AI Drafter 
TaxTMI 
TaxTMI 
2020 (5) TMI 618
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.... received from the Forward Markets Commissions(FMC) 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 unlaw....
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....ation by way of filing an cross objections and not otherwise. Such view was vetted by a Senior Advocate also. Accordingly 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 ....
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....echnical issue which goes to the root of the jurisdiction. We note that technical issue raised by the assessee is a pure question of law relating to jurisdiction, which goes to the root 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....
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....e tax, if paid. Therefore, the question is dependent on the determination of the liability. This interest would not be payable if no amount is found to be due on account of tax payable. Thus, in such circumstances, in one contingencies 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 canno....
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....re, a question of law arising out of facts found by the authorities and which goes to the root of the jurisdiction can be raised for the first time before the learned Tribunal. The second point : The jurisdiction : The order : Whether a nullity : So far as the second question 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 A....
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....ed to the jurisdiction of the officer of the ward newly created. The expression 'who are' or 'would come' include all assessees whose cases are pending or who would have come or used to come would also come under the new jurisdiction apart from those who are within such jurisdiction. The expression is clear enough to mean that this jurisdiction 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 ....
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....was initiated would continue to exercise jurisdiction. This decision also on the same analogy does not help Mr. Agarwal. The principle applied : Asst. yRs. 1983-84, 1984-85, 1986-87 and 1987-88: 7. In this case, so far as the assessment relating to the financial years 1982-83, 1983-84,1985-86 and 1986-87 corresponding to asst. yRs. 1983-84, 1984-85, 1986-87 and 1987-88 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.....
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....e 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared(Mofussil areas) ITOs ACs/DCs Corporate returns Upto Rs. 20 lacs Above Rs. 20 lacs Non-corporate returns Upto Rs. 10 lacs Above Rs. 15 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Banagalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai 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....
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....edly, been filed by the assessee on October 29, 2004, i.e., during the current financial year 2004-05. The selection for scrutiny of the assessee's case and completion of the assessment was not valid. 6. We find that the Hon'ble Chhatishgarh High Court in Sunita Finlease Ltd.'s case (supra) has also considered the decision of Hon'ble Supreme Court in the case of UCO Bank (1999) 237 ITR 889 and quoted from page 896 as under: "Such instructions may be by way 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 othe....
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....f the Act is beyond the dates specified in Instruction No. 9 dated 20th September, 2004. At this juncture, we would like to clarify that Instruction No. 9/2004 dated 20th September, 2004 referred by the Tribunal in Ajanta Financial Services (P.) Ltd.'s case (supra) as well as the Hon'ble Chattisgarh High Court in the case of Dy. CIT v. Sunita Finlease Ltd. [2011] 330 ITR 491/11 taxmann.com 241 are in respect of the corporate assesses. However, in the case of the non-corporate assesses similar 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 rev....
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....ia. 6. We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return of income on 29.03.2013 declaring total income of Rs. 50,28,040/-. As per the CBDT Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of 'non corporate returns' the ITO's increased monetary limit was upto Rs. 15 lacs; and if the returned income is above Rs. 15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs. 15 lakh, then 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 issue....
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....र 3 31 Tax कारà¥à¤¯à¤¾à¤²à¤¯ Office of * -5(2) 5(2), Kol कोलकाता Yours faithfully ASSESSING OFFICER Name MAGPEN BHUTIA Designatincome Tax Officer, Ward-5(2), Kolkata Code No.-WBG-W-105(2) Document 2 Add: (1) Donation 820600 (i)Depreciation as per Companies Act 6210580 (iii) Disallowable u/s 36 of 1.T. Act 586953 7618133 16814956 Less: (i) Depreciation as per I.T. Act 7816592 8998364 Added Back (i) Loss in National Multi Commodity Exchange 71890315 (as discussed in para 3 above) (ii) Share Capital 30000000 101890315 110888679 (as discussed in para 4 above) Total Income Rounded off u/s 288A of I.T. Act 110888679 110888680 Tax @ 30% (A) Computation of Book Profit u/s 115JB Net profit as per P&L a/c Book Profit Tax @ 18.5 % (B) 33266604 9196823 9196823 1701412 5.1 Since, tax on total income (A) is higher than the tax computed on Book Profit u/s 115JB (B), the assessee is required to pay tax at normal rates. 6. Assessed u/s.143(3) of the Income-tax Ac....