2017 (12) TMI 297 - AT - Income Tax

Assessment order quashed for lack of jurisdiction; Appeals allowed, Revenue's dismissed

Tata Sons Limited Versus ACIT Circle 2 (3), Mumbai And Vice-Versa

Tata Sons Limited Versus ACIT Circle 2 (3), Mumbai And Vice-Versa - Tmi Issues Involved:1. Validity of the assessment order dated 15.03.2005.2. Jurisdiction of the Additional Commissioner of Income Tax to pass the assessment order.3. Admission of additional grounds of appeal after a significant delay.4. Validity of the order passed under Section 263 of the Income Tax Act.Detailed Analysis:1. Validity of the Assessment Order Dated 15.03.2005:The assessee challenged the assessment order dated 15.03.2005 on the grounds that it was 'bad in law, illegal and without jurisdiction.' The Additional Commissioner of Income Tax, who passed the order, did not establish that he possessed the legal and valid jurisdiction under the Act. The Tribunal noted that the jurisdiction to pass the assessment order was initially with the Assistant Commissioner of Income Tax, and there was no valid transfer of jurisdiction to the Additional Commissioner under Section 127 of the Act. Hence, the assessment order was quashed as it was passed without proper jurisdiction.2. Jurisdiction of the Additional Commissioner of Income Tax:The Tribunal examined whether the Additional Commissioner of Income Tax had the authority to act as an Assessing Officer. The definition of 'Assessing Officer' under Section 2(7A) of the Income Tax Act, as it stood at the relevant time, did not include the Additional Commissioner. The amendment to include the Additional Commissioner came into effect retrospectively from 01.06.1994 through the Finance Act, 2007. However, the Tribunal found that there was no specific order or notification authorizing the Additional Commissioner to perform the functions of an Assessing Officer. Therefore, the assessment order passed by the Additional Commissioner was held to be without jurisdiction and was quashed.3. Admission of Additional Grounds of Appeal After a Significant Delay:The assessee raised additional grounds of appeal challenging the jurisdiction of the Additional Commissioner after about ten and a half years. The Tribunal admitted the additional grounds, noting that they were purely legal and did not require any fresh investigation of facts. The Tribunal referred to the Supreme Court's decision in National Thermal Power Co. Ltd. v. CIT, which allows raising legal grounds at any stage if they go to the root of the matter. The Tribunal dismissed the Revenue's argument that the additional grounds should not be admitted due to delay and acquiescence by the assessee.4. Validity of the Order Passed Under Section 263:The appeal in ITA No. 193/Mum/2006 was against the order passed by the CIT under Section 263, which was based on the assessment order dated 15.03.2005. Since the Tribunal quashed the assessment order for being without jurisdiction, the order passed under Section 263, which was based on the assessment order, also became invalid. Consequently, the Tribunal quashed the order passed under Section 263.Conclusion:The Tribunal quashed the assessment order dated 15.03.2005 for being passed without jurisdiction by the Additional Commissioner of Income Tax. The additional grounds of appeal raised by the assessee were admitted despite the significant delay, as they were purely legal and went to the root of the matter. The order passed under Section 263 was also quashed as it was based on the invalid assessment order. The appeals filed by the assessee were allowed, and the appeal filed by the Revenue was dismissed.