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2022 (12) TMI 1492

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....ove, the ld. AO erred on facts and in law in framing assessment u/s. 147 of the IT Act, 1961. 2. On the facts and circumstances of the case, the ld. AO has erred in framing the assessment order u/s 147 without passing speaking order about any disagreement, if any, with the explanation/contentions given by the assessee for the reason recorded. 3. On the facts and circumstances of the case, the ld. AO has erred in estimating the sales at Rs. 11,00,00,000 as against the sales shown as per audited accounts at Rs. 9,97,97,240, without mentioning any basis for that. 4. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs. 8,99,546 by applying the GP rate @ 6% (as against GP shown as per audited accounts at Rs. 57,00,454) on such estimated sales and doing this, again, the, AO has not mentioned any basis. 5. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs. 4,00,000 on account of expenses of personal nature u/s. 37(1) of the IT Act, 1961. 6. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs. 9,90,902 on account of disallowance on interest u/s. 36(1)(iii) and u/s. ....

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.... assessee. I have given a thoughtful consideration to the reasons leading to the delay in filing of the present appeal, and is of the considered view that as the delay involved in filing of the same had occasioned due to an inadvertent omission on the part of the assessee, which, he had fairly admitted, therefore, the same in all fairness merits to be condoned. 3. As the assessee by raising the aforesaid additional grounds of appeal has assailed the validity of the jurisdiction that was assumed by the ITO-1(2), Raipur for framing the assessment u/s. 143(3), dated 31.03.2015, which being a purely legal issue would not require looking any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. The aforesaid view that where an additional ground of appeal involving purely a question of law requiring no further verification of facts is raised before the Tribunal, though for the first time, then, the same merits admission is supported by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 4. Succinctly stated, the assessee who is engaged in the business of trading in f....

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....k down on the said count itself. It was averred by the Ld. AR that as the assessment framed u/ss.143(3)(sic), dated 31.03.2015 was framed by the ITO, Ward-1(2), Raipur, i.e., the jurisdictional officer not on the basis of any notice u/s. 148 of the Act issued by him but on the basis of that issued by the Dy. CIT-1(1), Raipur on 19.06.2013, therefore, the impugned assessment could not be sustained for want of valid assumption of jurisdiction on his part. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that pursuant to the CBDT Instruction No.1/2011, dated 31.01.2011 that was applicable w.e.f. 01.04.2011, the existing monetary limits for assigning cases to ITOs and DCs/ACs stood revised. It was averred by the Ld. AR that as per the CBDT Notification No.1/2011 (supra) w.e.f. 01.04.2011, the case of a non-corporate assessee located in a mofussil area having declared an income upto Rs. 15 lac in his return of income was to be assigned to the ITOs. It was submitted by the Ld. AR that the pecuniary jurisdiction over the case of the assessee was vested with the ITO-1(3), Raipur, which pursuant to restructuring/reallocation of territorial jurisdiction over the case o....

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.....2011 had, inter alia, revised the existing monetary limits for assigning cases to ITOs and DCs/ACs. For the sake of clarity, I deem it fit to cull out the CBDT Instruction No.1/2011 dated 31.01.2011, which reads as under: "INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered 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) Income Declared (Metro cities)   ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Ab....

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....had in compliance to the notice u/s. 148, dated 18.06.2013 filed a noncorporate return on 05.07.2013 for the year under consideration, i.e., A.Y.2010-11 declaring an income of Rs. 9,47,500/- was vested with the ITO, Ward 1(3), Raipur [which w.e.f. 15.11.2014 was transferred to ITO-1(2), Raipur]. Although notice u/s. 148, dated 18.06.2013 was issued within the stipulated time period, however, the same was issued by the DCIT-1(1), Raipur, i.e., an A.O who pursuant to the CBDT Instruction No.1 of 2011, dated 31.01.2011 was not vested with jurisdiction over the case of the assessee for the year under consideration. On the other hand as the ITO, Ward-1(3), Raipur [succeeded by ITO, Ward-1(2), Raipur w.e.f. 15.11.2014] who as per the aforesaid CBDT Instruction (supra) was at the relevant point of time vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had not issued any notice u/s. 148 of the Act, and had proceeded with on the basis of the notice u/s. 148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional Officer, therefore, no valid jurisdiction could have been assumed by him for framing the impugned as....

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....an, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case before the Hon'ble High Court notice u/s. 148 was issued by the ITO-(IV)(1), Lucknow who at the relevant point of time had no jurisdiction over the case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s. 148 of the Act, therefore, the Hon'ble High Court treating the notice u/s 148 issued by the ITO-(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O. Apart from that, a similar view had earlier been taken by the Hon'ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon'ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s. 148 of the Act by him, therefore, the notice so issued by him would be without jurisdiction. Also, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/....

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....127 of the Act. Also, no material had been placed before me by the Ld. DR which would reveal that as the ITO, Ward-1(1), Raipur at the time of issuance of notice u/s. 148 dated 23.03.2015 was duly vested with the jurisdiction over the case of the assessee, which, thereafter, had validly been transferred to the ITO, Ward-2(1), Bhilai, therefore, as per Section 129 of the Act the assessment framed by the latter on the basis of notice u/s. 148 dated 23.03.2015 issued by the ITO, Ward-1(1), Raipur could not be faulted with. 13. On the basis of the aforesaid facts, I am of the considered view that as stated by Mr. R.B Doshi, the Ld. AR, and, rightly so, the framing of the impugned assessment u/ss. 143(3)/147 dated 25.03.2016 by the ITO, Ward-2(1), Bhilai on the basis of notice issued u/s. 148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. an officer who at the relevant point of time was not vested with jurisdiction over the case of the assessee, was devoid and bereft of any force of law. I find that involving identical facts a similar issue had came up before the Hon'ble High Court of Bombay in the case of Ashok Devichand Jain Vs. UOI in W.P. No. 3489 of 2019, dated 08.03.2022. I....

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.... assumption of jurisdiction by the jurisdictional A.O., i.e, ITO(IV)(1), Lucknow. Apart from that, a similar view had earlier been taken by the Hon'ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon'ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s. 148 of the Act by him, therefore, the notice so issued would be without jurisdiction. Further, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No. 84/RPR/2022, dated 29.11.2022. 14. Considering the aforesaid position of law, I find substance in the claim of the Ld. AR that the assessment framed in the case of the present assessee by the ITO-2(1), Bhilai vide his order passed u/ss. 143(3)/147, dated 25.03.2016 on the basis of notice u/s. 148 of the Act, dated 23.03.2015 issued by the ITO-1(1), Raipur ,i.e., a non jurisdictional A.O, being devoid and bereft of any of force of law cannot be sustained and is liable to be vacated on the said count itself. Thus, the Ground of appeal No.1 ( to the extent....