2021 (9) TMI 1394 - AT - Income Tax

Jurisdiction issue renders assessment order null, Tribunal dismisses additional grounds, partly allows appeal.

The Tribunal found that the Joint Commissioner of Income Tax (JCIT) did not have jurisdiction over the case, rendering the assessment order null and void. ... Applicability of provisions Section 144C - draft of the proposed order of assessment forwarded or not? - HELD THAT:- As assessee’s contentions before the assessment proceedings were properly taken into account and there was no procedural lapse pointed out by the assessee or Ld. AR as prescribed u/s 144C as well as there was no lapse on substantive basis, as the assessee has availed the remedy prescribed under the Section before the Revenue Authorities. To clarify further, the Finance Act clearly mentions that the reference to Dispute Resolution Panel was inserted by the Finance(No.2) Act, 2009, w.r.e.f. 01.04.2009, Section 144C(1) clearly mentions that notwithstanding anything to the contrary contained in the Act, in the first instance, forward a draft of the proposed order of the assessment to the eligible assessee, if he proposes to make on or after 1st day of October 2009, any variation in the income or loss return which is prejudicial to the interest of such assessee. In the instant case, the AO has rightly forwarded the draft of the proposed order of assessment on 03.01.2014 as per the provisions of Section 144C(1) and the assessee has also filed his objections to the variation with ld. DRP on 29.04.2014 in accordance with the Section 144C(2). The ld. DRP vide order dated 31.12.2014 has issued directions in accordance with the provisions of Section 144C(6). Subsequently, the assessee upon the receipt of the directions issued under sub-section (5) has completed the assessment on 08.01.2015. Thus, on going through the entire provisions of the law, the judgments quoted, the orders of the Tribunal, the procedure followed by the assessee, TPO, ld. DRP and the Assessing Officer has been found to be correct as per the provisions of the Act inserted by the Finance (No.2) Act, 2009, hence, the additional grounds filed on 8.7.2021 with regard to non-applicability of provisions Section 144C are hereby dismissed. Jurisdiction of JCIT, Hisar Range - As argued that the Joint Commissioner is not competent to pass the order under the provisions of Section 143(3) - HELD THAT:- Board may assign the power to any Income Tax Authority to exercise powers of the A.O. having regard to territorial area etc., or the Board may authorise or empower Pr. Director General, Pr. Chief Commissioner etc., to issue order in writing to assign powers of the A.O. to other Authorities including Joint Commissioner of Income Tax as Assessing Officer. Considering the provisions of Section 2(7A) of the I.T. Act, 1961, which defines the definition of the Assessing Officer would make it clear that Joint Commissioner of Income Tax could function as an Assessing Officer when jurisdiction have been assigned to him by virtue of the directions or orders issued under section 120(4)(b) of the I.T. Act, 1961. On going through the entire events, we find that the order dated 29.07.2013 passed by the ld. CIT (A) invoking the powers conferred by Sub-Section (1), (2) and (5) of Section 120 would not confer any powers to the CIT to confer the concurrent exercise of powers to the Assessing Officers. Further, when concurrent powers are conferred both the officers namely Joint/Addl. Commissioner along with the ACIT or DCIT/ ITO would exercise the jurisdiction. Whereas the order dated 29.07.2013 of the CIT conferred concurrent exercise from ACIT, Hisar to JCIT, Hisar which effectively culminated in transfer of the assessment for the year 2011-12 from ACIT, Hisar to JCIT, Hisar. When the case is transferred from one Assessing Officer to the other Assessing Officer, JCIT in this case, it is legally mandated to pass order u/s 127 by the ld. CIT invoking the “power to transfer” u/s 127. In the instant case, (1) there is no order by the ld. CIT invoking powers conferred u/s 120(4) wherein sub-Section (b) empowers the CIT to issue orders in writing that the powers and functions conferred on or as the case may be assigned to the Assessing Officer by or under the Act in respect of any specified areas or persons shall be exercised by the Joint Commissioner. In the absence of any order by the ld. CIT invoking the powers conferred by sub-Section (4) of Section 120, we hold that the order passed by the Assessing Officer lacks jurisdiction. (2) Further, we also find that the order of the ld. CIT in pursuance with the notification No.251/2001 also did not confer any jurisdiction to the CIT, Hisar. (3) In addition, no order has been issued by the Ld.CIT transferring the case from one AO to other AO u/s 127 is also wanting in the instant case. We are of the view that JCIT, Hisar Range, do not have jurisdiction over the case of assessee and since he did not assume the jurisdiction legally and validly, therefore, the impugned assessment order framed by him is vitiated and illegal and without jurisdiction. In view of the above discussion, we set aside the order of the authorities below and quash the impugned order. Issues Involved:1. Jurisdictional issue regarding the assessment not being done by the competent person.2. Validity of the assessment order under Section 144C of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Jurisdictional Issue Regarding the Assessment Not Being Done by the Competent Person:The assessee argued that the Joint Commissioner of Income Tax (JCIT) was not competent to pass the assessment order dated 08.01.2015 for the Assessment Year (AY) 2010-11. The contention was that there was no valid order conferring the power of the Assessing Officer (AO) to the JCIT, making the assessment order null and void.The Revenue countered that the assessment order was valid as it had been passed by the competent authority. It was argued that the CIT, Hisar, had issued an order under Section 120 of the Income Tax Act, 1961, assigning the case to the JCIT. The Revenue provided a written reply from the JCIT, Hisar, and the order dated 29.07.2013 of the CIT, Hisar, to support this claim.Upon examination, it was found that the order dated 29.07.2013 by the CIT, Hisar, did not confer any powers to the CIT to authorize the concurrent exercise of powers to the Assessing Officers. The Tribunal noted that the concurrent powers conferred effectively culminated in the transfer of the assessment from the ACIT to the JCIT, which legally mandated an order under Section 127 by the CIT invoking the 'power to transfer.'The Tribunal concluded that:- There was no order by the CIT invoking powers conferred under Section 120(4), which empowers the CIT to issue orders in writing for the exercise of powers by the JCIT.- The notification relied upon by the CIT, Hisar, did not confer any jurisdiction to the CIT.- No order was issued by the CIT transferring the case from one AO to another AO under Section 127.Thus, the JCIT, Hisar Range, did not have jurisdiction over the case of the assessee, making the assessment order framed by him vitiated, illegal, and without jurisdiction. The Tribunal set aside the order of the authorities below and quashed the impugned order.2. Validity of the Assessment Order Under Section 144C of the Income Tax Act, 1961:The assessee challenged the assessment order under Section 144C(13)/143(3) of the Income Tax Act, 1961, arguing that it was bad in law, void ab-initio, and barred by limitation. The assessee contended that the provisions of Section 144C, introduced by the Finance (No. 2) Act, 2009, were not applicable for the AY 2010-11, relying on the decision of the Hon’ble Madras High Court in Vedanta Ltd. Vs. ACIT (2020) 422 ITR 262.The Revenue argued that Section 144C was applicable from AY 2010-11 as per the Circular No.5/2010 issued by the CBDT. The Revenue contended that the assessee had availed the provisions and procedure of Section 144C by filing objections before the Dispute Resolution Panel (DRP), thus taking the benefit of Section 144C as per the statute.The Tribunal examined the provisions of Section 144C and noted that it was a mechanism to resolve tax disputes between the assessee and the Revenue Department. The Tribunal found that the assessee had voluntarily availed the provisions of Section 144C, and the DRP had duly accepted and adjudicated the matter.The Tribunal held that:- The provisions of Section 144C were applicable for AY 2010-11.- The procedure followed by the assessee, TPO, DRP, and the AO was correct as per the provisions of the Act.- The additional grounds filed by the assessee regarding the non-applicability of Section 144C were dismissed.Conclusion:The Tribunal allowed the additional ground regarding the jurisdictional issue and quashed the assessment order passed by the JCIT, Hisar Range, for lack of jurisdiction. The additional grounds regarding the non-applicability of Section 144C were dismissed, and the appeal of the assessee was partly allowed.