2024 (6) TMI 1431 - AT - Income Tax

Assessment quashed for lack of valid jurisdiction under Section 120(4)(b) - Jt. CIT cannot exercise AO powers without specific order

Jindal Power Limited Versus The Jt. Commissioner of Income Tax, Range-1, Bilaspur (C. G.).

Jindal Power Limited Versus The Jt. Commissioner of Income Tax, Range-1, Bilaspur (C. G.). - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the Joint Commissioner of Income Tax (Jt. CIT) had the jurisdiction to pass the assessment orders for the assessment years 2010-11 and 2011-12 under Section 143(3) of the Income Tax Act, 1961, without an order under Section 120(4)(b) conferring such jurisdiction.Whether the assessment orders passed by the Jt. CIT for the respective assessment years are valid and sustainable in law.Whether the objections to the jurisdiction of the Jt. CIT raised by the assessee company are barred by the time limit prescribed under Section 124(3) of the Act.2. ISSUE-WISE DETAILED ANALYSISJurisdiction of the Jt. CIT to Pass Assessment Orders:Relevant Legal Framework and Precedents: The jurisdiction of an Assessing Officer, including a Jt. CIT, is governed by Sections 2(7A) and 120(4)(b) of the Income Tax Act, 1961. Section 2(7A) defines an 'Assessing Officer' and includes a Jt. CIT who is directed under Section 120(4)(b) to exercise the powers of an Assessing Officer. Section 120(4)(b) allows the Central Board of Direct Taxes (CBDT) to empower certain authorities to confer jurisdiction upon a Jt. CIT.Court's Interpretation and Reasoning: The Tribunal found that the Jt. CIT, Range-1, Bilaspur, lacked jurisdiction to pass the assessment orders for the years in question as there was no order under Section 120(4)(b) empowering him to act as an Assessing Officer. The Tribunal relied on various precedents, including decisions from the ITAT Mumbai, Delhi, and other benches, which held that a Jt. CIT cannot assume jurisdiction without a specific order under Section 120(4)(b).Key Evidence and Findings: The Tribunal observed that there was no order under Section 120(4)(b) conferring jurisdiction on the Jt. CIT. The Department failed to produce any notification or order that would authorize the Jt. CIT to act as an Assessing Officer for the assessee company.Application of Law to Facts: The Tribunal applied the legal framework to the facts and concluded that the assessment orders were passed without valid jurisdiction. The absence of an order under Section 120(4)(b) was a critical factor leading to the quashing of the assessment orders.Treatment of Competing Arguments: The Department argued that the assessee was barred from raising jurisdictional objections due to the time limit under Section 124(3). However, the Tribunal clarified that Section 124(3) pertains to territorial jurisdiction and not to the inherent jurisdiction, which was the issue in question.Conclusions: The Tribunal concluded that the Jt. CIT did not have the jurisdiction to pass the assessment orders, rendering them void ab initio.Time Limit for Raising Jurisdictional Objections:Relevant Legal Framework and Precedents: Section 124(3) of the Income Tax Act prescribes a time limit for raising objections to the jurisdiction of an Assessing Officer, specifically concerning territorial jurisdiction.Court's Interpretation and Reasoning: The Tribunal held that Section 124(3) applies to objections regarding territorial jurisdiction and not to the inherent jurisdiction of the officer. The Tribunal referred to judgments from the Bombay and Gujarat High Courts, which supported the view that the time limit under Section 124(3) does not apply to objections concerning the inherent jurisdiction of an officer.Key Evidence and Findings: The Tribunal noted that the assessee's objection was not about territorial jurisdiction but about the Jt. CIT's lack of inherent jurisdiction due to the absence of an order under Section 120(4)(b).Application of Law to Facts: The Tribunal applied the legal principles and concluded that the assessee's objection to the jurisdiction was not barred by the time limit under Section 124(3).Treatment of Competing Arguments: The Department's argument that the objection was time-barred was rejected, as the Tribunal found that the objection related to inherent jurisdiction, not territorial jurisdiction.Conclusions: The Tribunal concluded that the assessee's objection to the jurisdiction was valid and not barred by any time limit.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'As the Jt. CIT, Range-1, Bilaspur in absence of any order passed by the specified authority u/s. 120(4)(b) of the Act had no jurisdiction to frame the assessment in the case of the assessee company before us, therefore, the calling into question of the same by the assessee company before us would not be hit by the prescribed time limit contemplated in Section 124(3) of the Act.'Core Principles Established: The assessment orders passed by a Jt. CIT without an order under Section 120(4)(b) conferring jurisdiction are void. The time limit under Section 124(3) applies only to objections regarding territorial jurisdiction, not inherent jurisdiction.Final Determinations on Each Issue: The Tribunal quashed the assessment orders for both assessment years 2010-11 and 2011-12 due to the Jt. CIT's lack of jurisdiction. The appeals filed by the assessee company were allowed.