TaxTMI 
TaxTMI 
2006 (3) TMI 224
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....see that the assessment is liable to be quashed as the same has been passed by the Addl. CIT despite the fact that such authority is given to the Addl. CIT for making an assessment under the Act. 4. On the facts and circumstances of the case, the learned CIT(A) has erred in rejecting the contention of the assessee that the order passed by the learned Addl. CIT is illegal and unsustainable in the eye of law as it does not specify the section categorically under which the assessment has been framed, i.e., whether under s. 143(3) or s. 144 of the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the addition of Rs. 46,95,347 as trading addition. 6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in upholding the action of the Addl. CIT of rejection of books of account even after accepting the contention of the assessee that the AO's reasons for rejecting the book results are inadequate. 7. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in not accepting the contention of th....
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....onfirming the disallowance of a sum of Rs. 60,000 on account of salary paid to the working partner, Mrs. Kusam Gupta. 13. (ii) That the salary paid to Mrs. Kusam Gupta has been disallowed in an arbitrary manner ignoring the evidences and explanation submitted by the assessee. 14. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the disallowance of a sum of Rs. 29,152 under s. 43B of the IT Act, 1961, on account of late payment of ESI and EPF ignoring the explanation of the assessee and the decided case law cited by the assessee. 15. The assessee craves leave to add, amend or alter any of the grounds of appeal." 2. Briefly the facts are that the appellant is a partnership firm engaged in the retail trading of readymade garments. The return declaring income of Rs. 27,04,313 was filed on 25th Nov., 1997. After processing the return under s. 143(1)(a), the AO, Dy. CIT, Circle-6 (1), Delhi, issued a notice under s. 143(2) of the Act on 10th Oct., 2000 and the assessee made appearance from time to time. Thereafter, the Addl. CIT, Range-20, New Delhi, issued a fresh notice under s. 143(2) on 4th ....
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....by a senior officer then the appeal has to go to a person who is much senior to that person making the assessment. It is because of this reason only that the Act specifically provides that where an order is passed by the CIT under S. 263 the appeal will be directed to the Tribunal. Moreover as per s. 2(7A) also, only those Jt. CITs who are directed under cl. (b) of sub-s. (4) of s. 120 and not the all Jt. CITs can exercise the powers of AO. For the purpose of s. 120(4)(b) there has to be an order in writing passed by the Board authorizing the Chief CIT or CIT who can in turn issue further orders conferring the power of AO on Jt. CIT. In this case, the first notice under s. 143(2) was issued by the Dy. CIT on 10th Oct., 2000. At what stage the case got transferred to the Addl. CIT is not known. For assuming jurisdiction over the assessee a proper procedure had to be followed. Since no proper procedure has been followed in the case, the assumption of jurisdiction by the Addl. CIT itself is illegal, more so when the Addl. CIT is not the AO within the meaning sub-s. (7A) of s. 2 of the Act: 6. In this case, firstly the Addl. CIT cannot be an AO within the meaning of s. 2(7A) of the ....
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....der s. 143(3) or not. As per s. 143(3) of the Act the power to pass the order is with that of the AO. The AO has been defined in s. 2(7A) of the Act. It includes various authorities but does not include Addl. CIT and as such the order passed by the Addl. CIT is not a valid order under s. 143(3) of the Act. The objection under s. 143(3) can be raised only when AO having jurisdiction over certain assessee passes assessment order in respect of certain other persons not falling within his jurisdiction. The purpose of s. 124(3) is to avoid dispute in respect of allocation of jurisdiction between different AOs. The provision of s. 124(3) cannot be invoked with reference to a person to vest with him the authority of AO who does not fall within the definition of the AO. The bar placed under s. 124(3) reads: "No person shall be entitled to call in question the jurisdiction of an AO." As such the bar is on the jurisdiction of the AO and not for a person who is not an AO. 9. The learned Authorised Representative in support of his argument has also relied upon the judgment of the Lucknow Bench in the case of Microfin Securities (P) Ltd. vs. Addl. CIT (2005) 94 TTJ (Luck) 7....
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.... any authority it is an order passed by the AO. 11. We have heard the parties with reference to precedents cited and taken ourselves through the entire material on record. The assessment order in this case has been made by the Addl. CIT, Range-20, New Delhi, on 28th March, 2002 on the strength of notice issued under s. 143(2) of the Act on 4th March, 2002. AO has been defined under s. 2(7A) of the IT Act, 1961. As per sub-s. (7A) of the Act there are two categories of officers, who can be AO under the IT Act, 1961. First category includes the officers who are vested with the relevant jurisdiction by virtue of directions or orders issued under sub-s. (1) or sub-s. (2) of s. 120 or any other provision of the Act. Such officers are: (i) Asstt. CIT, or (ii) Dy. CIT, or (iii) Asstt. Director, or (iv) Dy. Director, or (v) ITO. The second category of the officers are those who are directed under cl. (b) of sub-s. (4) of s. 120 of the Act to exercise or perform all or any of the powers and functions conferred on, or assigned to, an AO under this Act. Such officers are Jt. CIT or Jt. Director. Furthermore, sub-s. (28C) of s. 2 of the ....
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....t. In the present case in appeal no such order is found to have been passed. The Revenue before us has argued that in view of the instructions issued by the Board on 7th Feb., 2002 authorizing Jt. CIT to act as AO, it was not necessary for the CIT to pass any separate order conferring jurisdiction to Jt. CIT to exercise or perform the powers and functions conferred on, or assigned to, an AO under this Act. We, however, do not agree to the position canvassed by the learned Department Representative. A perusal of letter dt. 7th Feb., 2002 copy placed at assessee's paper book pp. 262 and 263 reveals that the Board had earlier issued a Notification S.O. 889 (E) dt. 17th Sept., 2001, whereby it had directed that Jt. CIT shall exercise the powers and functions of the AO in respect of class of persons or incomes in respect of which such Jt. CIT authorized by the CIT. Thereafter, Instruction No. S/2001 dt. 20th Sept., 2001 stated that Addl. CIT/Jt. CIT will himself not make the assessment but will closely monitor and supervise the same. It is through this letter dt. 7th Feb., 2002, the Board clarified that its Instruction dt. 17th Sept., 2001 will supersede the scrutiny guidelines issu....
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....o not be imported from the definition of Jt. CIT given under s. 2(28C) of the Act. Sec. 2(9A) defines Asstt. CIT to mean a person appointed to be an Asstt. CIT or Dy. CIT under s. 117(1) of the Act. Despite this definition, s. 2(7A), specifically includes in the definition of AO, the IT authorities like Asstt. CIT as well as Dy. CIT. Likewise s. 2(21) defines Director General or Director to mean a Director General, Director and includes an Addl. Director, Jt. Director, Asstt. Director or Dy. Director also. If s. 2(7A) included Jt. Director, Dy. Director or Asstt. Director in the definition of AO, then by import of definition under s. 2(21), the reciprocal authorities like Director General or Director can also be termed as AO, thereby taking into its compass all the IT authorities. If that were the position, there would have been no necessity to include the specific authorities in the definition clause of assessing authority and all authorities would have assumed the powers and functions of AO themselves. The reason for specifying the authorities in the definition of s. 2(7A) is obvious, i.e., to exclude what is not included. Furthermore the definition of AO is not inclusive but is ....
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....d to an AO under this Act. Since the definition clause has used the word "means", the definition of AO given under sub-s. (7A) of s. 2 shall be conclusive. 18. In the said definition clause, article "the" has been used before the authority "Jt. CIT or Jt. Director" and this goes to show that the authority so specified alone having a direction flowing from the delegate of CBDT can exercise or perform all or any of the powers and functions conferred on, or assigned to, an AO under this Act. In the same manner while giving the definition of "AO" the Parliament has used article "the" before IT authority, Asstt. CIT, yet has included in its definition "Dy. CIT" also to be an AO under this Act. In case the definition of "Asstt. CIT" as contained under sub-s. (9A) of s. 2 of the Act was to be imported in the definition of "AO" so as to include a "Dy. CIT" as well, then there was no necessity to include a Dy. CIT in the definition clause of AO again, after the authority, the Asstt. CIT. Following this analogy alone, the definition of Jt. CIT given under sub-s. (28C) of s. 2 of the Act defining him to be a Jt. CIT or an Addl. CIT cannot be imported in sub-s. (7A) of s. 2 so as to include....
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.... the Jt. CIT as an IT authority on whom powers have been delegated by cl. (b) of sub-s. (4) of s. 120 of the Act to perform the functions of an AO, the intent and purpose of the Act shall be fully achieved, if those functions are exercised or performed by the Jt. CIT without extending the scope of vesting the jurisdiction into its extended definition by including an Addl. CIT as well. If this position is maintained the purpose of statute conferring powers on AO to make assessment of total income of a person shall be fully achieved and the definition so given under sub-s. (7A) of s. 2 shall not become inapplicable in any manner. 21. The learned Departmental Representative however, made a feeble attempt to say that sub-s. (4)(b) of s. 120 of the Act has used article "a" before the authority "Jt. CIT" or a "Jt. Director" who could be authorized to exercise or perform the functions of an AO. Since the powers were delegated by the CBDT empowering the Director General or Chief CIT or CIT to issue order in writing for assigning the powers of the AO to a Jt. CIT. essentially the resort is to be had to sub-s. (28C) of s. 2 of the Act where the authority Jt. CIT has been defined to includ....