Additional CIT lacks jurisdiction to assess without proper section 120(4)(b) authorization order

ITAT Raipur quashed an assessment order passed by Additional CIT, Range-1, Raipur under section 144. The tribunal held that the Additional CIT lacked jurisdiction to function as an Assessing Officer without a proper order under section 120(4)(b) by the competent authority. The assumption of jurisdiction by the Range head without such authorization was deemed contrary to law, following the precedent in Jindal Power Ltd. Additionally, no transfer order under section 127 was issued. The tribunal concluded that absent inherent jurisdiction, the assessment order dated 03.02.2014 could not survive and directed its quashing.

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The core legal issues considered by the Tribunal in this appeal are as follows:

1. Whether the assessment order passed by the Additional Commissioner of Income Tax (Addl. CIT), Range-1, Raipur under section 144 of the Income Tax Act, 1961 (the Act) for the assessment year (AY) 2011-12 is valid, given the absence of an order under section 120(4)(b) conferring jurisdiction to the Addl. CIT to act as Assessing Officer (AO).

2. Whether the absence of an order under section 127 of the Act transferring the case from the Deputy Commissioner of Income Tax (DCIT), Circle-1(1), Raipur to the Addl. CIT, Range-1, Raipur affects the validity of the assessment order.

3. Whether the delay of 151 days in filing the appeal before the Tribunal is liable to be condoned on the ground of bona fide reasons.

4. Ancillary issues relating to the production of additional evidence before the Tribunal and the applicability of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.

Issue-wise Detailed Analysis:

1. Validity of Assessment Order Passed by Addl. CIT in Absence of Order u/s 120(4)(b)

Relevant Legal Framework and Precedents: Section 2(7A) of the Act defines "Assessing Officer" to include Additional Commissioner or Joint Commissioner who is directed under clause (b) of sub-section (4) of section 120 to exercise or perform powers and functions of an AO. Section 120(4)(b) empowers the Central Board of Direct Taxes (CBDT) to authorize such officers by order in writing. Section 124(3) prescribes a time limit for challenging territorial jurisdiction of an AO. CBDT Instruction No. 6/2009 dated 18.12.2009 deals with the role of Range Heads in monitoring and guiding assessments but does not substitute for statutory orders under section 120(4)(b).

Judicial precedents relied upon include decisions of various Benches of the Income Tax Appellate Tribunal (ITAT) and High Courts, notably:

• Jindal Power Ltd. (2024) (Raipur-Tribunal)
• Tata Steel Ltd. (2024) (Mumbai-Tribunal)
• Nasir Ali (2020) (Delhi-Tribunal)
• Dr. Nalini Mahajan v. DCIT (Delhi High Court)
• Kanwar Singh Saini v. High Court of Delhi (Supreme Court)
• Various ITAT decisions holding that in absence of an order u/s 120(4)(b), an Addl. CIT cannot validly assume jurisdiction to act as AO and frame assessment.

Court's Interpretation and Reasoning: The Tribunal observed that the Addl. CIT, Range-1, Raipur passed the assessment order under section 144 without any order under section 120(4)(b) conferring jurisdiction to exercise powers of an AO. The CBDT Instruction No. 6/2009, which entrusts Range Heads with monitoring and guidance roles, does not equate to or replace the statutory requirement of an order under section 120(4)(b). The Tribunal emphasized that the definition of "Assessing Officer" under section 2(7A) includes Additional Commissioners only if empowered by a written order under section 120(4)(b). Without such an order, the Addl. CIT lacks jurisdiction to frame assessments.

The Tribunal further noted that the assessment order was passed by an officer who was not the jurisdictional AO and that no order was passed under section 127 transferring the case from the DCIT who had issued the notice under section 143(2) to the Addl. CIT. The absence of such transfer order further vitiates the assessment.

Key Evidence and Findings: The revenue produced reports from the DCIT office stating no order under section 120(4)(b) or section 127 was passed. The revenue relied on CBDT notifications and circulars assigning powers to Joint Commissioners and Additional Commissioners generally but failed to produce any specific order conferring jurisdiction in this case. The Tribunal found that the absence of such orders was fatal to the validity of the assessment.

Application of Law to Facts: Applying the statutory provisions and judicial precedents, the Tribunal held that the Addl. CIT, Range-1, Raipur was not validly empowered to act as AO in this case. The assessment framed by him under section 144 was therefore without jurisdiction and void ab initio.

Treatment of Competing Arguments: The revenue argued that the CBDT instructions and notifications confer inherent jurisdiction on Range Heads and that the assessee failed to challenge jurisdiction within the prescribed time under section 124(3). The Tribunal rejected these contentions, holding that the CBDT instructions do not replace statutory orders under section 120(4)(b), and that section 124(3) applies only to territorial jurisdiction, not to inherent jurisdiction or authority to act. The Tribunal relied on Supreme Court and High Court decisions emphasizing that jurisdiction is a legislative function and cannot be conferred by consent or waiver.

Conclusion: The assessment order passed by the Addl. CIT without a valid order under section 120(4)(b) and without transfer of jurisdiction under section 127 is invalid and liable to be quashed.

2. Absence of Order u/s 127 Transferring Case from DCIT to Addl. CIT

Relevant Legal Framework and Precedents: Section 127 of the Act allows the Principal Commissioner or Commissioner to transfer cases from one AO to another. The transfer must be by an order in writing. The absence of such transfer order affects the validity of jurisdiction.

Court's Interpretation and Reasoning: The Tribunal noted that the notice under section 143(2) was issued by DCIT-1(1), Raipur, but the assessment was framed by Addl. CIT, Range-1. No order under section 127 transferring the case was found on record. The revenue contended that since the DCIT falls under the jurisdiction of the Addl. CIT, no transfer order is required. The Tribunal rejected this, holding that the absence of a transfer order under section 127 is fatal to the assumption of jurisdiction by the Addl. CIT.

Key Evidence and Findings: Reports from the DCIT office confirmed no order under section 127 was passed. The Tribunal found no evidence to support the revenue's contention.

Application of Law to Facts: The statutory requirement of a transfer order under section 127 is mandatory. Without it, the Addl. CIT cannot assume jurisdiction.

Treatment of Competing Arguments: The revenue's argument that the DCIT is subordinate to the Addl. CIT and hence no transfer order is needed was rejected as contrary to statutory mandate.

Conclusion: The absence of a transfer order under section 127 invalidates the jurisdiction of the Addl. CIT to pass the assessment order.

3. Delay in Filing Appeal Before the Tribunal

Relevant Legal Framework and Precedents: Appeals before the Tribunal must be filed within prescribed time limits. Delay can be condoned if sufficient cause is shown. The assessee claimed the delay of 151 days was due to non-receipt of the appellate order in physical form, despite furnishing a physical address and opting out of email communication.

Court's Interpretation and Reasoning: The Tribunal found that the appeal was filed under the pre-faceless regime and the assessee had opted for physical service of notices and orders. The appellate order was not physically served, and the assessee became aware of it only months later through the accountant checking the IT portal. The Tribunal accepted this as a bona fide reason beyond the control of the assessee.

Key Evidence and Findings: The assessee submitted an affidavit affirming non-receipt of the order physically. The Tribunal found no mala fide intention or negligence on the part of the assessee.

Application of Law to Facts: The Tribunal applied principles of equity and fairness in condoning the delay.

Treatment of Competing Arguments: The revenue objected to condonation due to inordinate delay. The Tribunal found the assessee's explanation credible and sufficient.

Conclusion: The delay of 151 days in filing the appeal before the Tribunal is condoned.

4. Production of Additional Evidence Before the Tribunal

Relevant Legal Framework and Precedents: Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 prohibits parties from producing additional evidence before the Tribunal unless exceptional circumstances exist. Clarificatory documents are not considered additional evidence.

Court's Interpretation and Reasoning: The Tribunal noted that the assessee failed to produce relevant evidence during assessment and first appellate proceedings and cannot now be allowed to do so before the Tribunal. The Tribunal referred to Karnataka High Court and Gauhati Bench decisions distinguishing clarificatory evidence from additional evidence.

Key Evidence and Findings: No exceptional circumstances were shown to justify admission of additional evidence.

Application of Law to Facts: The Tribunal refused to admit additional evidence.

Treatment of Competing Arguments: The assessee's attempt to produce evidence at this stage was rejected.

Conclusion: The Tribunal did not entertain additional evidence.

Significant Holdings:

"The Addl. Commissioner of Income Tax in absence of an order u/s 120(4)(b) of the Act cannot exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under the Act. A corollary flowing thereto is that the Addl. CIT in absence of such order cannot frame the assessment under section 143(3) or section 144 of the Act."

"CBDT Instruction No. 6/2009 for monitoring and guidance of assessments by Range Heads cannot be considered as a substitute for the statutory requirement of an order under section 120(4)(b) conferring jurisdiction."

"The absence of an order under section 127 transferring the case from the DCIT who issued the notice under section 143(2) to the Addl. CIT who framed the assessment vitiates the assumption of jurisdiction."

"The time limit prescribed under section 124(3) for challenging the jurisdiction of the Assessing Officer applies only to territorial jurisdiction and does not bar a challenge to the inherent jurisdiction or authority of an officer to act."

"Jurisdiction is a legislative function and cannot be conferred by consent, waiver, or acquiescence. An order passed without jurisdiction is a nullity and can be challenged at any stage including appeal."

"Delay in filing appeal before the Tribunal can be condoned on bona fide grounds beyond the control of the appellant."

"Additional evidence cannot be admitted before the Tribunal unless exceptional circumstances exist. Clarificatory evidence may be considered but production of fresh evidence belatedly is not allowed."

Final Determinations:

1. The assessment order dated 03.02.2014 passed by the Addl. CIT, Range-1, Raipur under section 144 of the Act for AY 2011-12 is quashed for want of valid assumption of jurisdiction in absence of an order under section 120(4)(b) conferring jurisdiction and absence of transfer order under section 127.

2. The appeal filed before the Tribunal with a delay of 151 days is condoned on bona fide grounds.

3. Other grounds relating to merits of additions made in the assessment order are left open for consideration in fresh proceedings, if any.

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