AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 1278
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....(Within time) has been issued by the ITO, Ward 1(1), Bilaspur, who is not the jurisdictional AO, and no notice u/s 143(2) has been issued by the jurisdiction A.O. i.e. Assistant commissioner Circle), Bilaspur C.G. 3. That the Ld. DCIT Bilaspur Circle 2(1) passed the order, has no jurisdiction as the jurisdiction was with DCIT, Bilaspur Circle 1. The appellant being a company, the jurisdiction lies with DCIT Circle 1(1), Bilaspur vide notification no 1 of 2014 dated 15/11/2014. 4. That the Ld. CIT(Appeal) erred in confirming the Rs. 26,89,094/- out of Rs.1,43,62,114/- as development expenses which were calculated by AO on estimates, resumptions & surmises ignoring the audited books of accounts. 5. That the large other expenses were to be examined with the audited books of accounts, and bills and vouchers. The addition made on the basis of estimated report of SDM, Bilha is perverse and unwarranted. 6. That the Ld. CIT(A) is not justified to confirm addition of Development expense of Rs. 11673020/-, whereas most of the expenses are paid by cheques and without development expenses like road, drainage no plots can be sold. 7. That the Ld. CIT....
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....figure shown under this head in the return of income. During the year the assessee had incurred major Expenses under the head "Other Expenses" are as under: Expenses Amount (in Rs.) Brokerage Exp. For sales 1,91,05,906/- Developing Expenses 1,43,62,114/- Stamp Expenses 27,65,260/- Registry Expenses 4,20,181/- Typing Expenses 88,000/- 3.2 Regarding genuineness of the above expenses, the assessee was show caused by the Ld AO, in response details and explanations were submitted by the assessee but the Ld AO did not find the explanations so offered as convincing, therefore, he made the following additions: Expenses Amount (in Rs.) Developing Expenses 1,16,73,020/- Stamp Expenses 27,65,260/- Registry Expenses 4,20,181/- Typing Expenses 88,000/- Total 1,49,46,491/- 4. Aggrieved by the aforesaid additions in the order of Ld. AO, assessee preferred an appeal before the Ld CIT(A) NFAC, Delhi, however the appeal of asseseee therein have been dismissed by the Ld CIT(A) with the following observations: DECISION: 6. I have carefully considered the grounds of appeal, statement of facts and the content....
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.... by the AO are hereby confirmed. All grounds of appeal are dismissed. 7. Accordingly, the appeal is treated as dismissed. 5. Dissatisfied with the order of Ld CIT(A), the assessee is before us with the present appeal. 6. At the outset, Ld. AR of the assessee has submitted a written synopsis the same is extracted as under: M/s Ananda Devcon Pvt. Ltd. A Y 2015/16 ITA No. 223/RPR/2023 1. Return of income filed on 29.09.2015, with returned income of Rs. 21,44,050/- 2. First notice u/s 143(2) required to be issued latest by 30.09.2016. 3. First notice u/s 143(2) cit. 17.03.2016 issued by ITO-1(1), Bilaspur, PN 49 of PB. 4. In view of returned income being more than Rs. 15 lakh, jurisdiction vested with AC/ DC. 5. ITO-1(1), Bilaspur himself transferred the case to ACIT-I(I), Bilaspur. Letter at PN 50 of PB. He admits that jurisdiction did not vest with him but with ACIT-I(I), Bilaspur. 6. No notice u/s 143(2) issued by ACIT-2(l ), Bilaspur, who passed the assessment order. 7. A case of pecuniary jurisdiction. Reliance on: - i) Mata Road Carriers vs DCIT, at PN 84 to 101 of PB, relevant finding at PN 10....
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....whereas valid jurisdiction was conferred upon ACIT-2(1), Bilaspur, who finally has passed the assessment order, but have never issued any notice u/s 143(2), therefore, the entire assessment proceedings have been build up on the foundation of an illegal notice, thus, there was clear violation of the provisions of the Act, instructions of CBDT and the revenue authorities. Accordingly, the order passed u/s 143(3) dated 23.12.2017 was illegal, void-ab-initio and therefore, the same should be considered as non-est. To strengthen the contentions raised by way of drawing support from legal pronouncements, Ld. AR submitted that the present case is squarely covered by the following judgments, wherein similar issue have been deliberated upon by the coordinate bench of the ITAT, Raipur and has held as under: i) Mata Road Carriers vs DCIT, ITA No. 79/BIL/2016 vide order dated 10.07.2023 19. The coordinate bench of the Tribunal under the similar facts and circumstances, in the case of Ravi Sherwani, passed in ITA No.64/RPR/2020, order dated 29.05.2023, observations of which have been reproduced in the foregoing paragraphs, which has already been followed in the case of Amarjee....
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....eration had issued the notice u/s. 143(2) of the Act, dated 05.05.2016, i.e., beyond the stipulated time period, therefore, no valid jurisdiction could have been assumed on the basis of the same for framing the assessment vide order under Sec. 143(3), dated 29.12.2016. 16. On the basis of our aforesaid deliberations, we are in agreement with the Ld. AR that the ITO-1(1), Bhilai could not have validly assumed jurisdiction and framed the assessment vide his order passed u/s. 143(3) of the Act, dated 29.12.2016 on the basis of the notice issued u/s. 143(2), dated 24.09.2015 by the DCIT-1(1), Bhilai i.e. a non-jurisdictional A.O. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Ashok Deckhand Jain Vs. UOI in W.P. No. 3489 of 2019, dated 08.03.2022. In the said case the Hon'ble High Court by referring to the CBDT Instruction No.1 of 2011, dated 31.01.2011, had observed, that as the pecuniary jurisdiction over the case of the assessee before them who had returned an income of Rs. 64.34 lacs was vested with the DCs/ACs, therefore, the notice issued u/s. 148 of the Act by the ITO who during the year under consideration had no pecun....
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....) 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 Chhattisgarh in the case of Dy. CIT Vs. Sunita Finlease Ltd. [2011] 330 ITR 491 (Chhattisgarh). 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 the Income-Tax Officer, Ward-2(2), Bhilai within the stipulated time period of one month from the date on which he was served with the not....
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....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 aforesaid observations, we are of the considered view that as the assessee's objection to the validity of the jurisdiction assumed by the In....
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....o 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 obligated to record his reasons for doing so. Considering the aforesaid position of law, we are of the considered view ....
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....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 31-1-2011 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....
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....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 favor 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....
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....erwise, 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. 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:- 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, Circle- 1(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. 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 confe....
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....he 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 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 ....
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....s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part. 9. Based on aforesaid submissions, it was argued by the Ld. AR that in absence of assumption of valid jurisdiction by the Ld. AO, who had framed the assessment order cannot survive. Ld. AR submitted that since the first notice u/s 143(2) was issued by an officer, having no vested jurisdiction over the case of assessee, by wrongly assuming the jurisdiction, further when the case is transferred to Jurisdictional AO he did not issued any notice u/s 143(2), consequently the assessment order framed on the foundation of a notice issued by the officer who is not the jurisdictional AO of the assessee and no notice by the jurisdictional AO, shall be liable to be rendered as illegal and unsustainable. It is, therefore, the prayer that the impugned order passed u/s 143(3) of the Act should be treated as illegal and the entire assessment should be quashed. 10. In rebuttal, Ld. Sr DR, on the issue has submitted a written submission by the department the same is extracted as under: 11. Baked by aforesaid submissions, it was the contention of Ld. Sr. DR that the notice u/s 143(2) of the Act was issued by....
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....on 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 from that, the aforesaid view is also supported by the order of the ITAT....
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....ince we have quashed the assessment for want of valid assumption of jurisdiction by the AO, therefore, we refrain from adverting to and to deal with the other contentions raised by the Ld. AR as per the grounds of appeal in the instant case, which, therefore, are left open. 19. In the result appeal of the assessee is allowed, in terms of our aforesaid observations. Order pronounced in the open court on 22/02/2024. ============= Document 1 INSTRUCTIONS REGARDING INCOME LIMITS FOR SIGNING CASES TO DEPUTY COMMISSIONERS/ASSISTANT COMMISSIONERS/ITOS AUTHOR:TG TEAM saxgura.in/income-tax/section-119-of-the-income-tax-act-1961-instructions-to-subordinate-authorities- instructions-regarding-income-limits-for-assigning-cases-to-deputy-commissionersassistant in commissionersites hom 119 of the Income-tax Act, 1961-Instructions to subordinate authorities-Instructions regarding te limits for assigning cases to Deputy Commissioners/Assistant Commissioners/ITOS. RUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-1)], DATED 31-1-2011 ences have been received by the Board from a large number of taxpayers, especially from mofussil areas he existing monetary....
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.... to ensure that the workload is equitably distributed amongst the Assessing Officers after ng reasons in this regard. further clarified that the mofussil anus refemal to in the Instruction No. 1/2011 means all stations other e metro cities of Delhi, Mumbai, Kolkata, Chennai, Hyderabad Ahmedabad, Pune and Bangalore. Document 3 à¤à¤¾à¤°à¤¤ सरकार वितà¥à¤¤ मंतà¥à¤°à¤¾à¤²à¤¯ राजसà¥à¤µ विà¤à¤¾à¤— कारà¥à¤¯à¤¾à¤²à¤¯ मà¥à¤–à¥à¤¯ आयकर आयà¥à¤•à¥à¤¤ केनà¥à¤¦à¥à¤°à¥€à¤¯ राजकारण Jukewarm.more (19) 402.00 Office of the Chiel Commiss one of ecome Tax Genna va Civil Lines. Pass IC 51+0 Gram: AAVAKAR-Phone 5052792.2331600 Fax: 0771-2426337 F.No.CCIT/RPR/2011-12 To Sir The Commissioner of Income tax Raipur Bilaspur Date: 30.05.2011 Sub: CBDT Instruction NO.1/2011 dated 31/01/2011 and Instruction No.6/2011 dated 08/04/2011 - Income li....
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....(1), BILASPUR SHRI RAM PLAZA, VYPAR VIHAR ROAD, BILASPUR (C.G.) E-mail: [email protected] F.No. DCIT/Cir.1(1)/BSP/ITAT/2023-24/570 Dated 23.01.2024 To, The Jt. Commissioner of Income Tax, Sir, ITAT, Raipur (C.G.) Subject:- Submission of repart in respect of ground no.2 of Appeal of the assessee- Ananda Devcon Pvt. Ltd. PAN-AALGAS848G, A.Y. 2015-16 before Hon'ble ITAT Bench, Raipur-regarding Kindly refer to your office letters in F.No. JCIT-ITAT/RPR/REQ/2023-24 dated 11.01.2024 on the subject cited above. 2. In this regard, it is submitted that the aforesaid case was selected for scrutiny through CASS for A.Y. 2015-16 accordingly, notice u/s 143(2) of the Income Tax Act, 1961 was issued by the ITO-1(1), Bilaspur on 17.03.2016. 3. Later, the ITO-1(1), Bilaspur had transferred the said case to this office i.e. DCIT- 1(1), Bilaspur on 27.07.2016 as the territorial jurisdiction of the assessee vest with this office(copy attached for reference). Further, on going through the case record it is found that notice u/s 142(1) of the Income Tax Act, 1961 was issued by DCIT-1(1), Bilaspur on 22.05.2017 and the ass....