TaxTMI 
TaxTMI 
2022 (7) TMI 1622
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....iction to pass the order in absence of transfer order u/s 127. 2. As per the facts, the original return of income was filed by the assessee on 29/07/2011 at assessable income of Rs. 8,50,980/- and which was processed u/s 143(1) of the Act. Thereafter, a notice u/s 148 of the Act was issued by the ITO ward 27(3)(2) Mumbai on 31/03/2017. The said ITO ward 27(3)(2) issued on 31/07/2017 a notice u/s 143(2) of the Act. The reasons was recorded on the basis of information that assessee has taken Long Term Capital Gain on alleged penny stock. The reasons recorded by the AO are as under :- "Information has been received from the Directorate of Investigation that an organized / racket of generating bogus entries of LTCG in penny stocks have been unearthed as a result of investigation carried out throughout the country. As a result of this investigation, one of the beneficiary who have taken bogus entries of LTCG amounting to Rs. 5,79,10,300/- have been identified as RUPAL K. MEHTA having PAN AGRPM5338E who is assessed in this ward has also availed of such an entry. The same is reflected in the return of income for A. Y. 2011-12 by way of claim of exemption amounting to Rs. 6,93,....
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....he root of the validity of the assessment order, it can be raised at any stage and must be first decided by the ITAT. 6. The Ld. AR submitted that a search action u/s 132 of the Act was carried out on 06/10/2017 on the assessee who is a part of Sunshine Group at their offices, branches and residences of main persons including the assessee. He also submitted that despite due notice of a search having undertaken by the revenue on 06/10/2017 on the assessee, given to the AO vide letter acknowledged by the AO on 07/12/2017, the AO still proceeded to pass an assessment order u/s 147 of the Act on 28/12/2017, though admittedly the reassessment proceedings for this assessment year were pending as on the date of search. 7. The AR also submitted that, for this assessment year (i.e., A.Y. 2011-12) as the reassessment proceedings were initiated on 31/03/2017, which was pending as on the date of search on the assessee on 06/10/2017, therefore, same got abated in view of the Second Proviso u/s 153A(1) of the Act because the AY 2011-12 fell within the scope 'relevant assessment years' (4 earlier assessment years over and above the six assessment years prior to the date of search) a....
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...... 147' and therefore, the only applicable section to assume the jurisdiction to make a reassessment of income on these facts was the section 153A of the Act. The AR relied on the judgment of the Hon'ble Apex Court in Kanwar Singh Saini vs. High Court of Delhi (2012) 4 SCC 307 to support the above contention where in para 13 the following was upheld: "13. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. (Vide: The United Commercial Bank Ltd. v. Their Workmen AIR 1951 SC 230;....
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....Court in Kanwar Singh Saini (supra), has upheld that a jurisdictional issue can be raised at any stage. Further, it is otherwise a settled law that a legal ground can be taken at any appellate stage, particularly when the same goes to the root of the jurisdictional aspect of the assessment proceedings. Thus, the objections of the DR are not accepted and this ground of appeal is admitted and adjudicated. 12. The Ld. AR further also challenged the assessment order passed without jurisdiction by the AO Ward 21(3)(1) Mumbai as bad in law and void ab initio as the said assessing officer did not have any valid jurisdiction to pass the said assessment order as no mandatory assessment jurisdiction transfer order u/s 127(2) of the Act was passed by the PCIT 27 Mumbai to transfer the same from the earlier Assessing Officer ITO Ward 27(3)(2) Mumbai to the ITO Ward ITO 21(3)(1) Mumbai who passed the assessment order in appeal, which here is evident from the reply dated 21/03/2022 received by the assessee under the Rights to Information Act, 2005. Thus, the AR prayed that the assessment order in this appeal must be cancelled as void ab initio having been passed by a non- competent / no juris....
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.... under this appeal was under the PCIT 21 who sits at Parel, Mumbai. Thus, an assessment jurisdiction transfer order must have been passed after granting a reasonable opportunity of hearing to the assessee. He further submitted that the road travel distance between Navi Mumbai to Parel is also most 23 kms. and cannot also be otherwise termed as the same city, locality or place in any manner, even in administration. 15. Thus, he stressed that it was mandatory to follow the provisions of the law as above by the 2 PCITs even, if the assessee had shifted to a Mumbai territory jurisdiction and had intimated to the income-tax authorities to record his new address. In such a situation, it became incumbent on the income-tax authorities to make reasonable enquiries about the new address by giving the assessee a reasonable opportunity of hearing and by directing the assessee to adduce proof of her residence at the new address to the satisfaction of the authorities and then pass a speaking order by serving a copy of the same to the assessee. This exercise becomes mandatory because the revenue authorities must satisfy themselves about the claim of the assessee of falling within the new terri....
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....the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases wher....
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...., if such order of annulment is set aside.] Explanation .- For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 19. Thus, on perusal of the above, it is clear from the language in the Second Proviso to the Section 153A(1) of the Act w.e.f. 01/04/2017 which envisages, "Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate". Ergo, on the search has taken place and AO was in possession of any documents, information or evidence which reveal that the income has escaped assessment amounts to or is likely to am....
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....or act apparently permissible which is otherwise impermissible under the special provisions. 21. It is clear as per scheme of the Act, the provisions of the section 148 of the Act were not at all available for a period of the ten years including for the relevant assessment year in this case. The rule of construction which is relevant to the present issue is expressed in the maxim "generaliaspecialibus non derogant", meaning where there is a conflict between a general or special provision, the latter shall prevail. This proposition has been upheld in Forbes Campbell & Co. Ltd. v. CIT (1994) 206 ITR 495 (Bom). The Hon'ble Supreme Court in in CTO vs. Binani Cement Ltd. & Anr on 19 February, 2014- CIVIL APPEAL NO.336 OF 2003, after considering Union of India & Anr. vs. Indian Fisheries (P) Ltd. (1965) 57 ITR 331,334 (SC); CIT vs. Indian Molasses Co. (P) Ltd. (1989) 176 ITR 473 (Cal), ITO vs. Shrilekha Business Consultancy (P.) Ltd. approved the said law. 22. Thus, in view of the aforesaid position of law as above, we hold that the AO could have only pass reassessment order u/s 153A of the Act for the A.Y.2011-12 instead of the section 147 of the Act, because after the search,....
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....fficers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,- (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner from whose jurisdiction the case is to be transferred 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, pass the order; (b) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal ....
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....the assessee and this order is held void ab initio passed by an AO without a valid and legal jurisdiction. 26. Thus, it is manifest that the AO passing the impugned assessment order did not possess any valid and legal jurisdiction and following the judgment of the Hon'ble Apex Court in Kanwar Singh Saini (supra), the same must be quashed as void ab initio. 27. In nutshell, both the above contentions of the assessee are accepted and the assessment order in this appeal is quashed on both grounds even considering those independent of each other. The Hon'ble Bombay High Court in Mavany Brothers vs CIT (2015) 62 taxmann.com 50 (Bom) has held in para 16 that in case the Tribunal after examining all the facts comes to the conclusion that the notice was without jurisdiction then the other issues as formulated herein will not arise for consideration. This is so as the foundation of proceedings on the other issues is the validity of the reopening notices. Since, the assessment order has been quashed as above on the jurisdiction, following the above jurisdictional High Court judgment, the other grounds of appeal on merits become academic and have not been adjudicated. 28. In ....