TaxTMI 
TaxTMI 
2023 (5) TMI 1297
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....ing cost of improvement of Rs. 1,11,02,013.00 without going through actual facts and circumstances. 4. The appellant reserves the right to amend, modify or add any of the grounds of appeal." Also, the assessee has raised an additional ground of appeal before us, which reads as under: "On the facts and circumstances of the case and in law, assessment made u/s. 143(3) dt. 29-2-16 by ACIT-4(1) is invalid, since notice issued u/s. 143(2) by the ITO-1(3) on 8-9-14, who was not having pecuniary jurisdiction over the assessee to make assessment for A.Y.2013-14 as per CBDT Instruction No. 1/2011 dt. 31-1-11, since 'returned income' shown at Rs. 19,12,120/-; in absence of a valid notice issued u/s. 143(2) by the 'Jurisdictional AO', assessment made u/s. 143(3) would be invalid, bad in law, non-est and is liable to be quashed." 2. Succinctly stated, the assessee who is engaged in wholesale and retail business of trading of tiles, marble etc. had e-filed his return of income for A.Y 201314 on 29.03.2014, declaring an income of Rs. 19,12,120/-. Subsequently, the case of the assessee was selected for scrutiny assessment under CASS and notice u/s. 143(2) was issued by the....
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....the first time, an additional ground of appeal before the Tribunal, which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 7. As the assessee has assailed the validity of the jurisdiction assumed by the ACIT, Circle-4(1), Raipur for framing the impugned assessment, therefore, we shall first deal with the same. It is claim of the Ld. Authorized Representative (for short "AR") for the assessee that as the ITO-1(3), Raipur was not vested with pecuniary jurisdiction over the case of the assessee for the year under consideration, therefore, the assessment framed by the ACIT-4(1), Raipur, i.e the jurisdictional assessing officer, vide his order passed u/s. 143(3) dated 29.03.2016, on the basis of notice issued u/s 143(2) by the ITO-1(3), Raipur, i.e a non-jurisdictional officer, cannot be sustained and is liable to be quashed for want of valid assumption of jurisdiction. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that the CBDT Instruction No. 1/2....
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....quashed for want of valid assumption of jurisdiction by him. In sum and substance, it was averred by the Ld. AR that as the ACIT, Circle-4(1), Raipur, i.e an officer who was vested with jurisdiction over the assessee's case for the year under consideration, had assumed jurisdiction to frame the assessment on the basis of notice u/s 143(2) of the Act, dated 08.09.2014 issued by the ITO-1(3), Raiur, i.e a non-jurisdictional officer, therefore, the assessment framed by him vide his order passed u/s. 143(3) of the Act, dated 29.03.2016 could not be sustained and was liable to be struck down. The Ld. AR in support of his contention that the assessments not framed in conformity with the CBDT Instruction No. 1/2011, dated 31.01.2011 r.w Instruction No. 06/2011, dated 08.04.2011 could not be sustained and was liable to be struck down had relied on a host of judicial pronouncements, as under: Sr. No. Particulars 1. Bhagyalaxmi Conclave PL (2021) ITANo. 2517/Ko1/2019 (Kol-Trib) dated 03-022021 2. Ashok Devichand Jain Vs. UOI (2023) 452 ITR 43 (Bom.) 3. Pankajbhai Jaysukhlal Shah Vs. ACIT (2020) 425 ITR 70 ( Guj.) 4. DCIT Vs. Parmar Built Tech, ITA No. 4124/Mum/2....
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....hich he was served with the notice u/s. 143(2), dated 08.09.2014, the Ld. AR answered in the negative. It was submitted by the Ld. AR that as the obligation cast upon an assessee to call in question the jurisdiction of the Assessing Officer under sub-section (3) to Section 124 of the Act would get triggered only where there was any dispute as regards the "territorial jurisdiction" of the officer issuing the notice, which however, was not the issue involved in the present case, therefore, the assessee remained under no obligation to have called in question the jurisdiction of the ITO-1(3), Raipur on receipt of notice u/s. 143(2), dated 08.09.2014 from him. The Ld. AR had in support of his aforesaid contention relied on the judgment of the Hon'ble High Court of Bombay in the case of Peter Vaz Vs. CIT [2021] 128 taxmann.com 180 (Bombay). It was averred by the Ld. AR that the Hon'ble High Court in its aforesaid order while reversing the view taken by the Tribunal, had observed, that the provisions of Section 124(3) referred mainly to the territorial jurisdiction of the A.O. Also, support was drawn by the Ld. AR from the judgment of the Hon'ble High Court of Gujarat in the case of CIT V....
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....pronouncements that have been pressed into service by them to drive home their respective contentions. 11. Controversy involved in the present appeal lies in a narrow compass, i.e, sustainability of the assessment framed by the ACIT, Circle 4(1), Raipur vide his order passed u/s 143(3) of the Act, dated 29.03.2016, which in turn was based on a notice u/s 143(2) of the Act, dated 08.09.2014 issued by the ITO-1(3), Raipur, i.e a non-jurisdictional officer. We find that the issue involved in the present appeal is squarely covered by the order of this Tribunal in the case of Durga Manikanta Traders Vs. ITO, ITA No. 59/RPR/2019 dated 12.12.2022; wherein, it has been held, that in case an A.O vested with jurisdiction over the case of the assessee, had framed an assessment u/s. 143(3) of the Act, by assuming jurisdiction to frame such assessment on the basis of notice u/s 143(2) of the Act issued by a non-jurisdictional officer, i.e an A.O who was not vested with pecuniary jurisdiction over the case of the assessee as per CBDT Instruction No. 1 of 2011, then, the assessment so framed could not be sustained and was liable to be struck down for want of valid assumption of jurisdiction. I....
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....30 lacs Upto Rs. 30 lacs Above Rs. 30 Lacs Noncorporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, 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." (emphasis supplied by us) As stated by the Ld. AR and, rightly so, the CBDT vide its aforesaid Instruction No. 1/2011, dated 31.01.2011 had, inter alia, revised the earlier existing monetary limit for assigning the cases to ITOs/ACs/DCs w.e.f. 01.04.2011. On the basis of the aforesaid CBDT Instruction 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 above Rs. 15 lacs in his return of income is to be assigned to the ACs/DCs. As the case of the present assessee for the A.Y.2012-13 was selected for scrutiny assessment vide notice issued u/s. 143(2), dated 24.09.2013, therefore, the aforesaid CBDT Instruction No. 1/2011, dated 31.01.2011 that was applicable w.e.f. 01....
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....s binding upon the department and has to be scrupulously followed, therefore, there can be no escape from the same for justifying assumption of jurisdiction by an officer other than that prescribed in the said instruction. Our aforesaid view is fortified by the Judgments of the Hon'ble Supreme Court in the case of UCO Bank Vs. CIT (1999) 237 ITR 889 (SC) and Commissioner of Customs etc. Vs. Indian Oil Corporation Ltd. & Anr. (2004) 267 ITR 272 (SC). In the aforesaid judgments it was held by the Hon'ble Apex Court that though the CBDT/CBEC circulars are not binding on court or the assessee, but the departmental authorities are bound by them and cannot act in contravention of the same. Also, support is drawn from the judgment of the Hon'ble High Court of Chattisgarh in the case of Dy. CIT Vs. Sunita Finlease Ltd. [2011] 330 ITR 491 (Chattisgarh). In its said order it was observed by the Hon'ble Jurisdictional High Court that the administrative instructions issued by CBDT are binding on the Income-tax authorities. On the basis of our aforesaid observations, we are of the considered view that as the framing of the assessment in the case of the present assessee by the Income-Ta....
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.... of Section 120, therefore, the provisions of sub-section (3) of Section 124 which places an embargo on an assessee to raise an objection as regards the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and would have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Also, support is drawn from a recent judgment of the Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income-tax Vs. Nopany & Sons (2022) 136 taxmann.com 414 (Cal). In the case before the Hon'ble High Court the case of the assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was passed by the ITO, Ward-4 without issuing notice u/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant point of time, the Hon'ble High Court quashed the assessment. Apart fr....
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....y authorities therein specified from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him, then he is under an obligation to record his reasons for doing so after giving the assessee a reasonable opportunity of being heard in the matter wherever it is possible to do so. For the sake of clarity sub-section (1) of Section 127 is culled out as under: "(1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him." On a careful perusal of the aforesaid mandate of law, it transpires, that even in ....
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....rder of the ITAT, Kolkata in the case of Bhagyalaxmi Conclave (P) Ltd. Vs. DCIT, ITA No. 2517 (Kol) of 2019, dated 03.02.2021 which in turn had relied on the earlier orders passed in the case of Hillman Hosiery Mills Pvt. Ltd. Vs. DCIT, ITA No. 2634/Kol/2019; Soma Roy Vs. ACIT, ITA No. 463/Kol/2019 dated 08.01.2020; and Shri Sukumar Ch. Sahoo Vs. ACIT, ITA No. 2073/Kol /2016 dated 27.09.2017, had struck down the assessment for want of valid assumption of jurisdiction by the A.O who had framed the assessment in contravention of the CBDT Instruction No. 1/2011, dated 31.01.2011, observing as under: "5. A perusal of the aforesaid statutory provisions would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also I.T.A. No. 339/Kol/2021 Assessment Year: 2016-17 Anderson Printing House Pvt. Ltd having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers. The ld. Counsel in this respect has relied upon the CBDT Instruction No. 1/2011 [F.No. 187/12/2010-IT(A-I), for the sake of conv....
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....as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal in ITA No. 2517/Kol/2019 and Others vide order dated 03.02.2021, wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. The relevant part of the order dated 03.02.2021 passed in ITA No. 2517/Kol/2019 and Others is reproduced as under: "5.2. The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosie....
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....erring to as and when necessary. 6. The ld. D/R, on the other hand, submitted that the concurrent jurisdiction vests with the ITO as well as the ACIT and hence the assessment cannot be annulled simply because the statutory notice u/s 143(2) of the Act, was issued by the ITO and the assessment was completed by the ACIT. He further submitted that the assessee did not object to the issue of notice before the jurisdictional Assessing Officer and even otherwise, Section 292BB of the Act, comes into play and the assessment cannot be annulled. On merits, he relied on the orders of the lower authorities. 7. I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:- 8. I find that there is no dispute in the fact that the notice u/s 143(2) of the Act dt. 29/09/2016 has been issued by the ITO, Wd-1(1), Durgapur. Later, the case was transferred to the jurisdiction of the ACIT on 11/08/2017. Thereafter, no notice u/s 143(2) of the Act was issued by the Assessing Officer having jurisdiction of this case and who ....
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....d 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 issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of ....
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....pur on 18-6-13 is invalid, non-est, as she was not having pecuniary jurisdiction as on 18-6-13, since, CBDT Instruction No. 1/11 dt. 311-11 was applicable from 1-4-11, is binding on IT authorities u/s 119; in absence of a valid notice issued u/s148 by ITO-1(2), Raipur (`jurisdictional AO') who framed the assessment u/s. 147 rws. 143(3) dt. 31-3-15; initiation of reassessment u/s 148 would be invalid, non-est and thereby, consequential assessment made u/s 147 rws.143(3) dt. 31- 3-15 would also be invalid, non-est and is liable to be quashed." The Tribunal adjudicated the aforesaid issue, observing as under: "11. Ostensibly, the proceedings u/s. 147 of the Act were initiated by the DCIT1(1), Raipur, Page 2 of APB. Notice u/s. 148 18.06.2013 was issued by the DCIT1(1), Raipur. Assessment u/s. 143(3)(sic. 143(3)/147) was, thereafter, framed by the ITO-1(2), Raipur. Admittedly, it is a matter of fact borne from record that the CBDT vide Instruction No. 1/2011, dated 31.01.2011 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 31.01.2....
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....f. 01.04.2011 duly applied to his case. Also, as per the areas earmarked in the aforesaid Instruction No. 1/2011, dated 31.01.2011 as the assessee is not located in any of those cities/stations which have been held to be metro cities, therefore, his case would be as that of a non-corporate assessee who is located in a mofussil area. As is discernible from the records, the aforesaid request of the assessee vide his letter dated 05.07.2013 that his original return of income disclosing an income of Rs. 9,47,500/- be treated as a return u/s. 148 of the Act was accepted by the A.O, who, thereafter, had framed assessment vide his order passed u/s. 143(3)(sic), dated 31.03.2015, therein taking the income of the assessee as originally returned as the base figure while arriving at the assessed income. 12. On the basis of the aforesaid facts, I am of the considered view, that as stated by the Ld. AR, and, rightly so, as per the CBDT Instruction No. 1/2011, dated 31.01.2011 the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Raipur and had in compliance to the notice u/s. 148, dated 18.06.2013 filed a non-corporate return on 05.07.2013 for the year u....
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....ase of Pavan Morarka Vs. ACIT-2, (2022) 136 taxmann.com 2 (Bombay). It was observed by the Hon'ble High Court that as the A.O at Delhi who had issued notice u/s. 148 of the Act had no jurisdiction over the case of the assessee who was being assessed at Mumbai, therefore, the subsequent reopening notice that was issued by the A.O at Mumbai after the case of the assessee was transferred to his jurisdiction could not be held to be in continuation of the proceedings which were initiated by the A.O at Delhi. To sum up, it was observed by the Hon'ble High Court that if an A.O. who had issued notice u/s. 148 was not vested with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non-jurisdictional A.O. Also, a similar view had been taken by the Hon'ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case befo....
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.... 148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. a non-jurisdictional A.O is sustainable in the eyes of law? 12. As observed by me hereinabove, the assessment proceedings in the case of the assessee were initiated by the ITO, Ward-1(1), Raipur vide notice u/s. 148 dated 23.03.2015. Subsequently, the ITO, Ward-1(1), Raipur had transferred the case record of the assessee on 12.05.2015 to ITO, Ward2(1), Bhilai. The ITO, Ward-2(1), Bhilai had, thereafter, on the basis of notice u/s. 148 dated 23.03.2015 (supra) proceeded with and framed the assessment vide his order u/ss.143(3)/147 dated 25.03.2016. Ostensibly, the ITO, Ward-2(1), Bhilai, i.e., jurisdictional officer had not issued any notice u/s. 148 of the Act but had acted upon that as was issued by the ITO, Ward1(1), Raipur i.e. a non-jurisdictional officer on 23.03.2015. At this stage, I may herein observe that it is not the case of the department that the jurisdiction over the case of the assessee was transferred from ITO, Ward1(1), Raipur to ITO, Ward-2(1), Bhilai vide an order passed by the appropriate authority u/s. 127 of the Act. Also, no material had been placed before me by the Ld. DR which would reveal th....
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....sted with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non-jurisdictional A.O. Also, a similar view had been taken by the Hon'ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, 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., i.e, ITO(IV)(1), Lucknow. Apart f....