2023 (6) TMI 110 - AT - Income Tax

Appeal succeeds on jurisdictional issue; assessment order invalidated due to notice and transfer deficiencies.

The appeal challenged the confirmation of the income of the assessee for AY 2017-18, the treatment of grant-in-aid, denial of depreciation claim, ... Transfer of case u/s 127 - Assumption of jurisdiction of AO for the assessment - HELD THAT:- With the documentary evidences and the judicial precedence we are of view that the assessment is not in accordance with the provisions of law since the assessment order has been passed by ITO, Ward-1(1), Exemption, Kolkata whereas assumption of jurisdiction for the assessment was done by ITO, Ward-51(1), Kolkata who issued the notice u/s 143(2) - Also, a valid order u/s 127 which is required to be passed for transferring a case from one AO to another AO could not be brought on record, though claimed to have been mentioned in the referred documents. We, therefore, are inclined to allow the additional ground raised by the assessee in holding the impugned assessment order as bad in law, liable to be struck down. Accordingly, the additional ground taken by the assessee is allowed. Issues Involved:The issues involved in the judgment are the validity of the assessment order u/s 143(3) of the Income-tax Act, 1961, confirmation of income by the Ld. CIT(A), treatment of grant-in-aid received from the Government of India, denial of depreciation claim, jurisdictional issue regarding notice u/s 143(2), and the transfer of assessment record between Assessing Officers.Validity of Assessment Order:The appeal challenged the order passed by the Ld. CIT(A) confirming the income of the assessee at Rs. 14,12,699.00 for AY 2017-18, against the returned income of Rs. Nil. The grounds of appeal contended that the order was contrary to law and principles. The delay in filing the appeal was condoned due to medical exigencies faced by the assessee's counsel. An additional ground was raised questioning the validity of the assessment order under section 143(2) for AY 2017-18, which was never issued by the Assessing Officer completing the assessment.Treatment of Income and Grant-in-Aid:The Ld. CIT(A) confirmed the addition of Rs. 12,41,967.00 as income of the assessee and the addition of Rs. 6,93,570.00 received as grant-in-aid from the Government of India. The assessee contended that these additions were not justified and should be deleted. The society being registered u/s 12AA and approved u/s 80G of the Act was claimed to be entitled to blanket deduction or exemption of the grant-in-aid.Depreciation Claim Denial:The Ld. CIT(A) denied the claim of depreciation of Rs. 1,98,374.00 by invoking the provision of Sec. 11(6) of the I.T. Act, which the assessee argued was not applicable as the depreciation was claimed as per Section 32 of the I.T. Act, 1961. The denial of the depreciation claim was contested on legal grounds.Jurisdictional Issue and Transfer of Assessment Record:A jurisdictional issue arose regarding the notice u/s 143(2) of the Act, which was initially issued by one Assessing Officer but the assessment was completed by another. The communication between the Assessing Officers regarding the transfer of assessment records was scrutinized. The additional ground challenging the jurisdictional issue was admitted for adjudication. The assessment order was deemed bad in law due to the absence of a valid notice u/s 143(2) and the lack of a proper order u/s 127 for transferring the case between Assessing Officers.Conclusion:The additional ground on the jurisdictional issue was upheld in favor of the assessee, leading to the allowance of the appeal. The original grounds raised in the appeal memo were not adjudicated upon. The assessment order was held to be not in accordance with the provisions of law, resulting in its invalidation and the appeal of the assessee being allowed.This summary provides a detailed overview of the judgment, highlighting the key issues and arguments presented in the case.