) of the Act, dated 08.09.2014 issued by the ITO-1(3), Raipur, i.e a non-jurisdictional officer. We find that the issue involved in the present appeal is squarely covered by the order of this Tribunal in the case of Durga Manikanta Traders Vs. ITO, ITA No. 59/RPR/2019 dated 12.12.2022; wherein, it has been held, that in case an A.O vested with jurisdiction over the case of the assessee, had framed an assessment u/s. 143(3) of the Act, by assuming jurisdiction to frame such assessment on the basis of notice u/s 143(2) of the Act issued by a non-jurisdictional officer, i.e an A.O who was not vested with pecuniary jurisdiction over the case of the assessee as per CBDT Instruction No. 1 of 2011, then, the assessment so framed could not be sustained and was liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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