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TMI Blog2024 (9) TMI 1739X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, any inherent defect therein cannot be cured under section 292B of the Act. 3. For that as per the CBDT Instruction No. 1/2011 the jurisdiction of the assessee fall under the jurisdiction of the ACIT and not ITO, issue of notice u/s 148 pursuant to the said binding Instruction was not vested with the requisite jurisdiction. 4. For that the reopening of assessment by merely quoting Insight Portal information is invalid without conducting any independent enquiry and without verifying the veracity and truthfulness of such information. 5. For that the 'reasons recorded' had fundamental factual errors, notice u/s 148 for reopening on incorrect facts is without jurisdiction and hence cannot be sustained, the approval u/s 151 of higher authorities thus being mechanical in nature 6. For that the proceedings u/s 147 of the IT Act are invalid, since there being no findings in the "reason recorded" as well as in the notice u/s 148" that the appellant had understated any income as per requirement of explanation 2(b) to sec 147 of the Act. 7. For that the Appellant craves leave to add, alter any further Grounds of Appeal." 3. Though the assessee through its gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further relied on the decision of the Coordinate 'C' Bench of the Tribunal in the case of M/s J R Roadlines Pvt. Ltd. vs. DCIT in ITA No. 2534/Kol/2019 order dated 27.05.2022. The relevant part of the order of the Tribunal is reproduced as under: "4. At the outset, the ld. counsel for the assessee has invited our attention to the impugned assessment order to show that in the opening lines of the assessment order itself, it has been mentioned that the assessee had shown a total income of Rs. 2,07,18,275/- in the return of income filed on 11.09.2012 for the assessment year under consideration. The ld. Counsel has further submitted that as per the relevant statutory provisions not only the territorial jurisdiction but also the pecuniary jurisdiction of the Income Tax Officers/Assessing Officer has been fixed by the CBDT and that if the returned income is less than Rs. 30 lacs in case of corporate assessee in metro cities, the jurisdiction to frame the assessment lies to the Income Tax Officer whereas if the returned income is more than Rs. 30 lacs, the jurisdiction lies with the concerned ACIT/JCIT. The ld. counsel has submitted that the jurisdiction to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to refer to section 120 of the Act which, for the sake of ready reference, is reproduced as under: "Jurisdiction of income- tax authorities (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 the other income- tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld show, in this case, the competent officer to proceed with the assessment by way of issue of notice u/s 143(2) of the Act was DCIT/ACIT, whereas, the notice u/s 143(2) has been issued by the ITO, Ward-1(1), Kolkata who did not have any jurisdiction to issue the aforesaid notice. As has been held by the various courts of the country including the Apex Court, the issuance of notice u/s 143(2) by the concerned Assessing Officer of a competent jurisdiction is mandatory to assume jurisdiction to proceed to frame assessment u/s 143(3) of the Act. The identical issue also came into consideration before the Coordinate Bench of the Tribunal in the case of Bhagyalaxmi Conclave (P) Ltd. v. DCIT [IT Appeal No. 2517/Kol/2019, dated 3-2-2021] wherein the Tribunal further relying upon various other decisions of the Co-ordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that when the notice u/s 143(2) was issued by an officer who did not have jurisdiction to proceed with the assessment and the assessment was framed by the other officer who did not issue the notice u/s 143(2) before proceeding to frame the assessment, then such an assessment order was ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submits that the assessment is bad in law. 5.1. On merits, he rebutted the findings of the lower authorities. The ld. Counsel for the assessee relied on certain case-law, which I would be referring to as and when necessary. 6. The ld. D/R, on the other hand, submitted that the concurrent jurisdiction vests with the ITO as well as the ACIT and hence the assessment cannot be annulled simply because the statutory notice u/s 143(2) of the Act, was issued by the ITO and the assessment was completed by the ACIT. He further submitted that the assessee did not object to the issue of notice before the jurisdictional Assessing Officer and even otherwise, Section 292BB of the Act, comes into play and the assessment cannot be annulled. On merits, he relied on the orders of the lower authorities. 7. I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:- 8. I find that there is no dispute in the fact that the notice u/s 143(2) of the Act dt. 29/09/2016 has been issued by the ITO, Wd-1(1), Durgapur. Later, the case was transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of 'non corporate returns' the ITO's increased monetary limit was upto Rs. 15 lacs; and if the returned income is above Rs. 15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs. 15 lakh, then the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular jurisdiction is created, same must be prospective and cannot be retrospective and it has to be interpreted having regard to manner in which it has been sought to be created - Held, yes - Assessee" 9.3. The Hon'ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal [2019] 108 taxmann.com 183 (SC), held as follows:- "7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer. On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(2) of the Act and also for the reason that the jurisdiction of these cases lies with the ITO and not the DCIT. Hence all the orders passed by the ld. CIT (A) in these four cases are hereby quashed and the appeals of the assessees are allowed." 8. In view of above discussion made and in the light of the various case laws, the assessment order passed by the Assessing Officer (DCIT) was bad in law for want of issuance of notice u/s 143(2) of the Act." 4. The ld. Counsel for the assessee has further relied on the decision of the Coordinate 'SMC' Bench of the Tribunal in the case of Shivam Finance vs. ACIT in ITA No. 422/Kol/2023 vide order dated 21.06.2023, wherein, the Coordinate Bench of the Tribunal relying on the decision of the jurisdictional Calcutta High Court in the case of PCIT vs. Shree Shoppers Ltd. (supra) has decided the identical issue in favour of the assessee. The relevant part of the order of the Coordinate Bench of the Tribunal in the case of Shivam Finance vs. ACIT (supra) is reproduced as under: "4. At the outset, Ld. Counsel for the assessee emphasized on the legal issue relating to jurisdiction assumed by Ld. ITO, ward-49(1), Kolkata for issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding has been recorded by the Tribunal : "Therefore, the legal ground stands to be admitted and the same relates to invalid notice issued u/ 143(2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. 143(3) of the Act, the statutory requirement of serving of valid notice u/s. 143(2) of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs. 48,47,180/- in the e-return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143(2) of the Act as issued by ITA, Ward-9(4), Kolkata dated 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No. 1 /2011 supra) revised the monetary limit for issuing notice by ITO/DCs/ACs. Through this instruction it stated that in case of metro cities in case of corporate declare income above Rs. 30 lakh the jurisdiction of such corporate assessee will lie with the DCs/ACs. It is not in dispute chat as on the date of selecting the case for scrutiny, the very basis for having jurisdiction over the assessee is the returned income which was more than Rs.&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of PCIT Vs. Shree Shoppers Ltd. (supra) has decided identical issue in favour of the assessee. 9. Thus, from the perusal of the findings given by Hon'ble jurisdictional High Court and from the examination of facts of the present case, we find that the aforesaid judgment of the Hon'ble High Court is squarely applicable on the facts of the present case. We thus, unhesitatingly hold that ITO, Ward49(1), Kolkata had no valid jurisdiction over the assessee on the date of issuing notice u/s. 143(2) of the Act. Revenue has not controverted this fact by placing any other contrary material on record to indicate otherwise. Since a valid notice u/s. 143(2) has not been issued, the assessment proceedings carried thereafter deserves to be quashed. We, therefore, respectfully following the ratio laid down by Hon'ble jurisdictional High Court in the case of PCIT Vs. Shree Shoppers Ltd. (supra), allow ground no. 4 raised by the assessee and quash the assessment proceedings completed u/s. 143(3) of the Act. Since we have quashed the assessment proceedings, the grounds relating to the merits of the case are rendered mere academic in nature and are, therefore, not adjudicated upon. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), A.O who has been vested with jurisdiction over any area, shall have jurisdiction within the limits of such area. Further, AO 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 AO in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction. The facts and legal position leave no manner of doubt that the AO had territorial Jurisdiction over the assessee. Objection to the jurisdiction had been raised merely on the ground that on account of pecuniary limit, the proceedings ought to have been initiated by ACIT. Merely because some pecuniary limit has been fixed for purpose of distribution of work between officers, it would not mean that there shall be an inherent lack of jurisdiction of AO. Thus, it cannot be said that AO ITO 36(1) Kolkata lacked inherent jurisdiction while issuing the impugned notice under section 148. 4. The Hon'ble Justice of Madras High Court T S Sivagnanam, while deciding WPs No. 5792 & 5793 of 2013 in the case of C Krishnan Vs ITO Erode & Others held that "the monetary lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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