TaxTMI 
TaxTMI 
2023 (5) TMI 1297
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....rough 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 ITO-1(3), Raipur on 08.09.2014. 3. Due to reallocation of jurisdiction vide or....
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....y 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. 1/2011, dated 31.01.2011 w.e.f 01.04.2011 [F.No. 187/12 /2010-IT(A-I)] had revised the moneta....
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....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/2012, dated 12.09.2022 5. Mateshwari Construction Vs. ACIT, ITA No. 245/Pat/2018 dated 16.06.2022 6. JR Ro....
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....see 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 Vs. Ramesh D Patel (2014) 362 ITR 492 (Guj.). It was submitted by the Ld. AR that the Hon'ble High Court had observed that the provisions of Section 124 of the Act clearly conc....
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....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. Indulgence of the Tribunal was sought by the asessee for adjudicating the following issue : "That the Assessment Order framed u/s. 143(3) is bad in law, without jurisdiction & void....
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...., 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. 01.04.2011 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-....
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....reme 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-Tax Officer, Ward-2(2), Bhilai is clearly found to be in contravention of the CBDT Instruction No. 1/2011, dated 31.01.2011, therefore, the same cannot be justified. 14. We shall now deal with the objection raised by the Ld. DR that as the assessee had not called in question the jurisdiction of t....
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....tion 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 from that, the aforesaid view is also supported by the order of the ITAT, Kolkata 'B' Bench in the case of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesa....
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....easons 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 a case where jurisdiction over the case of an assessee that is vested with one A.O (having concurrent jurisdiction over the case of the assessee) is to be transferred to another A.O (having concurrent jurisdiction over the case of the assessee), even then the authority specified under sub-section (1) of Section 127 is oblig....
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....ar 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 convenience is reproduced as under: "Instruction No. 1/2011 [F.No. 187/12/2010-IT(A-I), DATED 31-12011 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 i....
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....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 Hosiery Mills Pvt. Ltd. vs. DCIT, in ITA No. 2634/Kol/2019, order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid down in a number of other decisions of the ITAT, Kolkata Bench on this issue. 5.3. Kolkata "B" Bench of the Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd.(supra) held as follows: "10. In this case, the ....
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....ction 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 had completed the assessment on 26/12/2017 i.e., ACIT, Circle1(1), Durgapur. Under these circumstances, the question is whether the assessment is bad in law for want of issual of notice u/s 143(2) of the Act. 9. This Bench of the Tribunal in the case of Shri Sukumar Ch. Sahoo vs. ACIT in ITA No. 2073/Kol/2016 order dt. 27.09.2017, held as follows:- "5. From a perusal of the above Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on....
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....6.09.2013 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 notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other groun....
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....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 31.01.2011, 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 t....
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..... 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 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 (su....
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.... 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. Apart from that, a similar view had earlier been taken by the Hon'ble High Cour....
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....onal 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 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/s. 143(3)/147 dated 25.03.2016 by the ITO, Ward 2(1), Bhilai on the bas....
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....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 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 ....