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2018 (9) TMI 1012
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.... 2010-11, the assessee filed its return of income showing income of Rs. 3,56,96,025; but declared NIL income after setting off the entire income of Rs. 3,56,96,025 against unabsorbed depreciation. The case was taken up for scrutiny and the assessment completed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') vide order dt.28.3.2011, accepting the returned income. A survey under Section 133A of the Act was conducted at the assessee's business premises on 7.11.2013, during which apparently there was a finding that the assessee had claimed excess depreciation over the years, which impacted the amount of carry forward of unabsorbed depreciation. Reassessment proceedings were initiated for Assessment Year 2010-11 and subsequently by issue of notice under Section 148 of the Act on 27.11.2013, the assessee was required to file return of income on or before 7.12.2013. In response thereto, the assessee filed a return of income on 6.12.2013 declaring income at NIL; while recomputing the brought forward losses at Rs. 3,41,48,848, thereby arriving at gross total income of Rs. 15,47,173 and claiming deduction thereon under Section 80P of the Act of Rs. 3,35,46,3....
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....sment year. 2.2.3 For Assessment Year 2012-13, the assessee filed its return of income declaring income of Rs. 3,66,89,548; but declared taxable income at NIL, after setting off the entire income against unabsorbed depreciation of earlier years. The assessee also filed a revised return of income wherein it claimed deduction u/s. 80P. Pursuant to the survey action under Section 133A of the Act on 7.11.2013, the case was taken up for scrutiny in this year also and the assessment was completed under Section 143(3) of the Act vide order dt.8.1.2014, wherein the assessee's income was determined at Rs. 3,66,57,056; after restricting the assessee's claim for deduction under Section 80P of the Act to Rs. 50,000 and also since there was no unabsorbed depreciation of earlier years for set off in this assessment year. 2.2.4 For Assessment Year 2013-14, the assessee filed its return of income on 30.9.2013 admitting NIL taxable income after claiming the entire income of Rs. 4,37,00,195 by claiming deduction under Section 80P of the Act and setting off the balance income by brought forward losses. Pursuant to survey action under Section 133A of the Act on 7.11.2013, the case was ta....
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....rving as under :- (i) As per the notification under Section 120 of the Act, of the CBDT, JCIT has concurrent jurisdiction over the cases of that particular Range; i.e. in the instant case, over the cases of Davangere Range. Concurrent jurisdiction means that apart from exercising administrative powers, the JCIT can issue instructions, guidance in completion of assessments, etc. and he may also assume and exercise the powers of an Assessing Officer as per the provisions of Sec. 120(4) & (5) of the Act. (ii) The JCIT intimated the assessee of his assuming jurisdiction over the case by issue of letter dt.4.12.2013; (iii) During the assessment proceedings, the assessee never objected and co-operated in the assessment proceedings. (iv) Non-issues of notice under Section 143(2) of the Act by the JCIT may be only a technical error and does not vitiate the assessment proceedings as being bad in law. (v) Transfer of a case may be effected at any stage of the proceedings and it is not necessary for the Assessing Officer to whose Ward / Circle / Range the case was transferred to re-issue the notice. The latter officer can continue and complete the ....
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.... forth before the authorities below for all four assessments and also citation of case laws 1 & 2 relied upon. At the outset, the learned Authorised Representative of the assessee contended that the orders of assessment need to be quashed as invalid, ab initio, due to the jurisdictional issues raised. The learned Authorised Representative further contended that, for Assessment Years 2010-11 and 2011-12, the failure of the Assessing Officer to furnish the reasons recorded for reopening the assessment as requested for by the assessee is a fatal flaw which renders the orders of assessment for both these years invalid. 4.2.2 In regard to the issue raised in respect of passing of the orders of assessment for all four assessment years 2010-11 to 2013-14 by the JCIT, the learned Authorised Representative contended that the JCIT was wrong in assuming jurisdiction over the case on hand without a specific order assigning the case to him. In support of this contention of the assessee, the learned Authorised Representative placed reliance on the judicial pronouncements in the following cases :- i) Valvoline Cummins Pvt. Ltd. Vs. DCIT (307 ITR 103) (Del) ii) Mega Corporatio....
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....sing Officer has not provided the same to the assessee. The learned CIT (Appeals) has also recorded in the impugned orders that the assessee relied, 'inter alia', on the decisions of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO (250 ITR 19) and of the Hon'ble Bombay High Court in the case of Allana Cold Storage Ltd. Vs. ITO (287 ITR 1) (Bom). The learned CIT (Appeals), we observe, has also noted that the Hon'ble Courts have held that providing reasons recorded for initiation of proceedings for reopening of assessments is a condition precedent for passing an order of assessment. After having making the above observations, the learned CIT (Appeals) proceeded to hold that the Assessing Officer was within his power to pass the impugned orders of assessment without providing copies of the reasons recorded for initiation of proceedings for reopening the assessments for these two years, for the following reasons :- (i) Not providing the assessee a copy of the reasons recorded will not vitiate the proceedings as the assessee was aware of the reasons. (ii) The Authorised Representative of the assessee attended hearings before the o....
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.... " 5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under s. 148 of the IT Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The AO is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the AO has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." 4.7.4 This decision of the Hon'ble Apex Court (supra) was followed by the Hon'ble Bombay High Court in the case of CIT Vs. Trend Electronics (supra), and the relevant para 8 thereof is extracted hereunder :- " 8. We find that the impugned order merely applies the decision of the Apex Court in GNK Driveshafts (India) Ltd. (supra). Further it also follows the decision of this Court in Videsh Sanchanr Nigam Ltd. (supra) in h....
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....ing the prescribed procedure, the entire proceedings will not be vitiated. The relevant paragraphs 16 to 18 and 24 to 26 thereof are extracted hereunder :- " 16. It is not in dispute that there is no statutory requirement to pass an order taking into account the statement of objections filed by the assessee after receiving the reasons for invoking Section 147 of the I.T. Act. The Hon'ble Supreme Court in GKN Driveshafts (India) Ltd.'s case (supra), has given a procedural safeguard to the assessee to avoid unnecessary harassment by directing the Assessing Officer to pass a speaking order taking into account the objections for reopening the assessment under Section 147 of the I.T. Act. 17. The forming of opinion to proceed further by disposal of the objections need not be a detailed consideration of all the facts and law applicable. It must show application of mind to the objections raised by the noticee. In case the objections are such that it would require a detailed examination of facts and application of legal provisions, taking into account the assessment order sought to be reopened, the string of violations, suppression of material particulars and tran....
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....ourt in the case of GKN Driveshafts (India) Ltd. (supra); the decision of the Hon'ble High Court of Madras in the case of Home Finders Housing Ltd. (supra) has discussed, in depth, the law laid down by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. (supra) and has rendered a finding that the procedure indicated in GKN Driveshafts (India) Ltd. (supra) is a procedure, the non-compliance of which itself would not make the order void. It is only an irregularity which can be caused by remitting the matter to the authority. As the Hon'ble High Court of Madras in its order (supra) has analysed the decision of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. (supra) and has rendered a finding on the actual position of that decision, we respectfully deem it appropriate to follow the decision of the Hon'ble High Court of Madras in the case of Home Finders Housing Ltd. (supra). 4.7.8 In our considered view, the above principles apply squarely to the facts of the case on hand for both the assessment year 2010-11 and 2011-12. In the case on hand, the undisputed fact is that the assessee had asked the Assessing Officer to provide it th....
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....f the case on hand and the assessee had fully co-operated and participated in the assessment proceedings without raising any objection at that time. 5.1.3 According to the reasoning put forth by the learned CIT (Appeals), non-issuance of notice under Section 143(2) by the JCIT may be only a technical error and does not vitiate the assessment proceedings to be held as bad in law. As the transfer of a case can be effected at any stage of the proceedings, it is not necessary for the Assessing Officer to whose file it has been transferred to reissue the notice. The latter officer can continue the proceedings and complete the same and in support of this proposition, the learned CIT (Appeals) has placed reliance on the decision in the case of Mathura Prasad Motilal & Co. V. CIT (1956) 30 ITR 695 (Nagpur). 5.2 Per contra, the learned Departmental Representative for Revenue emphatically supported the order of the learned CIT (Appeals). 5.3.1 We have heard the rival contentions, perused and carefully considered the material on record; including the submissions made and judicial pronouncements cited. The issue of "concurrent jurisdiction" in the context of the CBDT Notification issu....
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....on 220(6) of the Act in dealing with the petition for stay. What has happened in the present case is that after having passed the assessment order, the Additional Commissioner seems to have washed his hands of the matter and left it to the Deputy Commissioner to decide the stay petition filed under section 220(6) of the Act. We are of the opinion that this was not permissible in law. 5.3.2 Further in the case of Mega Corporation Ltd. (supra), it has been held by the Tribunal that in the absence of an order under Section 120(4)(b) of the Act, the Addl. CIT lacks jurisdiction to exercise the functions of the Assessing Officer and therefore the order of assessment is framed without jurisdiction. The relevant portion at para 7.1 thereof is extracted hereunder :- " 7.1 On careful consideration we find merit in the said submission. This order apparently is neither an order under section 120(4)(b) of the Act and nor it otherwise directs the Additional Commissioner to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under the Act. As regards the notification no. 267/2001 dated 17.9.2001 we notice that such notification ....
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....ing Officer as envisaged in section 2(7A) so amended only if he is directed under clause (b)of sub-section (4) of section 120 to exercise or perform all or any of the powers and functions concerned on or assigned to an Assessing Officer; meaning thereby that the Addl. CIT can function or can exercise the powers and perform the functions of an Assessing Officer if he is empowered by the CBDT as required under clause (b) of sub-section (4) of section 120. ...... 18.1 So far as the issue before us in the present appeal is concerned, it is now clear from the provisions as discussed hereinbefore that the Additional CIT could act and exercise the powers of an AO only in consequence upon delegation of such authority by the Board, Chief Commissioner of Income-tax or Commissioner of Income-tax as envisaged in the provisions of section 120(4)(b) of the Act. However, the power given to the Chief Commissioner of Income-tax or Commissioner of Income-tax being in consequence upon the delegation of power duly authorized by the Legislature, the Chief Commissioner of Income-tax or Commissioner of Income-tax were duty bound, if at all they were to exercise such delegated power to act accord....
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.... It is further noted that similar view has been expressed by Jodhpur Bench of ITA in the case City Garden v. ITO [2012] 21 taxmann.com 373/51 SOT 195 (URO) wherein it has been held that in the absence of a specific order issued in pursuance to Section 120(4)(b) specifically authorizing Joint Commissioner of Income Tax to exercise the powers and perform the function as conferred on or assigned to an Assessing Officer by or under the Act or a notification under section 120 of the Act, he is not competent to act as an Assessing Officer and pass an assessment order. 3.35. Similar view has been taken by Lucknow Bench of ITAT in the case of Microfin Security (P.) Ltd. v. Addl. CIT [2005] 3 SOT 302 wherein it was held that in absence of any allocation being made in favour of Additional Commissioner to make an assessment, he cannot assume for himself such an authority so as to pass an assessment order. 3.36. Similar view has been taken recently in another judgment by the Delhi bench of the ITAT in the case of Harvinder Singh Jaggi v. Asstt. CIT [2016] 157 ITD 869/67 taxmann.com 109. Relevant part of observations of the Bench is reproduced below:- ".......As regard the conten....
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....n an authority to be exercised in a particular manner, then that authority is bound to exercise it only in the manner provided in the statue only. 3.39. Hon'ble Bombay High Court dealt with a similar situation in the case of Ghanshyam K. Khabrani (supra) wherein the said assessee raised an issue that requisite sanction prescribed u/s 151 for reopening of an assessment was required to be obtained by the AO from Joint Commissioner of Income tax whereas the same was granted by Commissioner of Income tax and therefore the same was nullity in the eyes of law. Revenue took a stand that sanction was granted by an officer superior in rank and therefore, no prejudice was caused to the assessee. But Hon'ble High Court did not agree with the contention of the Revenue and observed that:- "........The expression "Joint Commissioner" is defined in section 2(28C) to mean a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income-tax under section 117(1). Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. The expression has a distinct meaning by virtue of the definition in section 2(28C). The Commissioner ....
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....e case, we deem it appropriate to remand the matter back to the file of the Assessing Officer to examine whether the necessary orders, as explained above, have been passed in the case on hand for the JCIT to assume valid jurisdiction to pass the impugned orders of assessment. Even if such an order is not passed, it would be a procedural issue and in terms of the decision of the Hon'ble High Court of Madras in the case of M/s. Home Finders Housing Ltd. Vs. ITO (supra), such a defect is not fatal and can be cured / rectified by passing a fresh order. In this factual and legal matrix of the case, we remand this issue to the file of the Assessing Officer for necessary action in accordance with law and the principles laid down in this regard by the judicial pronouncements cited / discussed from para 5.3.1 to 5.3.5 of this order. Needless to add, the Assessing Officer shall afford the assessee adequate opportunity of being heard in these matters and to put forth details / submissions required which shall be duly considered by the Assessing Officer before deciding these issues. We hold and direct accordingly. 6. Deduction u/s.80P of the Act. 6.1 On the substantive issue of the d....