TaxTMI 
TaxTMI 
2020 (11) TMI 310
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.... already available on record. Learned counsel for the assessee, in view of the judgment of Hon'ble I.T.A.T. in the case of AAA Paper Marketing Ltd. vide order dated 27/04/2018, prayed that the issues raised by the assessee in its application under Rule 27 of the I.T.A.T. Rules may be admitted and adjudicated first before taking up the appeal filed by the Revenue. Learned counsel for the assessee, in support of his arguments that the said application under Rule 27 can be admitted and adjudicated at I.T.A.T. level also, relied on a number of case laws besides its reliance on the case laws of Lucknow Bench of the Tribunal in the case of AAA Paper Marketing Ltd. Our specific attention was invited to the cases listed in the paper book at pages 7 and 8. Therefore, in view of the judicial precedents, Learned counsel for the assessee argued that the application, moved by the assessee under Rule 27 of the I.T.A.T. Rules, may be admitted and adjudicated. 3. Learned D. R., on the other hand, vehemently argued against acceptance of application under Rule 27 of the I.T.A.T. Rules and submitted that the issues raised in application do not arise either from the order of the Assessing Offic....
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.... (iv) M/s Tata Petrodyne Ltd., I.T.A. No.7679/Mum/2010, dated 16/09/2015 (v) M/s Cerner Healthcare Solutions Pvt. Ltd., I.T.A. No.675/Bang/2012, dated 08/01/2016 (vi) Great Wall Marketing (P) Ltd., I.T.A. No.660/Kol/2011, dated 03/02/2016 (vii) CIT vs. Edward Deventer (successors) Pvt. Ltd. 123 ITR 200 (Del) (viii) Deep Chand Kothari vs. CIT 171 ITR 381 (Raj) (ix) R. B. Construction, I.T.A. No.1537/Ahd/2011, datedl 10/04/2015 (x) IME International Pvt. Ltd., I.T.A. No.1873/Deol/2012, dated 08/01/2016 (xi) Thandi Ram Jai Narain, I.T.A. No.1289/Del/2013, dated 27/06/2017 (xii) Jolly Fantasy World Ltd. 373 ITR 530 Besides the above noted cases, Learned counsel for the assessee has also invited our attention to an order passed by Lucknow Bench of the Tribunal vide order dated 28/04/2017 in the case of AAA Paper Marketing Ltd. We find that in this order the Tribunal has considered the arguments raised by Learned D. R. and after considering the arguments and after relying on the case law of Jubiliant Enpro Pvt. Ltd. (supra), has decided the issue in favour of the assessee by holding as under: "2. We ....
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....f total income of the assessee u/s 115]A of the Act and the additions sustained pertaining only to the income computed under the normal provisions of the Act. The Id. AR relied on the judgment of the Hon'ble jurisdictional High Court in C1T Vs Nalwa Sons Investment Ltd. (2010) 327 ITR 543 (Del) to propel this submission. 14.2. Before proceeding with the matter on merit, it would be apposite to first decide about the maintainability or otherwise of such application. Rule 27ofITA T Rules, 1963 with its marginal note reads as under- 'Respondent may support order on grounds decided against him. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.' 14.3. The effect of this rule is that a respondent has been entitled to support the order on the ground which has been decided against him. The underlying idea and the spirit of Rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavorable decision of the CIT(A) on the aspect(s) of an issue, the final decision on which Issue has been delivered in his favor. Take an instance ....
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....he Act is a remedy to the respondent to challenge' the ultimate unfavorable conclusion of the CTT(A). 14.5. A cursory look at the language of rule 27 transpires that a respondent has been empowered to support the order appealed against on any of the grounds decided against him. In other words, the challenge can be made by a respondent only in respect of a ground decided against him' In such circumstances, a question arises that if there is no decision at all of the CIT(A) on a particular aspect, which is otherwise germane to the overall issue decided in favor of the respondent, can the respondent espouse such aspect under rule 27 in an appeal filed by the plaintiff. If we go by the literal interpretation of the Rule, then the answer is in negative that unless the ground is not decided against' the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff A pragmatic approach on consideration of the object of such Rule, in our considered opinion, necessita....
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.... we admit the application under Rule 27 of the I.T.A.T. Rules and Learned counsel for the assessee was asked to proceed with his arguments on merits of the grounds taken by him in the application. 6. Learned counsel for the assessee, at the outset, submitted that the second ground taken by the assessee is a jurisdictional issue therefore, he will be taking up the same first and invited our attention to the fact that the assessee had e-filed return of income on 26/09/2014 declaring income of Rs. 11,11,750/- and the case was selected for scrutiny u/s 143(2) vide notice issued by DCIT, Circle-4, Kanpur and DCIT-6, Kanpur on the same date i.e. 03/09/2015 and in this respect our attention was invited to pages 40 to 42 of the paper book where the fact of having filed the return for Rs. 11,11,750/- along with the two notices issued by DCIT, Circle-4, Kanpur and DCIT-6, Kanpur were placed. Learned counsel for the assessee submitted that as per assessment order dated 29/12/2016 read with transfer memo dated 16/05/2016, the present case was transferred from DCIT-6, Kanpur to Income Tax Officer -6(1), Kanpur on the ground of monetary limit vide Pr. CIT-2, Kanpur order dated 28/04/2016 and ....
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....f Hon'ble Gujarat High Court in the case of Pankaj Bhai Shah 425 ITR 70. Learned counsel for the assessee in this respect invited our attention to the short write up at page 3 where the orders favouring the assessee were placed. Inviting our attention to CBDT Instruction No. 1/2011 dated 31/01/2011 of CBDT, Learned counsel for the assessee argued that the competent person to issue notice u/s 143(2) was Income Tax Officer-6, Kanpur who had passed the assessment order as the income of the assessee was less than Rs. 20 lacs whereas the notice u/s 143(2) has been issued by DCIT and that too by two DCITs from Circle-4 & 6 and, therefore, it was argued that the assessment in this case is bad in law and is void ab initio and the appeal filed by the Revenue needs to be dismissed. At the asking of Bench regarding judgment of Hon'ble Supreme Court in the case of I-Ven Interactive Ltd, the Learned counsel for the assessee stated that in that judgment Hon'ble Supreme Court has held that notice issued to assessee u/s 143(2) at the address mentioned in the PAN database is a valid notice. Learned counsel for the assessee submitted that this judgment is not applicable in the case of th....
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....eted the assessment and submitted that Instruction No. 1 of 2011 are the instructions issued by the CBDT which are binding on the Department and which says that the assessment of the assessees with income less than Rs. 20 lacs has to be completed by Income Tax Officer and since the assessee had filed return of income declaring income of Rs. 11,11,750/- which is less than Rs. 20 lacs, the jurisdictional Assessing Officer was Income Tax Officer-6, Kanpur who was mandatorily required to issue notice u/s 143(2) and which he did not do. Therefore, it was prayed that since the statutory notice u/s 143(2) was not issued by jurisdictional Income Tax Officer, the assessment order is bad in law. As regards the reliance placed by Learned D. R. on sections 119, 120 and 127 are concerned, Learned counsel for the assessee submitted that section 119 in fact goes in favour of assessee which empowers the CBDT to issue instructions/orders etc. to income tax authorities and which are binding on Department therefore, Instruction No. 1/2011 issued by CBDT are binding instructions. Regarding section 120, the Learned counsel for the assessee submitted that this section deals with jurisdiction of income t....
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....hat no such orders, instructions or directions shall be issued- (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the [Commissioner (Appeals)] in the exercise of his appellate functions. (2) Without prejudice to the generality of the foregoing power,- (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of [sections [115P, 115S], [115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK]] [139,] 143, 144, 147, 148, 154, 155, [158BFA] [sub-section (1A) of section 201, sections 210, 211, 234A, 234B, 234C, [234E],] [270A,] 271 [,271C, 271CA] and 273 or otherwise), general or special orders in respect of [any class of incomes or fringe benefits] or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax author....
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.... favour of the assessee. 9.2 Similarly section 120 deals with jurisdiction of income tax authorities wherein it has been mentioned that income tax authorities shall exercise all powers and perform all functions conferred on or as the case may be as assigned to such authorities under this Act in accordance with such directions as the Board may issue for exercise of powers and performance of the functions by all or any of these authorities. The reliance placed by Learned D. R. on this section is also not helpful to Revenue as this section only binds the authorities to act in accordance with directions of CBDT and therefore, only the jurisdictional Assessing Officer as per instruction No.1/2011 should have issued the notice u/s 143(2) of the Act whereas the notices have been issued by non jurisdictional Assessing Officers. 9.3 Now coming to provisions of section 127 relating to transfer of cases. This is an important section and for the sake of completeness, the provisions of section 127 are reproduced below: "[SECTION 127. Power to transfer cases. (1) The [Principal Director General or Director General] or [Principal Chief Commissioner, Chief Commi....
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....ty or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation.-In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.]" The analysis of above provisions clearly demonstrate that Principal Commissioner or Chief Commissioner can pass an order u/s 127 of the Act for transfer of assessment records from one Assessing Officer to another Assessing Officer and earlier assessment proceedings undertaken by earlier Assessing Officer will be deemed to be part of assessment proceedings continued by new Assessing Officer but the requirement of section....
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....idered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 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." The above CBDT instruction clearly states that for corporate assessees having income upto Rs. 20 lac, the assessment is to be done by Income Tax Officer. In the present case, admittedly the assessee is a corporate assessee and its returned income is less than Rs. 20 lac as the assessee had filed return for an income of ....
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....ched in the paper Book marked as Annexure as - 3 which has been challenged. The ACIT, Circle-Haldia issued the notice u/s. 142(1) of the Act 3.7.2012 which is in the paper book. The said notice for issuing is beyond the jurisdiction of the ACIT, Haldia the as per the CBDT Instruction marked as Annexure - 4 in the paper book. The ld. AR further submitted the Section 119, strategically placed in Chapter XIII which deals with "income-tax authorities" and enabling power of the Central Board of Direct Taxes, which is recognized as an authority under the Income-tax Act u/s 116(a). The Central Board of Direct Taxes under this section is empowered to issue such orders, instructions and directions to other income-tax authorities "as it may deem fit for proper administration of this Act". Such authorities and all other persons employed in execution of this Act are bound to observe and follow such orders, instructions and directions of the Central Board of Direct Taxes. The proviso to sub-section (1) of Section 119 recognizes two exceptions to this power. The first exception is that the CBDT cannot require any income-tax authority to make a particular assessment or to dispos....
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....lars specified therein or on which the assessee may rely, in support of such claim; (Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003) (ii) notwithstanding anything contained in clause (1), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return. (Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished)." On a perusal of the foregoing provision, it is evident that the provisions of this section are mandatory in nature. If the Assessing Officer considers it necessary or expedient to verify the correctness and completeness of the return then he is bound to serve a notice under this sub section on the assessee requiring him, on a specified date, either t....
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.... 7. On the other hand the ld. DR before us submitted that the assessee cannot raise the question on the jurisdiction of AO after the expiry of one month from the date on which he was served with the notice or after the completion of assessment, whichever is earlier in terms of the provisions of section 124(3) of the Act. 7.1 The ld. DR further submitted that as per the provisions of Section 127(3) of the Act no opportunity will be given to the assessee where the transfer of the jurisdiction is from one AO is to any other AO provided the offices all the such officers are situated in the same city, locality and place. In the instant case the notice was issued by the ACIT under section 143(2) of the Act and later it was transferred to ITO. The transfer of the file was within the same locality. Therefore the validity of the assessment framed by the AO cannot be challenged on the ground of non-issuance of notice by the ITO. The ld DR also referred to the provisions of Section 129 of the Act which allows the succeeding income tax authority to continue the proceedings from the stage at which the proceeding was left by his predecessor. The ld DR vehemently supported th....
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....-too-subordinate authorities- instdructions-regarding-inclimits-for-assigningcases- to-deputy-commissioners assistant 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 Pvt. Limited Vs ITO in ITA No. 1426/Kol/2011. We consider it fit to incorporate the relevant portion of the Tribunal order which is as under :- "5. We find that the Hon'ble Chhatishgarh High Court in the case of DCIT Vs. Sunita Finlease Ltd. (2011) 330 ITR 491 (Chh) has considered the same Instruction No. 9/2004 dated 20.....
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....isions, 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 issuing circulars binding on the taxing authorities." The facts and circumstances in the present case are that the selection of scrutiny in this case is also completed beyond the prescribe....
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....crutiny 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 Pvt. Ltd.(supra). 8.1 In view of above we set aside the orders of the revenue authorities by squashing 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 31.01.2011. 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." 10. Similarly, Kolkata Bench of the Tribunal in the case of Sukumar Ch. Sahoo vs. ACIT in I.T.A. No.2073.Kol/2016, vide order dated 27/09/2017, has decided the similar issue by holding as under: "4. Brief facts of the case are that the assessee is an individual who filed his return of income for the year under consideration ....
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....dent that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the 'non corporate returns' filed where income declared is only upto Rs. 15 lacs ; and the ITO doesn't have the jurisdiction to conduct assessment if it is above Rs. 15 lakhs. Above Rs. 15 lacs income declared by a non- corporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC. In this case, admittedly, the assessee an individual (non corporate person) who undisputedly declared income of Rs. 50,28,040/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the assessment order, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward-1, Haldia on 06.09.2013 and the same was served on the assessee on 19.09.2013 as noted by the AO. The AO noted that since the returned income is more than Rs. 15 lacs the case was transferred from the ITO, Ward-1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia on 24.09.2014 and immediately ACIT issued notice u/s. 142(1) of the Act on the same day. From the aforesaid facts the following facts emerged: i....
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....ashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed. 7. In the result, appeal of assessee is allowed." 10.1 Similar is the position with other cases decided by Kolkata Bench of the Tribunal, the details of which are as under: (i) Sanat Kumar Sahana vs. ACIT, I.T.A. No.2202/Kol/2019 (ii) Dipti Kumar Sahana vs. ACIT, I.T.A. No.2203/Kol/2019 (iii) DCIT vs. Proficient Commodities Pvt. Ltd., I.T.A. No.1346/Lol/2016 (iv) Shake Akhtar Hossain vs. ACIT, I.T.A. No.2572/Kol/2019 (v) K.A. Wires Ltd. vs. Income Tax Officer, I.T.A. No.1149/Kol/2019 (vi) S.N. Ghosh & Associates vs. ACIT, I.T.A. No.462/Kol/2019 10.2 We further find that Lucknow Bench of the Tribunal in the case of Bajrang Bali Industries vs. ACIT in I.T.A. No.724/Lkw/2017, vide order dated 30/11/2018 has allowed appeal of the assessee by declaring the assessment order void ab initio. In that case also the notice u/s 143(2) was issued by non jurisdictional Assessing ....
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....o 8 are allowed. Since we have decided the legal issues, in favour of assessee the grounds on merits of the case have become infructuous and have not been adjudicated." We further find that Hon'ble jurisdictional High Court in the case of Pr. CIT vs. Mohd. Rizwan, Prop. M/s M. R. Garments Moulviganj, Income Tax Appeal No.100 of 2015, vide order dated 30/03/2017 has held that if an order is passed by judicial or quasi-judicial authority having no jurisdiction, it is an obligation of appellate court to rectify the error and set aside order passed by authority or forum having no jurisdiction. Though this case relates to notice u/s 148 however, the crux of the findings of Hon'ble jurisdictional High Court, after noting down the provisions of section 292BB are that only jurisdictional Assessing Officer can issue the statutory notice. For the sake of completeness, the relevant paragraphs starting from para 32 to 57 are reproduced below: "32. Now we come to legality of notice issued under Section 148. Admittedly, it was issued by a Designated Officer authorized to receive AIR information and make inquiry. Thereafter, said Designated Officer was supposed to ....
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....igh Court in the case of Lt. Col. Paramjit Singh Vs. Commissioner of Income Tax and another 1996 (220) ITR 446 (Punjab) said "a notice for reassessment can be issued only by A.O. who had concluded the proceedings." 41. We, however, do not go to that extent for the reason that there may be any subsequent change resulting in change of jurisdiction of A.O. Notice of reassessment can be issued by such an Officer but not by Officer who has no jurisdiction for assessment/reassessment. 42. In Commissioner of Income Tax Vs. Rajeev Sharma 2011 (336) ITR 678, Court observed "provisions contained in Section 148 of Act, 1961 with regard to escaped assessment must be construed strictly with regard to procedure prescribed for escaped assessment." 43. The reason for issuance of notice by Competent A.O. is quite obvious inasmuch as such notice could have been issued only when concerned A.O. has reason to believe that some income has escaped assessment and recomputation/ reassessment is needed. Now such satisfaction can be of that A.O. only who has jurisdiction in the matter and not of any third party. 44. We, therefore, hold that in the present case, no valid no....
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.... before Jurisdictional A.O. would operate as acquiescence or waiver and will not invalidate proceedings is thoroughly misconceived. 50. In Karnal Improvement Trust, Karnal Vs. Smt. Prakash Wanti and another (1995) 5 SCC 159, Court said that acquiescence does not confer jurisdiction and erroneous interpretation should not be permitted to perpetuate and perpetrate defeating of legislative animation. 51. In Abdul Qayume Vs. Commissioner of Income Tax 1990 (184) ITR 404, Court said "an admission or an acquiescence cannot be a foundation for assessment where the income is returned under an erroneous impression or misconception of law." 52. It is well settled that a jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an Assessee cannot confer upon any jurisdictional authority, something which he lacked inherently. 53. Even if, it can be said that Assessee submitted to jurisdiction of A.O., law is that Assessee cannot confer jurisdiction on an authority who did not have the same and we find support from Commissioner of Income Tax Vs. Hari Raj Swarup and sons (1982) 138 ITR 462 (Alld.). 54. In M....
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....it Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as wel appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid. 8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act. 9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated infirmities in the mann....
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.... tax authority but challenged the notices saying that these notices were not served upon him and that he never received notice u/s 143(2) of the Act and that further subsequent notices served and received by the assessee were beyond the period of Imitation prescribed under the law. The assessee submitted that he changed his address and the new address was mentioned in the return of income filed for subsequent years. The assessee also submitted that he filed Form No.18 with Registrar of Companies, regarding change of address. No separate intimation was given to the Assessing Officer by the assessee regarding change of address. The Court held that mere mentioning of the new address on subsequent return without specifically intimating the Assessing Officer with respect to change of address and without getting the PAN database changed, is not enough and sufficient. The court found that the assessee claimed to have filed a letter for change of address but such letter was never produced before any of the authorities. It was held that on the facts of the case, the notice issued on the address available on the PAN data base was proper and valid service of notice u/s 143(2) of the ....