2023 (12) TMI 930 - AT - Income Tax

ACIT lacks jurisdiction to assess corporate assessee with income below Rs 20 lakhs without proper transfer order

ITAT Kolkata held that assessment order framed by ACIT was without jurisdiction and nullified it. Corporate assessee with income below Rs. 20 lakhs should ... Jurisdiction of ACIT to complete assessment - Allocation of cases based on monetary limit - Issuance of notice u/s 143(2) by non jurisdictional AO - Addition u/s 68 - HELD THAT:- The assessee being a corporate assessee and located in a mofussil area and the income of the assessee being less than Rs. 20 Lakhs, the jurisdiction for assessing the income of the assessee vested with the Income-tax Officer. However, the assessment order in the case of assessee has been framed by the ACIT, Circle-38, Midnapore. In absence of any specific order u/s 127 of the Act, further giving powers to the prescriber authorities for transferring of the case, prima facie it indicates that the assessment in the case of the assessee ought to have been framed by the Income-tax Officer and not by the ACIT as the income declared in the Income-tax return is less than Rs. 20 Lakhs. As relying on Deepak Kedia [2023 (12) TMI 895 - ITAT KOLKATA] indicates that issuance of notice u/s 143(2) of the Act by the Assessing Officer not having jurisdiction over the assessee renders the assessment proceedings as a nullity. However, the case of the assessee before us is on a much stronger footing because leaving aside the issuance of notice u/s 143(2) of the Act, even the final assessment order has been framed by the Assessing Officer not having jurisdiction over the assessee. We allow the additional ground raised by the assessee and hold that the assessment order framed in the case of the assessee for AY 2013-14 dt. 26/03/2016 is without jurisdiction and is a nullity and is hereby quashed as the AO framing the said assessment did not have jurisdiction over the assessee as mandated in the CBDT Instruction No. 1/2011 - Decided in favour of assessee. Issues Involved:1. Addition of Rs. 13,29,00,000/- as unexplained cash credit under Section 68.2. Validity of the assessment order based on the jurisdiction of the Assessing Officer (ACIT).Summary:Issue 1: Addition of Rs. 13,29,00,000/- as Unexplained Cash Credit under Section 68The assessee challenged the addition of Rs. 13,29,00,000/- made by the Assessing Officer (AO) and confirmed by the CIT(A) as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The assessee argued that it had provided the PAN of the share applicants, their registration details with the ROC, bank statements, and source declarations, thereby discharging its onus. The AO did not conduct further inquiries and added the amount without any evidence to the contrary. The CIT(A) upheld the AO's decision, stating that the share applicants did not appear in response to the notice under Section 131, which the assessee contended was irrelevant to proving the cash credit under Section 68.Issue 2: Validity of the Assessment Order Based on JurisdictionThe assessee raised an additional ground, arguing that the assessment completed by the ACIT was without jurisdiction, making the assessment order a nullity. The assessee cited CBDT Instruction No. 1/2011, which mandates that in cases where corporate returns declare income up to Rs. 20 Lakhs in mofussil areas, the jurisdiction for framing the assessment lies with the Income-tax Officers (ITO), not the ACIT. The Tribunal admitted this additional ground, referencing the Supreme Court judgments in Jute Corporation of India and National Thermal Power Corporation.The Tribunal noted that the assessee's income was less than Rs. 20 Lakhs, and thus, the jurisdiction for assessing the income vested with the ITO. The assessment was framed by the ACIT, Circle-38, Midnapore, without any specific order under Section 127 of the Act transferring the case from the ITO to the ACIT. This made the assessment order a nullity. The Tribunal relied on similar cases, including Alpha National Trading Co. vs. ACIT and Deepak Kedia vs. ACIT, where assessments were quashed due to jurisdictional issues.The Tribunal concluded that the assessment order dated 26/03/2016 was without jurisdiction and quashed it, rendering the grounds on quantum addition academic. The appeal of the assessee was allowed.Order Pronounced:The order was pronounced in the Court on 14th December, 2023, at Kolkata.