AI Drafter 
TaxTMI 
TaxTMI 
2021 (7) TMI 678
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....ed u/s 139 of the Act. The assessment was completed u/s 143(3) read with section 153A vide order dated 29.12.2016 wherein the Assessing Officer made an addition amounting to Rs. 6,86,686/- towards undisclosed investment in plot of land situated at B-140 to B-149, Shivaji Nagar, Jaipur on substantive basis. Further, protective addition of Rs. 3,27,83,846/- was made in the hands of the assessee as undisclosed investment in land bearing Khasra No. 551,551/673, 552 at village Jugalpura, Chitanukalan, Tehsil Amer, Jaipur wherein substantive addition was proposed in the hands of the M/s Indian Medical Trust. Accordingly, the assessment was completed at Rs. 3,60,97,040/- as against return of income of Rs. 26,26,510/-. 3. Being aggrieved, the assessee challenged the order and the findings of the Assessing Officer before the ld. CIT(A) in respect of both substantive and protective additions. Regarding the addition of Rs. 6,86,686/- made by the AO on substantive basis, the same was confirmed by the ld. CIT(A) against which the assessee carried the matter in appeal before the Tribunal and the Co-ordinate Bench vide its order dated 24.07.2018 in ITA No. 1028/JP/2017 has deleted the said add....
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....CIT(A) was justified in ignoring the facts that the Hon'ble ITSC has relied upon a subsequent report of the Pr. CIT(C) and wherein the PCIT(C) has submitted that the addition of undisclosed investment in land should be made in the hands of Ms. Pallavi Tomar and no IMT. 3. Whether the ld. CIT(A) was justified in ignoring the facts that protective addition of Rs. 3,27,83,846/- was made in the case of the assessee and after the order of the Hon'ble ITSC, the same was made as substantive addition. The conversion of protective to substantive addition is well within the jurisdiction of the AO." 7. At the outset, the ld. CIT/DR submitted that the Revenue wishes to take certain additional grounds of appeal which are purely legal in nature and in light of the Hon'ble Supreme Court decision in case of NTPC vs. CIT (229 ITR 883), it was prayed that the additional grounds of appeal may be admitted and adjudicated upon on merits. The additional grounds of appeal so sought to be raised by the Revenue read as under:- "A. The learned CIT Appeal has erred in law in adjudicating against an order which was not appealable before the CIT Appeal, ab initio. B. The learned C....
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....lement Commission and once the jurisdiction of the matter lies with ITSC and the AO passes an order to give effect to the order of ITSC, the matter clearly falls outside the regular appellate route wherein the appeal could have been filed before the ld CIT(A). It was further submitted that the ld CIT(A) has adjudicated the additional grounds of appeal without calling for the remand report from the AO and therefore, the Revenue has not been provided an opportunity of being heard violating the principles of natural justice. It was further submitted that the ld CIT(A) was again wrong in holding that after framing the assessment, the AO becomes functus officio as in the instant case, once the ITSC has passed the order, the AO is well within his jurisdiction to compute the income and give effect to the order so passed by the ITSC. He accordingly submitted that the order so passed by the ld CIT(A) may thus be setaside for want of jurisdiction and other reasons as stated above. 9. In his submissions, the ld. AR submitted that in first three additional grounds of appeal, the Revenue has challenged the jurisdictional of ld. CIT(A) -4, Jaipur who had admitted and decided the appeal of the....
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....-1, Jaipur, vide letter no. 11 dated 04.04.2018 has submitted the aforesaid report through Addl. CIT, Central Range, Jaipur No. 26 on 05.04.2018, the relevant extracts of which is reproduced herein as under:- Kingly refer to your office letter Nos. .......................................... 4. Para 6, Page 15 A copy of the said report has also been provided to the A/R of the appellant on 9.4.2018 for rejoinder comments. 11. It was accordingly submitted that though there appears to be no requirement under law for obtaining remand report from the AO for adjudication of any legal grounds of appeal. However, for adjudication of any additional grounds raised in appeal by the assessee or where there is any complexity in assessment order or where any clarification is required, the remand report may be obtained from the Assessing Officer before deciding the appeal. It was submitted that in the instant case, the additional grounds of appeal were forwarded to the Assessing Officer and after considering the remand report of the AO and rejoinder filed by the assessee, the appellate order was passed by the ld. CIT(A) and accordingly, there is no legal force in the additional g....
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....er is passed in the case of the appellant reportedly giving effect to the order of Settlement Commission which was passed in the case of Indian Medical Trust and not the appellant herself. The appellant never filed any application for settlement of her case before Settlement Commission. Therefore the order impugned in the present appeal could not have been passed by the Ld. AO. It is also contended that even the settlement commission in it's' order has not directed to take any action or recompute the income of the appellant herein. The AO passed the impugned order without any notice or affording an opportunity of hearing to the appellant and hence the same is bad in law as it is in violation of principle is of natural justice. 7.2 It is also contended that order for the year under appeal was passed u/s 143(3) r.w.s 153A on 29-12-2016. In the said assessment an addi t ion of Rs. 3,27,83,846/- was made on protective basis as substantive addition was proposed in the case of Indian medical trust as per report of the Pr. CIT(C) Under Rule 9 of Settlement Commission Rules. After the framing of original order the Assessing Officer exhausted his jurisdiction over ....
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....ng of assessment, the Assessing Officer becomes functus officio. He no longer remains in jurisdiction to redo or re-compute such assessment. Such an assessment once framed can be modified either u/s. 154 or u/s. 147 or to give a give effect to an order in appeal u/s 250 or s. 254 or revision u/s 263/264. Thus every time an assessing officer modifies an order, he has to reassume the jurisdiction for the same by taking recourse to some provision in the act, or by way of some direction from some authorities. In the present case it is seen that the Assessing Officer has resorted to modify the order purportedly for giving effect to the order of Settlement Commission. However reading the order of Settlement Commission, there is no direction contained therein so as to modify the assessment of the appellant herein. The order of Settlement Commission is only in respect of computation of income of an entity called Indian Medical Trust. The said trust is a separate legal and taxable entity. Therefore any order in the case of Indian Medical Trust will not alter the income of the appellant herein. I (am) therefore of the view that the Assessing Officer exceeded his jurisdiction in pass....
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..... 3,60,97,040/- The total income of the assessee in the status of individual for Assessment Year 2013-14 relevant to previous Year 2012-13 is assessed at Rs. 3,60,97,040/- u/s 143(3) r.w.s 153A of the Act. The form ITNS-150 showing calculation of tax and interest chargeable is attached herewith and forms a part of this Order. A notice of demand u/s 156 of the Act and challan for payment of tax is hereby issued." 16. The AO has stated that the order of the Income Tax Settlement Commission has been passed u/s 245D(4) dated 30.06.2017 in case of M/s Indian Medical Trust and the matter relating to investment in the land at Jugalpura has not been discussed at all and not considered in the order u/s 245D(4) in the hands of M/s Indian Medical Trust. There is thus a clear acknowledgment by the AO that the assessee was not an applicant before Income Tax Settlement Commission and there was no discussion relating to investment in the land at Jugalpura in the order so passed by the Income Tax Settlement Commission. Therefore, the question of any direction by the Income Tax Settlement Commission and passing of any order by the AO to give effect to non-existent directions do....
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....nd proceeded to converted the protective addition into substantive addition in the hands of the assessee by way of impugned order dated 15.09.2017. 19. We, therefore, find that it is case where there was no substantive addition made in the hands of Indian Medical trust at first place and in absence of substantive addition, the AO has proceeded with protective assessment in the hands of the assessee. Secondly, subsequent to completion of original assessment proceedings made on protective basis in hands of the assessee, realizing the fact that no substantive addition has been made in hands of either of two assessees, the AO changed his position and took a suo-moto decision to convert protective addition into substantive addition in the hands of the assessee. It is AO's own independent decision subsequent to completion of original assessment and not something which is directed by the Income Tax Settlement Commission. 20. The question which therefore arises for consideration is post completion of original assessment proceedings, what is the basis of the assumption of such jurisdiction by AO to suo-moto convert protective assessment into substantive assessment and under what speci....
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....e order of the Settlement Commission. Such a change in position thus amounts to change of opinion on same set of facts. In any case, once the ld CIT(A) was ceased of the matter, the AO could have brought this up before the ld CIT(A) and sought necessary directions. Where however, the AO still hold the belief to take suo-moto action to convert protective assessment into substantive assessment, he could have invoked his jurisdiction in terms of section 147 on satisfaction of conditions specified therein and in absence of thereof, the present action of the AO cannot be sustained in the eyes of law. In this regard, we find that the ld CIT(A) has rightly held that once an assessment has been framed by the AO, he becomes functus officio and whenever the AO wishes to modify and/or enhance the assessment, he is required to reassume the jurisdiction under the Act after satisfying the conditions as so contained in section 154 or section 147 of the Act. Further, the AO can assume jurisdiction so as to give effect to an order or directions so contained in order passed u/s 250/254/263/264 of the Act. In the instant case, the AO has not invoked his jurisdiction under section 154 and section 147 ....