TaxTMI 
TaxTMI 
2019 (12) TMI 349
X X X X Extracts X X X X
X X X X Extracts X X X X
..... At the outset, the learned Counsel for the assessee stated that the facts regarding additional ground raised in these two assessment years i.e. AYs 2004-05 and 2005-06, vide letter dated 20.01.2017 and 27.01.2017 before the ITAT challenging the validity of the assessment orders passed by the Additional CIT inter alia on the following grounds: - "1. On the facts and in the circumstances of the case the assessment order dated 31-12-2007, passed by the Additional Commissioner of Income Tax under section 143(3) is bad in law, illegal and without jurisdiction and.) or in excess of jurisdiction. On the grounds amongst others, that he failed to establish that he possessed legal and valid jurisdiction under the Act to pass the assessment order and consequently the Honourable Tribunal he pleased to quash the said order. 2. The Additional Commissioner of Income Tax lacked jurisdiction to pass the order of assessment u/s 143(3) dated 31-12-2007 and to exercise the powers of performing the functions of as Assessing Officer, without establishing that he possessed such jurisdiction conferred on him under section 120(4)(b) of the Act. Accordingly, in the absence of an order tx....
X X X X Extracts X X X X
X X X X Extracts X X X X
....87 ITR 688 (SC) National Thermal Power Corpn. Ltd. V. CIT (229 ITR 383) (Bom High Court) (FB) Ahmedabad Electricity Co. Ltd. v. CIT (188 ITR 351) (Bom High Court) (FB) CIT v. Pruthvi Brokers & Shareholders (349 ITR 336) (Bom High Court)" 4. The learned Counsel for the assessee in support of his above argument also stated that on identical set of facts, the ITAT has admitted similar additional grounds in the case of its group concerns in the following cases: - "Tata Sons Ltd. V. ACIT (162 ITD 450) (Mum ITAT) Tata Sons Ltd. v. ACIT (ITA No. 3745/Mum/2006) (Mum ITAT) Tata Sons Ltd. v. ACIT (ITA No. 263m9/Mum/200) (Mum ITAT) Tata Communications Ltd. V. Addl. CIT (ITA No. 7071/Mum/2005) (Mum ITAT) Tata Communication Ltd. Vs. Addl. CIT (ITA Nos. 3972/Mum/2007 & 1109/Mum/2008) (Mum ITAT)" 5. He stated that the necessity for raising of additional grounds arose after the decision of Mumbai ITAT in the case of Tata Sons Ltd. Vs. ACIT (162 ITD 450), wherein exactly identical issues was first dealt with. He has further narrated the facts that filing additional grounds of appeal in ITAT on 20.01.2017 & 27.01.2017 chal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e same is drawn our attention. Thereafter, the Addl. CIT passed assessment order under section 143(3) of the Act dated 31.12.2007 and against this assessment assessee filed appeal before CIT(A), who partly allowed the relief to the assessee vide order dated 27.02.2009. Against the order of CIT(A), the assessee as well as the Revenue filed an appeal before Tribunal. 9. We noted that the assessee after filing appeal before ITAT 20.01.2017 and 27.01.2017 challenging the jurisdiction of Addl. CIT to pass the assessment order under section 143(3) of the Act and consequently the assessee company vide its letter dated 24.01.2017 requested the jurisdictional AO to produce certain documents including the authorization from the CBDT to the CIT and the relevant order passed by the CIT and any other relevant document. The details of the letter are enclosed in assessee's paper book at page No. 3. We noted that as per section 2(7A) of the Act, AO means inter alia an Addl. CIT who is directed under section 120(4)(b) to exercise or perform all or any of the powers and functions conferred on, or assigned to, an AO under the Act. As per Section 120(4)(b), the CBDT has to first empower the Commiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2003. Before that, he has also processed the return of the assessee for the impugned assessment year and issued intimation under section 143(1) on 31st March 2003. It is evident on record, subsequently the Addl. CIT, Range-1(3), assumed jurisdiction as an Assessing Officer of the assessee and issued notices under section 142(1) and 143(2) on 9`" December 2004 and ultimately completed the assessment for the impugned assessment year vide order dated 21st February 2005. Therefore, we have to examine firstly, whether there is an order of transfer of jurisdiction under section 127 of the Act, from the DCIT, Range-1(3) to the Addl. CIT, Range-1(3) and secondly, whether the Addl. CIT is vested with authority/jurisdiction to act/perform or exercise the powers of an Assessing Officer in respect of the present assessee. Before proceeding to decide the, issue, it is necessary to examine certain provisions of the Act. The expression "Assessing Officer' has been defined under section 2(7A) of the Act. The aforesaid provision as it existed during the relevant period is extracted hereunder for convenience: Definitions 2. In this Act, unless the context otherwise requires, - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cerned CCIT/CIT to issue order in writing in terms of section 120(4)(b) in respect of a particular assessee. Keeping in view the aforesaid statutory provisions, we have to decide the issue raised before us. The specific contention of the assessee is, as per the provisions of section 2(7A), as it existed at the relevant period, Addl CIT was not an Assessing Officer. It is further submitted, even otherwise also, there is no notification / order empowering the Addl. CIT to act as an Assessing Officer in terms of section 121)(4)(b). To counter the aforesaid contention of the assessee, the 'earned Departmental Representative has relied upon the following notifications. i)Notification no.228 of 2001 date 31.072001 ii)Notification no.MIC/HQ- 1/Jurisdiction/2001 -02 dt 01.08.2001; iii)Notification no. ACIT, Range-1(3)/Jurisdiction/2001-02 dated 08.08.2001; and iv)Notification no.267/2001 dated 17.09.2001 15. At this stage, we propose to deal with each of the aforesaid notification relied upon by the Department to establish the valid exercise of jurisdiction as an Assessing Officer by the Addl. CIT. The first notification being notification n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....120(2) and not u/s.(4)(b) of section 120. The last notification relied upon by the Department is notification no.267/2001 dated 17th September 2001. A perusal of the aforesaid notification, a copy of which has been placed in the Departmental paper book shows that this notification has been issued by the Board under section 120.(b) directing JCIT/IDIT to exercise powers and functions of the Assessing Officer. It does not mention Addl. CIT / Addl. Director of Income Tax in any case of the matter at the time of issuance of this notification, Addl. CIT was not treated as an Assessing Officer either under section 2(7A) or under section 120(4)(b) as the amendment including Addl.. CIT, as an Assessing Officer was brought to the statute by Finance Act, 2007, though, with retrospective effect from 1st April 1994. Therefore, under no circumstances, the Board notification dated 17th September 2001, can be said to have conferred the jurisdiction of assessing officer on Addl. CIT. In this context, it is necessary to deal with the argument of the Department that as per the definition of JCIT under section 2(28C), it includes Addl. CIT, therefore, the notification dated 17th September 2001, issue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urrent exercise of power and joint exercise of power. The Bench held when power has been conferred upon two authorities concurrently, either one of them can exercise such power and once a decision is taken to exercise the power by any one of those authorities that exercise must be terminated by that authority only. In fact on a careful perusal of the orders passed by the Tribunal in case of Mega Corporation Ltd. (supra) and Tata Sons Ltd. (supra) we are of the view that the arguments/contentions raised by the Department in the present appeal relying upon certain notifications have been exhaustively dealt with by the Tribunal in these decisions and the issue has been decided in favour of Though, the learned Departmental Representative has submitted that the decisions of Mega Corporation Ltd. (supra) and Tata Sons Ltd (supra) should not be relied upon, however, we are of the considered view that these decisions of the Tribunal have been rendered more or less on identical facts and issues and after considering the very same notifications relied upon by the learned Departmental Representative in the present case and the Tribunal has ultimately concluded that in absence of a valid notif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee in assessment proceedings: It was contended by the Ld. CIT-DR that during the course of assessment proceedings, assessee had made participation in the proceedings. Therefore, assessee cannot he allowed to challenge jurisdictional defect in the assessment order at this stage. We have considered this aspect very carefully. The assessee has challenged before us authority of the Officer to pass the impugned assessment order. It is bounden duty of the Revenue to establish the authority and legal competence of, its officer to pass the assessment order, as and when it is called upon to do so. No order can be sustained in the eyes of law if its author does not have requisite sanction of the law. If an Order does not possess requisite strength in the eyes of law and is void ab-initio then it will remain so even if there is acquiescence or participation by the assessee in the proceedings carried out by the AO to frame the assessment order. it is well settled law that consent of the assessee cannot confer jurisdiction to an assessing officer who lacked jurisdiction under the law. Similarly, vice versa is also true i.e. absence of consent of the assessee shall not take away jurisdi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'ble Delhi High Court in the case of Valvolines Cummins Ltd, supra. 3.16. In view of the facts and circumstances, of this case and the judgments of Hon'ble Supreme Court and Hon'ble Bombay High Court relied upon by the Ld. Counsel in its petition as* mentioned above, we find that these additional grounds deserve to be an admitted and therefore, these are admitted for our adjudication. 3.17. Since the additional grounds go to the root of the matter and challenge jurisdictional validity of the order, therefore, we find it appropriate to first deal with the same before deciding the appeal on merits. It has been argued at length by the Ld. Senior Counsel of the assessee that in this case first notice of assessment proceedings intimating change of jurisdiction was issued by ACIT circle 2(3) Mumbai, dated 5th September 2001 wherein it was claimed that the jurisdiction of assessment was with the said officer. Subsequently, notice u/s 143(2) was issued by the DCIT dated 01.12.2003. Thereafter a questionnaire was issued by the Additional Commissioner of Income Tax Range -2(3), Mumbai dated 10th February 2004 and finally the Additional Commissioner of Income Tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to pass the impugned assessment order. It was further submitted that as per section 2(28C), Joint Commissioner includes Additional Commissioners also. It was further submitted that Section 2(7A) was amended retrospectively and the word 'Additional Commissioner' was also inserted along with word 70/nt Commissioner' by Finance Act, with retrospective effect from 01.06.1994..In response to the query, Ld. CIT-DR fairly submitted that he was not able to t any Order from the board or Chief Commissioner of Tax or Jurisdictional Commissioner of Income Tax authorizing the present Additional Commissioner of Income Tax to act as an Assessing Officer and to pass assessment order. But, he maintained that even without and such specific order, the Additional Commissioner was legally competent to pass the impugned assessment order. 3.19. In rejoinder, Ld. Senior Counsel of the assessee again took us through all the previous order sheet entries recorded by the bench on earlier dates wherein bench had repeatedly directed and had given opportunity to the department to produce if there Wd5 any order authorizing the Additional Commissioner of Income Tax to pass impugned assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llow up correspondences on that account are to be made with the undersigned. All payments towards Income-tax and Wealth-tax wef 01.08.2001 of the above persons are also to be made to the credit of ACIT Cir. 2(3) Mumbai. This maybe Carefully noted. Your's Faithfully Sd/- (Jagadish Prasad Jangid) ACIT CIR2(3), Mumbai 3.21. Thus, from the above, it is clear that initially the jurisdiction was with ACIT Cir. 2(3), Mumbai, for passing the assessment order. Subsequently, a notice u/s 143(2) was issued by DCIT Cir. 2(3) dated 01. 12.2003 who was indeed successor to the first officer. Subsequently, assessee received a questionnaire dated 10th December, 2004 from the Additional CIT range 2(3) Mumbai. Apparently, Additional Commissioner of Income Tax was not successor. of ACIT/DC1T who had issued earlier notice. But, the assessee has contended that there is nothing on record to show as to how the Additional Commissioner of Income Tax became AO of the assessee and passed the impugned assessment order. 3.22. Thus, the first issue raised by the assessee before us is that in this case assessment proceedings were initiated by the Assistant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th or without concurrent jurisdiction) also subordinate to him. Thus, mandatory requirement of the law in this regard is that an order in writing must be passed by the jurisdictional Commissioner of Income tax for effecting transfer of assessment proceedings from one Assessing Officer to the other. Law in this regard was explained in detail by Hon'ble Delhi High Court in the case of Valvolines Cummins; supra Similar view was taken by the Delhi bench of the Tribunal in the case of Mega Corporation Ltd. Vs. Additional CIT, supra following the aforesaid judgment of the Delhi High Court. Relevant part of order is reproduced below for the sake of ready reference:- "....9 Another content/on specifically raised is that there is no transfer order u/s 127 of the Act from transferring the case from the DCIT to the Addl CIT, Range 6, and New Delhi. The learned CIT(A) has held that in the cases of transfer of cases to another AO after issue of notice u/s 143(2) of the Act by another AO, the issue involves the interpretation of concurrent jurisdiction which is beyond the scope of this appeal within the restricted directions of the Hon'ble ITAT. He has held that, "in my considered Opinio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for anticipatory bail it must deal with it and similarly if the Sessions Judge is seized of an anticipatory bail, he must deal with it. There can be no joint exercise of power both by the High Court as well as by the Sessions Judge in respect of the same application for anticipatory bail. 30. In the facts of the present case, since the Additional Commissioner had exercised the power of an Assessing Officer, he was required to continue to exercise that power till his jurisdiction in the matter was over. His jurisdiction in the matter was not over merely on the passing of the assessment order but it continued in terms of section 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(5) of the Act. We are of the opinion that this was not permissible in law." 9.1 We therefore hold that applying the above judicial position that assessment has to be completed by the authority who has initiated the proceedings for making ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equired to be passed by the jurisdictional Commissioner of Income tax) is available in the records. Thus, it is clear that there was no valid transfer of jurisdiction to the Additional commissioner of income Tax who had passed the impugned assessment order. Thus, impugned assessment order had been passed without assuming jurisdiction as per law. 3-24. Next issue raised by the Ld. Senior Counsel was that the Additional Commissioner who had passed the impugned assessment order was not authorized to act as assessing officer of the assessee and pass the impugned assessment order. We analyzed the provisions of law in this regard and find that section 2(7A) defines the term of Assessing Officer as under: "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or subsection (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-Section (4) of that section to exercise or perform all or any f the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by us that only that Joint Commissioner' was authorized to act as an Assessing Officer who was directed under clause (b) of sub-section 4 of Section 120 to exercise or perform all or any of the Powers and functions of an Assessing Officer as defined u/s 2(7A) Of the Act. Now, if we refer to section 120, its perusal makes further clear that only CBDT can empower the Chief Commissioners or Commissioners for issuance of orders to the effect that powers and functions of an Assessing Officer for a particular assessee or classes of assessee shall be exercised by a 'Joint Commissioner'. Despite numerous directions, the Revenue was not able bring before us any order wherein any specific authority was given by any Chief Commissioner or Commissioner authorizing the impugned Additional Commissioner to pass impugned assessment order. We find force in the argument of Ld. Counsel that at the relevant time when the assessment proceedings were in progress, the word Additional Commissioner' was not available in the aforesaid section and therefore, it was not possible for the Chief Commissioner or the Commissioner to have authorized an Additional Commissioner for exercising powers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otification reveals that only those Joint Commissioners shall exercise the powers and functions of the Assessing. Officers who have been authorized by the concerned Commissioners of Income tax in pursuance to the relevant notification conferring requisite powers to the concerned Commissioners. 3.30. Similarly notification No.228/2001, supra authorize the Commissioners of Income tax to issue orders for authorizing in turn, the Joint Commissioner of Income tax who are subordinate to them for exercising of the powers and performance of the functions of the Assessing Officers. It also, inter-alia authorizes the Joint Commissioners who were so authorized by the Commissioners, to issue orders in writing to the Officers who are subordinate to them for the exercise of the powers and performance of the functions of the Assessing Officers for specified assessee or class of assessee. Relevant part of the said notification is reproduced as under for the sake of ready reference:- .....(c) authorise the Commissioner of Income Tax referred to in this notification to issue the orders in writing for the exercise of the powers and performance of the functions of C the Joint Commiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcise the powers of an Assessing Officer only if he is specifically directed under section l2Q(4)(b) of the Act to do so. Relevant part of the observations of the bench is reproduced hereunder for the sake of ready reference:-' . ......... We have considered the arguments advanced by the parties and perused the order of the learned CIT(A), comments of the Assessing Officer and material placed on record. The controversy raised in this appeal relates to the validity of order of assessment dated 29.12.2008 passed by Additional- CIT, Range 6, New Delhi. According to the appellant/assessee, it is incumbent under the scheme of statute to vest .the Additional CIT u/s 120(4)(b) of the Act to exercise or perform all or any of the powers and functions of Assessing Officer under the Act. To examine the above contention, we consider it inappropriate to firstly extract section 2(7A) of the Act which s as under: 2(7A) Assessing Officers 2(7A) "Assessing Officer" means the Assistant Commissioner 2 Deputy Commissioner 3 or Assistant Director 4 or Deputy Director or the Income-tax Officer who is vested - with the relevant jurisdiction by virtue of directions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of cases, shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made there under to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or a Joint Director, by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply." 53 It will be seen that the said provision provides that Board may by general or special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on or as the case may be, assigned to, Assessing Officer by or under this Act in respect of any spec/fled area or persons or classes of persons or incomes or classes of income or cases or classes of cases shall be exercised or performed by an Additional Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat 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/hg 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 supported by the decision of the Hon'ble Delhi High Court in t case of Dr. Nalini Mahajan vs DIE 257 ITR 123,wherein the Hon'ble High Court, while discussing the powers of Additional Director Investigation, held as under: It is now well....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of Micro fin Security Pvt. Ltd vs. Additional CIT 94 TTJ 767 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. 6. Similar view has-been taken recently in another judgment by the Delhi bench of the ITAT in the case of Harvinder Singh Jaggi Vs. ACIT 157 lTD 869 (Delhi). 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 W be passed by the Commissioner of Income tax. However, no such order of the Commissioner of income tax conferring the concurrent jurisdiction to the Addl. Commissioner of Income Tax over the cases of the Income tax officer is either available on assessment record, or was produced by the revenue. Thus, in absence of any s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee But Hon'blè 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 15 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 particular manner, it has to be done in that manner only............ 3.40. Thug, in view of the legal discuss/op made above and facts of the case, it is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demon....