TaxTMI 
TaxTMI 
2020 (5) TMI 618
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....through I&CI wing that the assessee company had taken accommodation entries in form of bogus losses through NMCE and the same was independently adjudicated. 2. Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,00,00,000/- as unexplained cash credit arising out of bogus share capital introduction. The order passed by the Ld. CIT(A) is not based on correct facts and is oblivious to the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company recently unearthed by the revenue. 3. Whether the order passed by the Ld. CIT(A) may be reversed or at least set aside to decide the case de novo to overcome the rule of audi alteram partem as held by him to be violated. 4. That the appellant craves for leave to add, or modify any of the grounds of appeal before or at the time of hearing of the appeal. 3. The cross objection raised by the assessee are as follows: 1. For that in the facts and circumstances of the instant case, the ld. CIT(A)-4, Kolkata acted unlawfully in not appreciating that the conditions precedent for issuance of notice u/s....
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....ordingly the instant cross objection was filing on 23.09.2019 involving a delay of 600 days." We have heard both the parties on this preliminary issue and having regard to the reasons given in the petition for condonation of delay, as mentioned above, we condone the delay and admit the cross objection of the assessee for hearing. 6. At the outset itself, the ld. Counsel for the assessee submitted that assessment was framed u/s 143(3) of the Act dated 28.03.2015 by the Deputy Commissioner of Income Tax, Circle-10(2), Kolkata. However, notice of scrutiny u/s 143(2) was issued by the ITO, Ward-5(2), Kolkata who does not have jurisdiction to issue scrutiny notice to the assessee company under consideration. The notice issued by non-jurisdictional ITO, Ward-5(2) is reproduced below: Notice under Section 143(2), of the Income Tax Act, 1961 Office of the ITO, WD 5(2) PAN No. : AADCP7843A Dated: 08/08/2013 To M/S PROFICIENT COMMODITIES PRIVATE LIMITED 1 R. N. MUKHERJEE RD 4TH FLR ROOM NO 20 KOLKATA WEST BENGAL 700001 Sir / Madam, There are certain points in connection with the return of income submitted by you on 28thSeptember, 2012 for the assessment year 2012-13 on ....
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....ot of the jurisdiction exercised hence assessee can raise the said issue for the first time before the Tribunal. As noted above, the scrutiny notice u/s 143(2) was issued by the Income Tax Officer, Ward-5(2), Kolkata, who does not have jurisdiction to issue notice on assessee company under consideration. The assessment order u/s 143(3) dated 28.03.2015 was framed by the Deputy Commissioner of Income Tax, Circle-10(2), Kolkata who did not get the jurisdiction under the Act to frame assessment, as the notice u/s 143(2) was not issued by him. It is settled law that servicing of notice u/s 143(2) of the Act is a sine qua non for an assessment to be made u/s 143(3) of the Act. Since the notice u/s 143(2) was not issued by the authority having jurisdiction on the assessee company. Therefore, assessment order framed by the Deputy Commissioner of income Tax, Circle-10(2), Kolkata is not valid in the eye of law, for that we rely on the judgment of the Hon'ble Calcutta High court in the case of West Bengal State Electricity Board reported in 278 ITR 218 (Cal) wherein it was held as follows: "The points raised : In exercise of the powers conferred under s. 120(2) of the IT Act, 1961 (IT A....
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....tingencies of the situation, the interest would become payable and in another contingencies it would not. It was rightly laid down by the Board to be discretionary. But this cannot be equated with a situation when the interest is compensatory in nature and payable on an amount which is not the income of the assessee but of someone else from which the assessee was liable to deduct the tax payable by such assessee and the default to deduct or to pay would start from the date it becomes deductible since this amount was payable to the treasury, simultaneously with the payment of the amounts to the third party assessee concerned. Therefore, according to him, the liability occurring in s. 201(1A) as has been engrafted in the enactment cannot be said to be discretionary. 2.1 He then contended that the jurisdiction though conferred on the specially created ward w.e.f. 8th May, 1989, but the same was not retrospective in operation. According to him, there cannot be any retrospective operation of a legislation conferring jurisdiction. By reason of such legislation neither the jurisdiction, which was already there, could be taken away with retrospective effect nor the jurisdiction could be ....
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....estion is concerned, the same does not seem to pose any difficulty. As pointed out by Dr. Pal, it is an admitted proposition that no jurisdiction can be conferred by default or by agreement and a decision without jurisdiction is a nullity. This defect of jurisdiction can be pecuniary or territorial and is incurable as was held in Kiran Singh vs. Chaman Paswari AIR 1954 SC 340 (para 6). The Court passing a decree without jurisdiction is a defect, which cannot be cured and the decree passed is a nullity. It was so held in Balvant N. Viswamitra vs. Yadav Sadhasiv Mule (2004) 8 SCC 706 and in CIT vs. Pearl Mechanical Engineering & Foundry Works (P) Ltd. (2004) 188 CTR (SC) 289 : (2004) 267 ITR 1 (SC). 6.1 In order to appreciate the situation in the present case, we may quote the notification in Annex. 'E' dt. 10th April, 1989 at pp. 117-118 : "Notification No. S.O. 1436, dt. 10th April, 1989. In exercise of the powers conferred under sub-ss. (1) and (2) of s. 120 of the IT Act, 1961, and all other powers enabling me in this behalf, I, the Chief CIT (Admn.), Calcutta, hereby create a new Range viz., Range 21, under the jurisdiction and administrative control of the CIT, West....
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....on was prospective but all matters would be prospectively dealt with from the stage as it stood on the particular date namely, 8th May, 1989. 6.3 The creation of new range and ward does not appear to be retrospective. It also does not provide that the matters pending would be transmitted to the newly created range or pending proceedings would stand transferred with the creation of the new jurisdiction. Unless there are express provisions in the statute, there is no scope of effecting transfer of pending proceedings to the newly created jurisdiction. 6.4 However, Mr. Agarwal sought to rely upon the decision in Sait Bansilal & Rangisetti Veeranna vs. CIT (1972) 83 ITR 750 (AP) to contend that unless the statute contains words, whether expressly or by necessary implication, ousting the jurisdiction of the ITO once vested in him, the jurisdiction cannot be taken away. Nothing but express words in the section can take away the jurisdiction of an officer. That a presumption exists in law in favour of the continuance of jurisdiction or power once vested in an officer until ousted by express words. The ratio decided in this decision is not in dispute. By reason of creation of new range....
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....88 were all initiated as against the assessee, admittedly, after 8th May, 1989. Therefore, the AO having territorial jurisdiction in respect of the regular assessment of the assessee could not assume jurisdiction after 8th May, 1989 in respect of matters covered under Chapter XVII-B. Thus, the orders in relation to those assessment years involved in the appeal except the asst. yr. 198586 corresponding to financial year 1984-85 cannot be sustained being without jurisdiction and a nullity." 8. We note that CBDT has issued instruction no. 01/2011 wherein the CBDT has declared the monetary limits for assigning the cases for the purpose of scrutiny to the Income tax Officer, Deputy Commissioner and Assistant Commissioner which is reproduced below: We note that assessee's monetary limit falls above Rs. 30 lacs therefore the statutory notice u/s 143(2) should have been issued by the Deputy Commissioner / Assistant Commissioner. However, in the instant case, scrutiny notice was issued by the ITO, Ward-5(2), Kolkata which is without jurisdiction and consequently the assessment framed by the Deputy Commissioner of Income Tax (DCIT, Circle10(2), Kolkata) becomes void since the notice u/s 1....
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....umbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011. -See more at: http://taxguru.in/income-tax/section-119-of-the-income-tax-act- 1961-instructions-too-subordinate-authorities-instdructions-regarding-inclimits-for-assigning-cases-to-deputy-commissionersassistnt- commissionersitos.html#sthash.U17d65534.dpuf" The notice u/s. 143(2) and order sheet entries which were referred by the ld. counsel for assessee are placed at Annexure no. 2 & 5 of the paper book respectively. Admittedly the notice u/s. 143(2) in the instant case was issued by the ld. ACIT to initiate the assessment proceedings which was later transferred to ITO. However, the ITO did not further issue any notice u/s. 143(2) of the Act. Therefore, ITO assumed the charge without issuing notice and consequently completed assessment u/s. 143(3) of the Act without jurisdiction. In similar facts and circumstances, the Co-ordinate Bench of this Tribunal has decided the issue in favour of assessee in the case of Ajanta Financial Services (P.) Ltd. v. ITO in ITA No. 1426/Kol/2011. We consider it fit to incorporate the relevant portion o....
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.... of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act, which are binding on the authorities in the administration of the Act. Under section 119(2) (a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuin....
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....lar instruction has been issued in Instruction No. 10 dated 20.09.2004. In this case also as per the order sheet entries incorporated in the preceding paragraphs, it is observed that the selection of scrutiny was made on 20.06.2005 and notice u/s. 143(2)(ii) and 142(1) was issued on 11.07.2005 i.e. beyond the period of the scrutiny as specified in Instruction No. 10/2004 dated 20.09.2004. Therefore, keeping in view of the decision of Hon'ble Chattisgarh High Court in the case of Sunita Finlease Ltd. (supra) as well as Tribunal's order in ITA No. 1426/Kol/2011 in the case of Ajanta Financial Services (P.) Ltd. (supra). 8.1 In view of above we set aside the orders of the revenue authorities by quashing the order of the assessment framed u/s. 143(3) of the Act since the issue of notice u/s. 143(2) of the Act was not done by the ITO as specified in CBDT Instruction No. 1/2011 dated 31.1.2011. As the assessment proceedings u/s. 143(3) of the Act have been held as invalid, therefore in our considered view the other issues raised by the assessee do not require any adjudication. Hence the ground raised by the assessee is allowed." 10. On identical facts our view is further forti....
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.... the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad....