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TMI Blog2023 (7) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional grounds, which read as under:- Revised Gr. No. l; "1. On the facts and circumstances of the case and in law, reopening u/s. 148 dt. 21-3-14 is invalid as it is assessed u/s 143(3) dt. 24-12-09; it is beyond 4 years; there is no allegation on the reasons recorded that indicate any failure on the part of the assessee to disclose fully & truly all material facts necessary for the assessment made u/s. 143(3) dt. 24-12-09; reopening u/s. 148/147 is not permissible in the eyes of law as hit by first proviso to sec. 147; is liable to be quashed." ........... Revised Gr. No. 2; "2. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs. 21,49,054 made by the Id AO on the count of income of the assessee for the AY 07-08 merely on presumption & surmises; which is unjustified, is liable to be deleted. Additional Gr. No. l: "1. On the facts and circumstances of the case and in law, reopening u/s 148 & assessment made u/s. 147, both are invalid & without having valid jurisdiction by the Id AOs i.e., DCIT-l(l)/ ACIT-3(1), as they were not having pecuniary jurisdiction over the assessee for recording reasons u/s 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.10.2007 declaring total income at Rs. 5,22,820/-. The assessee's case was reopened by the Assistant Commissioner of Income Tax, Circle-3(1), Raipur on the basis that during the course of assessment proceedings for the assessment year 2008-2009, the assessee has submitted copy of confirmation of accounts in the name of Merline Infrastructure and Smt. Kewar Bai Dheewar. It has been noticed that there is an opening balance as on 01.04.2007 in the case of Merline Infrastructure amounting to Rs. 7,77,500/- and in the case of Smt. Kewar Bai Dheewar amounting to Rs. 13,71,554/-but the same have not been reflected in the balance sheet of the assessee filed for 31.03.2007. Being satisfied with he aforesaid observation, the AO has formed the reason to believe that Rs. 21,49,054/- has escaped from assessment. In this case, the order u/s. 143(3) of the Act was also passed on 24.12.2009 and the income was assessed at Rs. 6,15,800/- on returned income of Rs. 5,22,820/-. Due to restructuring and reallocation of jurisdiction, the case of the assessee was transferred from DCIT-1(1), Raipur to ACIT-3(1), Raipur and due to change of incumbent, notice u/s. 142(1) of the Act dated 08.12.2014 along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id instruction issued by the CBDT as well as the office of the CCIT, Raipur, the ld. AR submitted that the reasons for reopening were recorded by the DCIT-1(1), Raipur on 19.03.2014 for the assessment year 2007-2008, since the assessee's returned income for the relevant assessment year was Rs. 5,22,820/-, which is below the monetary limit as prescribed by the CBDT, therefore, the reopening itself was invalid and nonest because the DCIT-1(1) Raipur was not having pecuniary jurisdiction over the assessee as on 19.03.2014. To support his contentions, ld. AR relied upon the various cases law and some of such cases laws having similar facts and circumstances which are as under :- i) Durga Manikanta Traders, ITA No. 59/RPR/2019, order dated 12.12.2022, wherein the Tribunal has held as under:- 17. On the basis of our aforesaid observations, we are of the considered view that as in the case of the present assessee before us the impugned assessment had been framed by the ITO-1(1), Bhilai vide his order 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 DCIT-1(1), Bhilai, i.e., an A.O who at the relevant point of time was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding and section 124(3) cannot correct or create a jurisdiction in respect of other proceedings, if the Assessing Officer otherwise I.T.A No. 266 to 269/Agra/2013 does not have jurisdiction. Such defects also cannot get cured because of appearance of the present Director of the Company and the Counsel during the assessment proceedings for AY 2008-09, because as held in the case of "M I Builders Pvt. Ltd. vs. ITO Lucknow" (supra), the principles of estoppel are not applicable to income-tax proceedings and what may be acceptable or held in one year or in one proceeding cannot be in general held to be applicable to other proceedings. The reliance of the AO for validation of jurisdiction in the three assessment years on the basis of compliance made by the assessee in AY 2008-09, is, as correctly held by the CIT(A), also not legally tenable because erroneous assumption of jurisdiction cannot, in general, be validated. Such validation is specific in section 124(3) and failure of the assessee to object within the time allowed under section 124(3) is available to specific proceedings and not to every proceeding as also held in "M.I. Builders" (supra). 12. The CIT(A) has correctly ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been triggered to fasten an obligation upon the assessee to call in question the jurisdiction of the said officer, i.e., ITO1(3), Raipur. v) Ravi Sherwani, ITA No. 64/RPR/2020, order dated 29.05.2023, wherein the Tribunal has held as under :- As the facts and the issue involved in the present appeal remains the same as were involved in the aforementioned orders of the Tribunal in the case of Durga Manikanta Traders Vs. ITO, ITA No. 59/RPR/2019 dated 12.12.2022 and Chowaram Dhiwar Vs. ITO, ITA No. 31/RPR/2022 dated 28.12.2022, therefore, respectfully following the same parity of reasoning, we are of the considered view that as the assessment framed in the case of the present assessee by the ACIT, Circle-4(1), Raipur vide order u/s. 143(3) dated 29.03.2016 on the basis of notice issued by the ITO-1(3), Raipur i.e. a non-jurisdictional A.O is devoid and bereft of any force of law, thus, the 29 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No. 64/RPR/2020 same cannot be sustained and is liable to be struck down on the said count itself. Accordingly, 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 assumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no enclosure or evidences. The AO categorically stated that the explanation of the assessee is not supported with the evidences and is contrary to the confirmation furnished during regular assessment proceedings. The assessee also failed to produce books of accounts. The assessee failed to discharge his onus. The burden of proof was shifted to the assessee by notice issued u/s 142(1), it was also not responded. ( Para-2 page -2) Hence the addition of Rs. 21,49,054/- The assessee failed to explain the escaped income, non-complied to the notices, and failed to discharge onus, hence addition was made. 16. Apart from the above submissions, ld. Sr. DR also submitted that the assessee is non responsive to assessment and appellate proceedings and has concealed the facts regular assessment proceedings. It was also submitted by the ld. Sr. DR that the assessee has never challenged the assessment proceedings on pecuniary and territorial basis. The assessee has not objected the notice issued under section 148, and also not objected proceedings in view of section 124(3) before assessing officer. The ground of appeal before CIT appeal and before ITAT is different. It was also the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing 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 2007-2008 with a returned income of Rs. 5,22,820/-, which is below Rs. 15 lakhs. As per the CBDT Instruction No. 1/2011, da ted 31.01.2011 and Instruction No. 6/2011, dated 08.04.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh. Therefore, the jurisdiction to assess the case of the assessee was vested with an officer in the rank of ITO, whereas the case of the assessee was reopened by the DCIT-1(1), Raipur, which was subsequently transferred to ACIT, Circle-3(1), Raipur. Since the jurisdiction assumed by the ACIT Circle-3(1), Raipur, who has framed the assessment of the assessee was not in accordance with the CBDT Instruction No. 01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011, therefore, the instruction assumed was invalid in terms of non-following the binding instructions issued by the CBDT and, therefore, the order remained on the basis of such reopening was also void ab initio and needs to be struck down. In this regard, reliance can be placed on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC. 10. The principles laid down by all these decisions are : (1) Although a circular is not binding on a Court or an assessee, It is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was thereafter wrongly been framed by an officer, who was not having jurisdiction over the case of the assessee as per the criteria laid down by the CBDT Instructions, referred to supra. Since similar issues were decided by the coordinate bench of the Tribunal in several different cases, referred to above, along with observations in these cases as are extracted hereinabove, therefore, respectfully following the view taken in the above judicial pronouncements, we are of the considered opinion that the order framed u/s. 147/143(3) of the Act by the ACIT, Circle-3(1), Raipur, dated 11.02.2015 for the assessment year 20047-2008 in the case of assessee, is liable to be quashed and we do so. Thus, the legal ground of assessee is allowed. 22. Since, we have decided the legal ground for want of valid assumption of jurisdiction by the AO and have struck down the assessment order itself, we, therefore, refrain ourselves from adverting to and to adjudicate the other grounds raised in the present appeal by the assessee with regard to the additions made by the AO and confirmed by the ld. CIT(A). 23. In the result, appeal of the assessee is allowed in terms of our observations hereinabove. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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