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TMI Blog2025 (2) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... Circle-1, Guwahati. Needless to say, that the successor Assessing Officer issued a notice u/s 142(1) of the Act, prior to completing the assessment. 1.2 During the course of assessment proceedings, the Assessing Officer has recorded that the assessee is a civil contractor and the reason for picking up the case for scrutiny was a substantial increase in sundry creditors. The Assessing Officer issued notices for collecting information about the said creditors and managed to obtain some basic details like addresses, PAN etc. However, notices u/s 133(6) of the Act issued by the Assessing Officer did not result in any compliance from the said creditors. Also, the Assessing Officer failed to obtain any details regarding payments made to them or even bills or vouchers in evidence of the transactions claimed. Even though, as is recorded, they were old creditors but it was felt that since even for this year some transactions had been made, there would be no problem with verification. Thereafter, the Assessing Officer proceeded to add u/s 68 of the Act Rs. 1,88,60,982/-, representing transactions during the period from 01.04.2014 to 31.03.2015, mainly on account of non-satisfactory verifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 1,88,60,982/-. 2. For that the learned CIT (Appeals) is not justified in enhancing the assessment by Rs. 6,80,71,300/- by making addition u/s 41(1) of I.T. Act, 1961. 3. For that the assessment order is bad in law as no notice u/s 143(2) has been issued by jurisdictional Assessing Officer. 4. For that the assessment order is bad in law as transfer of assessment by one A.O. to another A.O. is without any order by Commissioner of Income Tax as provided u/s 127 of I.T. Act, 1961. 5. For that the learned CIT (Appeals) after holding in 3rd Para on Page 44 of order that no books of accounts has been maintained making addition on same books of accounts. 6. For that the learned CIT (Appeals) is not justified in giving blanket direction for reassessment for the A.Y. 2013-14 to A.Y. 2018-19. 7. For that the learned A.O. is not justified in applying tax rate as prescribed u/s 115 BBE of I.T. Act, 1961. 8. The Appellant craves the leave to take Additional Grounds at the time of hearing of Appeal." 2.1 Right at the outset, it may be mentioned that Ground Nos.6,7 & 8 are not proposed to be specifically adjudicated as they would be consequential to the decision ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alinga Institute of Industrial Technology reported in 454 ITR 582 (SC), mainly on the ground that it denotes allowing of an SLP and is not a decision of regular Civil appeal. It needs to be mentioned that this order is dated 01.05.2023. (B) Ld. DR - (i) At no stage, either before the Assessing Officer or the ld. CIT(A), has the assessee ever raised the issue of jurisdiction and since the assessee participated in the proceedings, he has forfeited his right to challenge the jurisdiction at this stage. (ii) Reliance has been placed on the case of Kailash Kedia 147 taxmann.com 126 (Ori) and the case of Anshul Jain reported in 143 taxmann.com 37 (P&H) 4. We have carefully considered the submissions from both sides and also perused the facts, as evident from the records. It is felt that the issue of whether assessment proceedings can be vitiated due to non- adherence to the pecuniary jurisdiction assigned to various levels of Income Tax Officers, deserves a fresh look with the judgment in the case of DCIT vs. Kalinga Institute of Industrial Technology reported in 454 ITR 582 (SC) order dated 01.05.2023. Since all the the case laws relied upon by the ld. AR, i.e. PCIT vs. Nopany an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erritorial. Here some relevant portions of section 120 of the Act (titled "Jurisdiction of income-tax authorities") and also section 124 (titled "Jurisdiction of Assessing Officers") need to be highlighted: Section 120 [Jurisdiction of income-tax authorities. 120. (1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. [Explanation. -For the removal of doubts, it is hereby declared that any income- tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1).] (2) The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.] Section 124 [Jurisdiction of Assessing Officers. 124. (1) Where by virtue of any direction or order issued under sub-section (1) or sub-section (2) of section 120, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the judgment of the Assessing Officer, whichever is earlier; [(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, whichever is earlier.] (4) Subject to the provisions of sub-section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made. ------------------ 4.3 A plain reading of section 120(3) of the Act reveals that jurisdiction pertains to territorial area, persons, classes of persons, incomes or classes of income and cases or classes of cases. Thus, it is clear that this section includes pecuniary jurisdiction. As a logical corollary, it would be a clear interpretation that the mechanism for settlement of any grievance, pertaining to the challenging of jurisdiction, would be available in this Chapter XIII and its Part 'B' ("Jurisdiction"). At this stage, it n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the three conditions mentioned in clause (a),(b) and (c) of sub- section (3) respectively exist. Clause (a) of sub-section (3) of section 124 refers to situations, inter alia, where a person has made a return under sub-section (1) of section 139, who has been served with a notice under sub-section (1) of section 142 or sub-section (2) of section 143. Given the provision of clause (a) of sub-section (3) of section 124, no person is entitled to call in question the jurisdiction of an Assessing Officer after expiry of one month from the date on which he is served with such notice, whichever date is earlier. Sub-section (4) of section 124 mandates the Assessing Officer to refer the matter for determination under sub-section (2) before the assessment is made, if he is not satisfied with the correctness of the claim of the assessee calling in question the jurisdiction of an Assessing Officer, subject to the provisions of sub-section (3). Sub-section (5) of Section 124 which begins with a non-obstante clause, is as under:- "(5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that every Assessing Officer shall have all the powers conferred by or under the Act,1961 on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120. Thus, the Assessing Officer vested with jurisdiction by virtue of direction of sub-section (1) and (2) of section 120 shall have all powers conferred by or under the Act, 1961 on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction. 18. It has been admitted before us that respondent no. 1 i.e the ITO-2(1), Moradabad has the territorial jurisdiction over the petitioner, but only objection to the jurisdiction has been raised merely on the ground that on account of pecuniary limit, the proceedings ought to have been initiated by ACIT-2, Moradabad. 19. Once the territorial jurisdiction of respondent no. 1 is admitted by the petitioner, there existed no occasion for the Assessing Officer to refer the matter for determination under sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of the assessment year 2010-11 in the prescribed proforma. It is mentioned in the notice that the notice has been issued after due satisfaction of the Assessing Officer that there is reason to believe that in the income chargeable for the assessment year 2010-11, the petitioner has escaped certain amount from assessment within the meaning of third proviso to Explanation 2(c)(i) to section 147 of the said Act. In the notice it is also mentioned that necessary approval has been granted by the Additional Commissioner of Income-tax for issuing such notice. The petitioner has responded to the said notice dated March 25, 2015 on April 22, 2014. However, no objection as to jurisdiction is raised. The objection as to the jurisdiction has been raised for the first time by representation dated September 7, 2015. Thus, it is amply clear that within the period of 30 days of issuance of notice under section 148 of said Act, no objection as to the jurisdiction was raised by the petitioner. By the notice dated June 26, 2015 issued by respondent No. 3 under section 142(1), respondent No. 3 called upon the petitioner to submit his return on July 11, 2015. The objection as to the jurisdiction wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Code enacts that no objection to the place of suing should be allowed by an appellate or revisional court, unless there was a consequent failure of justice. It is the same principle that has been adopted in Section 11 of the Suits Valuation Act with reference to pecuniary jurisdiction. The policy underlying Sections 21 and 99, C. P. C. and Section 11 of the Suits Valuation Act is the same namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in failure of justice and the policy of the legislature has been to treat objections to jurisdiction both territorial and pecuniary as technical and not open to consideration by an appellate court, unless there has been a prejudice on the merits. The contention of the appellants, therefore, that the decree and judgment of the District Court, Monghyr, should be treated as a nullity cannot be sustained under Section 11 of the Suits Valuation Act." 16. Same view has been taken by the Hon'ble Supreme Court in Greenworld Corpn. Referring to an earlier judgment in Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit and that of territorial and pecuniary jurisdiction. Whereas in the case falling within the former category the judgment would be a nullity, in the latter it would not be (emphasis added)..." 17. Accordingly, question has to be answered against the assessee and impugned notice cannot be held to be vitiated for want of jurisdiction. (d) Also in the case of Abhishek Jain vs. ITO reported in 405 ITR 1 (Del), the Hon'ble Delhi High Court has observed as under: "Section 120 which relates to jurisdiction of the Income-tax Authorities stipulates that Income-tax Authorities shall exercise any of the powers and perform all or any of the functions conferred or assigned to such authority by or under this Act as per the directions of the Board i.e., Central Board of Direct Taxes. As per Explanation to sub-section (1), the power can also be exercised, if directed by the Board, by authorities higher in rank. Under sub- section (2), the Board can issue orders in writing for exercise of power and performance of functions by the Income-tax Authorities and while doing so in terms of sub-section (3), the Board can take into consideration and have regard to the four-fold criteria n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuniary jurisdiction before the Assessing Officer. In view of the law laid down in the case of Abhishek Jain (supra) that any objection with regard to territorial and pecuniary jurisdiction should be taken at the earliest possible opportunity before the settlement of issues and not at a subsequent stage and the interpretation of section 254 by the Karnataka High Court in the case of Fidelity Business Services (P.) Ltd. (supra), there was no error in the order passed by the Tribunal. [Para 14] In the result, the appeal filed by the assessee deserves to be dismissed. [Para 16]" (f) Finally, in the case of CIT vs. British India Corpn. Ltd. reported in 337 ITR 64 (Allahabad), reliance has been placed on an extract from the case of Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, wherein, the Hon'ble High Court has observed as under: "21. We cannot lose sight of the fact that in the Act it has been specifically provided that the question of jurisdiction of the assessing authority can be gone into either by the Commissioner or by the Board, as the case may be. An appeal to an appellate authority under the Act lies on the grounds as enumerated in section 246 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authority concerned, will not in any manner vitiate the assessment order in the absence of any objection with regard to lack of jurisdiction by the assessee. It is a case where both the Assessing Officer and the assessee proceeded as if there is no transfer order transferring jurisdiction. 28. There is one more flaw in the order of the Tribunal. The Tribunal at the most should have remitted the matter back to the Inspecting Assistant Commissioner for completing the assessment. It was not justified in annulling the assessment order." 4.5. A combined reading of the case laws cited above and the plain language of the sections determining jurisdiction (both territorial and pecuniary) reveals that the mechanism for challenging the jurisdiction of an Assessing Officer is contained in Part B of Chapter XIII of the Act and it is clearly within the administrative domain. Since, in this case, the assessee never challenged the jurisdiction of the Assessing Officer, therefore, there was no occasion to administratively consider that issue. 4.6. Furthermore, the facts do not indicate that either of the two AOs: ITO and ACIT, did not have territorial jurisdiction, the absence of which m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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