TaxTMI 
TaxTMI 
2023 (11) TMI 1149
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....diture even though the assessee is engaged in the business of trading of land and therefore the provisions of section 40A (3) is clearly attracted? 2. Whether on the facts and circumstances of the case, the Id. CIT(A) was justified in deleting the addition of Rs. 1,42,85,000/- by way of disallowance u/s. 40A(3) of the IT Act on account of amount paid towards purchase of land which is stock-in trade of the assessee and claimed as expenditure since the Id. CIT(A) has completely ignored the fact that no exemption provision is applicable as envisaged in Rule 6DD and the same has not challenged by the assessee or in the order of the Ld. CIT(A)? 3. "Whether on the facts and circumstances of the case, the Id. CIT(A) was justified in deleting the addition of Rs. 1,42,85,000/- by way of disallowance u/s. 40A (3) of the IT Act on account of amount paid towards purchase of land which is stock-in trade of the assessee and claimed as expenditure as the assessee had not brought anything before the Assessing officer which showed that the cash payments were made out of business expediency? 4. "Whether on the facts and circumstances of the case, the Id. CIT(A) was justifi....
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....229 ITR 383, are allowed to be admitted. The additional grounds raised by Ld. AR on behalf of the assessee are culled out as under: 1.1 The assessee-firm wants to raise 'additional ground' of appeal, which is given as under, may kindly be admitted & taken on record for your kind consideration & adjudication on the matter: Additional Gr.No.1: "1. On the facts and circumstances of the case and in law, return has filed u/s. 139(1) with ITO-1(4); notice u/s. 143(2) issued by ITO-1(1) who was not having authority of law to issue such notice u/s. 143(2) as per sec2(7A), sec124(1) rws.120(2)&(3); no notice u/s. 143(2) issued by ITO-1(4) who passed order u/s. 143(3); in absence of a valid notice issued u/s. 143(2) by ITO-1(4) who was the 'Assessing Officer' as per sec2(7A), sec124(1) rws.120(2)&(3), assessment made u/s. 143(3) by ITO-I (4) would be invalid as without assuming valid jurisdiction for making assessment u/s. 143(3), is liable to be quashed." Additional Gr.No.2: "2. On the facts and circumstances of the case and in law, return has filed u/s. 139(1) with ITO-1(4) who was the 'Assessing Officer' as per sec2(7A), 124(1) ....
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....s barred from looking into unconnected/ independent issue(s) other than those mentioned in the reasons for 'limited scrutiny' selection; in absence of prior approval of PCIT as per CBDT Instruction No. 7/2014 & No.20/2015; without assuming valid jurisdiction by the Id AO, impugned addition is unjustified and is liable to be deleted." Additional Gr.No.6: "6. On the facts and circumstances of the case and in law, Id AO has erred in making addition of Rs. 18,05,000, on credits in undisclosed bank account, when it was not the issue of 'limited scrutiny' assessment under CASS; it is in violation of CBDT Instruction No.7/2014; No.20/2015; No.5 of 2016; Id AO cannot go beyond the issues mentioned in the reasons for selection of 'limited scrutiny' assessment under CASS; Id AO is barred from looking into unconnected/ independent issue(s) other than those mentioned in the reasons for 'limited scrutiny' selection; in absence of prior approval of PCIT as per CBDT Instruction No.7/2014 & No.20/2015; without assuming valid jurisdiction by the Id AO, impugned addition is unjustified and is liable to be deleted." The above 'additional ....
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....hange of incumbent was without issuing of the mandatory order u/s. 127 by the Pr. Commissioner of Income Tax for transferring the case from ITO ward -1(1) to ITO ward-1(4). In absence of an order u/s. 127, the assumption of jurisdiction by the Assessing Officer, i.e., ITO, ward 1(4), who has framed the assessment, is as good as no jurisdiction, thus the order passed by such an officer who is bereft of valid jurisdiction, is equal to an Illegal order, invalid in the eyes of law, consequently, the same is liable to be quashed. 7. On the issue of change of incumbent which is evident from the assessment order also that the case was first taken up by ITO ward -1(1), Raipur, who has issued the first notice u/s. 143(2) on 30.07.2016 copy of the same is extracted as under: 8. The aforesaid notice has been placed before us by the Ld. AR which in turn has been confronted to the Ld. CIT DR, representing the case on behalf of the department, with a request to verify the same from the case records and confirm that, whether an order u/s. 127 was issued by the Ld. PCIT in the present case or not to effect the change of incumbent. In response Ld. CIT DR furnished before us the assessment rec....
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.... assessee. 4. As per material available on record, the assessee has not raised objection over the jurisdiction before AO within one month of from the date of service of notice dated 30.07.2016, therefore, the assessee is not entitled to raise objection over the jurisdiction of the AO as per provision of section 124(3) of the Act. For sake of convenience, the said section is reproduced below: - "Section: 124(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return under sub- section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub- section (1) of section 142 or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier" In view of the above fact, the assessee has no right to call in question on the jurisdiction of the AO passing the assessment order. 5. In case of any change in the jurisdiction of AO or for desired change in AO's jurisdiction, he has to request jurisdictional Pr. CIT an application under section 127 for transfer from one assessing officer to other in view of his con....
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....ppeal stage cannot be said out of omission or ignorance of law and procedure and it is clearly afterthought of the assessee. 8. In the present, the case the assessment proceeding u/ s 143(3) was completed as on 29.12.2017. The assessee had neither challenged the jurisdiction before AO during the assessment proceeding nor before Id. CIT(A) during appellate proceedings. Thus, it is evident that the assessee has challenged the jurisdiction only in order to escape from tax liability arising from assessment proceeding. Further, the provisions of Section 124(3) are very clear. Where the appellant is of the view that the jurisdiction is not justifiable, the appellant is free to challenge the same before the AO or under writ or seek any further legal remedy. But where the appellant does not exercise such an option, it cannot be questioned later on. The same observation was made by the Hon'ble High Court of Delhi in the case of Abhishek Jain vs Income Tax Officer, Ward - 55(1), New Delhi (WRIT PETITION (CIVIL) No. 11844/2016) that "As far as territorial or pecuniary jurisdictions are concerned, objection should be taken at the earliest possible opportunity and / or before the s....
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....f jurisdiction could not be raised for the first time in appeal, without showing error in the order on the merit and without showing any prejudice to the assessee by exercise of jurisdiction by the Assessing Officer." 9.3 In Mantoo Sarkar v. Oriental Insurance Co. Ltd. [20091 2 SCC 244, the apex court in relation to the question of jurisdiction of the Tribunal under the Motor Vehicles Act has made the observation that "A distinction, however, must be made between a jurisdiction with regard to the subject-matter of the suit and that of territorial and pecuniary jurisdiction. Whereas in the case falling within the former category the judgment would be a nullity, in the latter it would not be." 9.4 In the case of Kiran Singh v. Chaman Paswan, AIR 1954 SC 340, wherein a distinction has been drawn between a jurisdiction with regard to the subject matter of the suit and that of territorial and pecuniary jurisdiction. It has been held that a decree or judgment passed by a court having no territorial or pecuniary jurisdiction is not a nullity but at the most it is an irregularity, and such a judgment and decree cannot be set aside by higher court while exercising appellat....
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....is area, place of business, class, income etc. Residence can mean permanent residence as well as current or temporary residence of some permanence. (iv) The question of jurisdiction or the place of filing has to be examined each year with reference to provisions of section 124. Section 124 provides flexibility and postulates multiple and concurrent jurisdiction including filing of return and where the assessee has permanent or current residence or where he has sole/ only source of income. (v) An assessment order passed without making reference to Commissioner/ Commissioners under section 124 is not a nullity for want of jurisdiction but it results in irregularity which can be rectified by order of remit and directing the Assessing Officer to continue with the proceedings from the stage where the error had occurred. 10. In the present case, the assessee has not challenged the issue of jurisdiction before the AO and before Id. CIT(A). Even the assessee was having sufficient opportunity during assessment proceeding as well as during the appellate proceeding. Thus, it clearly indicates that the assessee had not come with clean hands for raising an additional issue of challengi....
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....to The Addl. Commissioner of Income Tax, Range-I, Raipur Income Tax Officer- 1 (1), Raipur 9. Based on aforesaid report of the ITO, W-1(1), Ld. CIT DR submitted that the assumption of jurisdiction by the ITO ward 1(4) was very much in compliance of the provisions of the Act and, therefore, the ITO, W-1(4) cannot be treated as non-jurisdictional AO, leading to qualify the assessment framed u/s. 143(3) as invalid. 10. We have considered the rival contentions, perused the material available on record and case laws relied upon by the parties. Admittedly, in the present case a notice u/s. 143(2) were issued by ITO ward 1(1) who is not having a valid jurisdiction in the case of assessee, however, subsequently the case was transferred to ITO ward 1(4), who is the jurisdictional AO for the assessee. It is further noticed that for change of incumbent no order u/s. 127 was issued by the Ld. PCIT having jurisdiction over such officers and the assessee's case. From the report of the ITO ward 1(1) regarding issuance of order u/s. 127, mentioning that "it is not necessary an order u/s. 127 should be passed. Thus, does not mean that the Assessing Officer whether the return of income w....
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....Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (2) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality, 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 reissue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. 12. According to aforesaid provisions of section 127, it is explicitly clear that in a case where the assessment proceedings are initiated by an Assessing Officer and the same are later on transferred to another Assessing Officer then according to section 127(4) an order u/s. 127(1) & (2), ir....
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....elf. Accordingly, we quash the assessment framed by the ITO, Ward2(2), Bilaspur vide his order passed under s. 143(3), dt. 12th March, 2014 for want of valid assumption of jurisdiction on his part. 14. Identical issue as that of the issue raised in the present case has been dealt with by the ITAT, "B" bench, Bangalore in the case of Shri Bangalore Narayan in IT(IT)A Nos. 120 & 121/Bangalore/2022 vide order dated 17.09.2023, wherein IT, Bangalore has decided the issue of validity of assessment u/s. 143(3) by change in incumbent but without issuance of order u/s. 127, following the guiding principle of law laid down by Hon'ble Apex Court in the case of CIT vs Hotel Blue Moon reported in (2010) 321 ITR 362 (S.C) wherein it is held that, issue of a legally valid notice u/s. . 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s. . 143(3) of the Act and absence of a valid notice u/s. 143(2) is not a curable defect. The view taken in the case of Hotel Blue Moon (supra) was reiterated by Hon'ble Supreme Court in another case of CIT vs Laxman Das Khandelwal in (2019) 108 taxmann.com, the observations of the tribunal are extracted as under: 7.6. Adm....
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....in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality 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." 7.7. It can be seen ....
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....A) that non-issue of notice under Section 143(2) is only a procedural irregularity and the same is curable. In the appeal filed by the assessee before the Gauhati High Court, the following two questions of law were raised for consideration and decision of the High Court, they were: "(1) Whether on the facts and in circumstances of the case the issuance of notice under Section 143(3) of the Income Tax Act, 1961 within the prescribed time-limit for the purpose of making the assessment under Section 143(3) of the Income Tax Act, 1961 is mandatory? And (2) Whether, on the facts and in the circumstances of the case and in view of the undisputed findings arrived at by the Commissioner of Income Tax (Appeals), the additions made under Section 68 of the Income Tax Act, 1961 should be deleted or set aside?" 4. In said appeal arising from the decision of the Income Tax Appellate Tribunal ('the Tribunal', for short), the issue that arose before the High Court was the effect of absence of notice under Section 143(2) of the Income Tax Act, 1961 ('the Act', for short). The Respondent-Assessee relied upon the decision of this Court in Asstt. CIT v. Hotel Blue Moo....
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.... 27. The case of the Revenue is that the expression "so far as may be, apply" indicates that it is not expected to follow the provisions of Section 142, subsections (2) and (3) of Section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression "so far as may be, apply". In our view, where the assessing officer in repudiation of the return filed under Section 158-BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub- sections (2) and (3) of Section 143." 6. The question, however, remains whether Section 292BB which came into effect on and from 01.04.2008 has effected any change. Said Section 292BB is to the following effect: -- "292BB. Notice deemed to be valid in certain circumstances.-- Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordan....
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....Section seeks to cure. The Section is not intended to cure complete absence of notice itself. 10. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, the findings rendered. by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter. 7.10. In the present case, admittedly no notice u/s. . 143(2) was issued by the AO who had jurisdiction over the assessee at all material point of time. The assessee filed return of income on 31/03/2018, under section 139(4). A notice u/s. . 143(2) of the Act, dated 24/09/2018 was issued by the ITO Ward 1(2)(1), who never had jurisdiction over the assessee. Thereafter, another notice u/s. . 143(2) dated 28/09/2018 was issued ITO Ward- 4(3)(4), who also did not have jurisdiction over the assessee. The case was transferred by ITO Ward 4(3)(4) on 24/06/2019 to ITO Ward-1(1), International Taxation who had jurisdiction over the assessee. The ITO Ward-1(1), International Taxation passed the assessment order dated 28/12/2019 was passed u/s. . 144 r.w. 147 of the Act. 7.11. In such ....
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....eiving the notice under section 143(2) of the Act. 7. As far as the last submission is concerned, learned counsel for the Petitioner submits that it is only if the Petitioner had filed a return under section 139(1) of the Act with Respondent No. 2 would the question of Drawing the attention of Respondent No. 2 for delay in issuing a notice have arisen. Since the Petitioner is not obliged to file any return, the question of availing section 124(3)(a) of the Act did not arise. 8. Be that as it may, in the considered view of the Court, the AO having jurisdiction i.e., Respondent No. I ought to have issue a notice under section 143(2)(a) of the Act within the prescribed time limit i.e., 30th. September 2014 in order to proceed with the assessment. Considering that a similar mistake of an AO not having jurisdiction over the Assessee issuing a notice to it had been committed earlier, there was no occasion for the Revenue to continue to repeat the same mistake and expect that it will be condoned. 9. The impugned assessment order dated 31st March 2016 is unsustainable in law since it has been passed without the AO having jurisdiction over the Assessee issuing not....
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....ds of appeal raised by the department in ITA 76/RPR/2020 rendered academic, thus, the same are left open and, accordingly, the appeal of the department stands disposed off. 19. In the combined result, appeal of the assessee in ITA No. 94/RPR/20121 has been allowed, and appeal of the revenue in ITA No. 76/RPR/2020 stands dismissed, in terms of our aforesaid observations. Order pronounced in the open court on 23/11/2023. ============= Document 1 DEPARTMENT GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD 1(1), RAIPUR To, G.P INFRAVENTURES 13/449 13/449 narmada para behind radha krishna mandir,station chowk 492001 Chhattisgarh India PAN: AY: AANFG6074B 2015-16 Notice No: ITBA/AST/S/143(2)/2016-17/1000250824(1) Notice under section 143(2) of the Income Tax Act, 1961 Complete Scrutiny Dated: 30/07/2016 Sir/Madam/M/s, This is for your kind information that the return of income for Assessment Year 2015-16 filed vide ack. no. 870874531291015 on 28/10/2015 has been selected for Complete Scrutiny. 2. In view of the above, we would like to give you an opport....
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....¯ पà¥à¤°à¤¾à¤¥à¤¿ रायपà¥à¤° (छ.ग.) 4 JUL 2023 पà¥à¤°à¤¾à¤ªà¥à¤¤ हà¥à¤† कà¥à¤°à¤®à¤¾à¤‚क Kindly refer to your letter F.No. JCIT-ITAT/RPR/REQ/2023-24 dated 07.06.2023 on the subject above. 2. In this regard, it is submitted that case records of G.P. Infraventures, Raipur for the A.Y. 2015-16 is produced herewith for further necessary action. The folder contains total no. of 669 pages of documents and 05 pages of order sheet which details as under:- S.No. Description Notice u/s 143(2) of IT Act dated 30.07.2016 issued by ITO-1(1), Raipur for A.Y. 2015-16 in the case of G.P. Infraventures, Raipur. 1. 2. 3. Print of screen shot of reason for selection of case under the scrutiny Copy of return of income for A.Y. 2015-16 4. 5. Intimation u/s 129 of the Act Pages 01 to 03 04 05 to 37 38 Notice u/s 142(1) of IT Act dated 13.07.2017 issued by ITO-1(4), Raipur 39 for A.Y. 2015-16 in the case of G.P. Infraventures, Raipur. Submissions filed by the assessee dated 16.10.2017 in connec....