TaxTMI 
TaxTMI 
2018 (9) TMI 1012
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....me 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. 3,35,46,397. The claim for deduction under Section 80P o....
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....ssessee 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 taken up for scrutiny for this assessment year also. The as....
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....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 proceedings as held in the case of Mathura Prasad Motilal & Co. reported in (1956) 30 ITR 695 (Nagpur). 3.2.2 On the issue of providin....
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....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 Corporation Ltd. Vs. Addl. CIT (155 ITD 1019) (Del) and iii) Tata Sons Ltd. Vs. ACIT (76 taxmann.com 126) (Mum) 4.3 It was also contended by the learned Authorised Representative that the assess....
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.... 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 officer. (iii) The assessee deliberately omitted to remind the Assessing Officer for being supplied with copy of the reasons recorded. (iv) The Assessing Officer addressed two letters to the assessee wherein he had conveyed....
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.... 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 holding that an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice under Section 148 of the Act being furnished to the assessee when sought for. It is axiomatic that power to reopen a compl....
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.... 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 transactions which would require considerable time and would be in the nature of a detailed adjudicatory process, the Assessing Officer can dispose of the objections, by giving his tentative reasons for overruling the objections. 18. The disposal of objections is in the val....
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....d 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 the reasons recorded for reopening assessments, which was not furnished. However, in spite of the reasons recorded not being provided by the Assessing Officer, the assessee has participated and co-operated with the Assessing Officer in completion of the assessment proceedings. Respectfully following the....
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....r 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 issued under Section 120 of the Act by the CBDT has been discussed in the decision of the ITAT, Delhi Bench in the case of Mega Corporation Ltd Vs. Addl. CIT(2015) 155 ITD 1019 [ITAT (Del)]. After discussing the issue of concurrent jurisdiction and the judicial pronouncements on the subject, the Tribunal held that t....
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.... 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 by CBDT u/s 120(4)(b) of the Act directs that Joint Commissioner of Income Tax or Joint Director shall exercise the power and function of an Assessing Officer in respect of specified cases in respect of which such Joint Commissioner or authorized by Commissioner of Income Tax vide CBDT notification dated 14.9.2001 and 31.7.2001. It ....
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....essing 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 according to the provisions of law; meaning thereby that it was incumbent upon the Chief Commissioner of Income-tax or the Commissioner of Income-tax, as the case maybe, if at all they wanted to authorize the Additional CIT to act and perform the functions of an AO, to pass a proper order delegating such functions/powers upon him. This view of ours is fully ....
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....nferred 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 contention of the assessee that no order under section 127 was passed by the Commissioner of Income-tax, the revenue has submitted that the Addl. Commissioner of Income Tax was provided concurrent jurisdiction over the cases through the order of the Commissioner of Income tax and, therefore, no separate order under section 127 was required to be passed by the Commissioner of Income tax. ....
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....d 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 of Income tax is not a Joint Commissioner within the meaning of section 2(28C). There is no statutory provision under which power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a p....
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....rt 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 disallowance of the assessee's claim for deduction under Section 80P of the Act, since the jurisdictional issues, namely non-furnishing of reasons recorded, validity of issued notices issued under Section 148 of the Act and validity of assumption of jurisdiction by the JCIT in passing the impugned orders of assessment have been remanded back to the file of the Assessing Officer for fresh considerati....