2023 (1) TMI 1099 - AT - Income Tax

Assessment quashed under Section 143(3) for lack of jurisdiction, assessee's appeal allowed. Other grounds not addressed.

The Tribunal quashed the assessment framed under Section 143(3) for lack of valid jurisdiction, allowing the appeal of the assessee. The other grounds ... Assumption of jurisdiction by the A.O for framing of the assessment u/s. 143(3) - HELD 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 vested with jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be struck down on the said count itself. Apropos the notice issued u/s.143(2) of the Act, dated 05.05.2016 by the ITO-Ward 1(1), Bhilai, we are of the considered view that as the said notice was issued after the lapse of the stipulated time period, i.e., beyond the specified time frame which expired as on 30.09.2015, therefore, the assessment order so framed would also not be saved on the said basis. To sum up, as the impugned assessment u/s. 143(3), dated 29.12.2016 had been framed by the ITO- Ward 1(1), Bhilai de-hors the issuance of a valid notice u/s. 143(2) of the Act, therefore, the same cannot be sustained is liable to quashed. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O u/s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed. Issues Involved:1. Validity of the ex-parte Appellate Order passed by CIT(Appeals).2. Legitimacy of the addition of Rs. 2,94,44,914/- towards advances given to suppliers.3. Validity of the jurisdiction assumed by the Assessing Officer (A.O) for framing the assessment under Section 143(3).Issue-wise Detailed Analysis:1. Validity of the ex-parte Appellate Order passed by CIT(Appeals):The assessee contested that the ex-parte order passed by the CIT(Appeals)-II, Raipur, was highly unjustified, bad in law, and against the principles of natural justice as it was passed without providing a reasonable opportunity of being heard. The Tribunal did not specifically address this ground as the decision on the jurisdictional issue rendered the other grounds moot.2. Legitimacy of the addition of Rs. 2,94,44,914/- towards advances given to suppliers:The assessee argued that the CIT(Appeals) erred in confirming the addition of Rs. 2,94,44,914/- made by the A.O towards advances given to suppliers, treating them as bogus/non-genuine debts. The assessee contended that the advances were assets representing the utilization of funds and could not constitute income chargeable to tax. The Tribunal did not delve into this issue due to the quashing of the assessment on jurisdictional grounds.3. Validity of the jurisdiction assumed by the Assessing Officer (A.O) for framing the assessment under Section 143(3):The primary issue adjudicated by the Tribunal was the validity of the jurisdiction assumed by the A.O. The assessee filed an additional ground challenging the jurisdiction of the A.O, stating that the mandatory notice under Section 143(2) was issued by the DCIT, Circle-2(1), Bhilai, who did not have jurisdiction over the case as per the CBDT Instruction No.1/2011. The Tribunal admitted this additional ground, citing the Supreme Court's decision in National Thermal Power Company Ltd. Vs. CIT, which allows raising a purely legal question that requires no further verification of facts.The Tribunal noted that the CBDT Instruction No.1/2011, dated 31.01.2011, revised the monetary limits for assigning cases to ITOs and DCs/ACs. For non-corporate returns in mofussil areas, the jurisdiction was vested with the ITO if the income declared was up to Rs. 15 lacs. The assessee had declared an income of Rs. 6,57,380/- for the A.Y. 2014-15, thus jurisdiction was with the ITO, Ward-1(1), Bhilai.The notice under Section 143(2) dated 24.09.2015 was issued by the DCIT-2(1), Bhilai, who did not have jurisdiction as per the CBDT Instruction. The ITO, Ward-1(1), Bhilai, issued a notice under Section 143(2) on 05.05.2016, which was beyond the stipulated time period. Therefore, the assessment framed by the ITO, Ward-1(1), Bhilai, under Section 143(3) on 29.12.2016 was invalid due to the lack of a valid jurisdictional notice.The Tribunal referred to several judicial precedents, including the Bombay High Court's decision in Ashok Devichand Jain Vs. UOI and the Gujarat High Court's decision in Pankajbhai Jaysukhlal Shah Vs. ACIT, which supported the principle that assessments framed without valid jurisdictional notices are invalid. The Tribunal concluded that the assessment order passed by the ITO, Ward-1(1), Bhilai, was invalid and quashed it for want of valid jurisdiction.Conclusion:The Tribunal quashed the assessment framed under Section 143(3) dated 29.12.2016 for want of valid jurisdiction, thereby allowing the appeal of the assessee. The other grounds raised by the assessee were not adjudicated due to the quashing of the assessment on jurisdictional grounds.