TaxTMI 
TaxTMI 
2026 (9) TMI 1321
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....h is bad and invalid in the eyes of law. 2. The Ld. CIT(A) has erred in law and in facts in not appreciating that the reopening of assessment u/s 148 of the Act and passing the reassessment order u/s 147 of the Act is invalid and bad in the eyes of law. 3. The Ld. CIT(A) has erred in law and in facts in not appreciating that the Ld. AO did not have valid jurisdiction to carry out assessment proceedings in the present case. 4. The Ld. CIT(A) has erred in law and in facts in not appreciating that the statutory notice issued u/s 143(2) of the Act is not valid in the eyes of law. 5. The Ld. CIT(A) has erred in law and in facts in not appreciating that the impugned order is passed in violation of principles of natural justice. 6. The Ld. CIT(A) has erred in law and in facts in not allowing additional claim of municipal taxes paid of Rs. 5,33,806/- [Rs. 25,54,306/- (-) Rs. 20,20,500/-] which is invalid and bad in the eyes of law. 7. The Ld. CIT(A) has erred in law and in facts in confirming the action of the Ld. AO in disallowing interest expenditure of Rs. 46,09,124/- u/s 24(b) of the Act. 8. The Ld. CIT(A) has erred in law ....
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....- 24(2)(4), Mumbai. The details of additions / disallowances are: 1. Addition u/s 68 for Rs. 14,02,96,481/- 2. Disallowance u/s 24(b) Rs. 46,09,124/- 3. Disallowance of unrealized Rent Claimed by the assessee - Rs. 2,83,290/- 4. Disallowance of Municipal Taxes paid u/s 24(b) - 12,23,461/- 4. Against the aforesaid disallowances/additions, the assessee preferred an appeal before the Ld. CIT(A), who partly allowed the assessee's appeal. The Ld. CIT(A), however, dismissed the contentions of the assessee challenging the validity of the assessment and the jurisdiction assumed by the Ld. AO, including the challenge to his pecuniary jurisdiction, the format of the notice issued under section 143(2) of the Act, as well as the alleged violation of the principles of natural justice. 5. On merits, the Ld. CIT(A) allowed the contention of assessee qua additions under section 68 and directed the AO to delete the entire addition. 6. Regarding the disallowance of municipal taxes, the assessee assailed the disallowance of Rs. 12,23,461/- made by the Ld. AO and furnished evidence in support of municipal taxes amounting to Rs. 25,54,306/-, thereby requesti....
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....he assessment jurisdiction was prescribed to be exercised by the ACIT/DCIT. Accordingly, it was contended that, since the assessee had declared total income of Rs. 31,55,524/-, the Ld. AO, being an Income-tax Officer, was not competent to assume jurisdiction over the assessee and pass the impugned reassessment order. The assessee, therefore, challenged the validity of the assessment on the ground that the same was framed by an authority lacking the prescribed pecuniary jurisdiction. A copy of the aforesaid CBDT Instruction is reproduced hereunder for the sake of reference: "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 l....
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.... No. 613/Mum/2026] dated 21.05.2026 13. Decision of Hon'ble Bombay High Court in the case of PCIT v. Shodiman Investments Pvt. Ltd. [93 taxmann.com 153] 14. Decision of Hon'ble Bombay High Court in the case of Khubchandani Healthparks Pvt. Ltd. v. ITO [68 taxmann.com 91] 15. Order of Hon'ble Bombay High Court in the case of Dulraj U. Jain v. ACIT & ORS. [WP No. 1641 of 2018] dated 06.07.2018 16. Decision of Hon'ble Delhi High Court in the case of Saraswati Petrochem Pvt. Ltd. v. ITO [156 taxmann.com 471] 17. Decision of Hon'ble Delhi High Court in the case of CIT v. Batra Bhatta Company [174 taxmann.com 444] 18. Decision of Hon'ble Delhi High Court in the case of Modicare Foundation v. NFAC [131 taxmann.com 35] dated 06.08.2021 19. CBDT Instruction No. [F.No. 225/162/2016/ITA.II] dated 11.07.2016 along with relevant annexures. 12. Regarding other contentions, legal as well as on merits, also the assessee hasfurnished a written submission which reads as under: "B. The reopening of assessment is invalid 6. In any case, the reopening is invalid for the following reasons: ....
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.... dictum of Hon'ble Bombay High Court in the case of CIT v. JetAirways (1) Pvt. [331 ITR 236(Bom)], where the issue for which reopening is made is not subject matter of addition, then no other additions can be made in the assessment order and reopening is invalid. d. In the reasons recorded, there is no mention of the exact quantum of income escaping assessment in the reasons recorded. Infact, even in the approval u/s 151, the AO has mentioned the income escaping assessment to be blank supporting the fact that the actual quantum of income escaping assessment is not known to the AO while recording reasons. Such lapse of non mentioning of the quantum of income escaping assessment is fatal to the validity of the reassessment proceedings as held by Hon'ble Jurisdictional High Court. Reference is invited to the following decisions: -PCIT v. Shodiman Investments Pvt. Ltd. v. ITO [93 taxmann.com 153(Bom)] [Pg 9598 of PB-2] - Khubchandani Healthparks Pvt. Ltd. v. ITO [68 taxmann.com 91(Bom)] [Pg 99-102 of PB-2] - Dulraj U. Jain v. ACIT & Ors. [WP No. 1641 of 2018(Bom)) dated 06.07.2018 [Pg 103-105 of PB-2] e. The approval taken under sect....
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....s an inadvertently issued "draft," and seeks to restore the matter to the AO/CIT(A). 10. It is submitted that the assessee has not received copy of the remand report by the AO. The said remand report is directly reproduced in the order of Ld. CIT(A) from Page 39-54 of CIT(A)'s order. It is submitted that the department's "draft report" contention is untenable as the remand report is generated and transmitted through the department's internal system only after enquiry. verification, authentication by the AO, and approval of the Addl. CIT/Range Head. It therefore cannot be later said that such report is not the final report. carries a presumption of validity and cannot later be disowned as a draft. Even if there were some errors, that is only an internal issue of the department which cannot adversely affect the assessee. Having been issued and acted upon by the CIT(A), it has attained finality and cannot be recalled on an internal administrative plea of some error in the system. Doing so would undermine the appellate process and give the Revenue an impermissible second opportunity, especially where the AO had already conducted complete enquiries and examined all ....
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....06/- (25.54 lakhs 20.20 lakhs) was made, and evidence for the such entire amount of Rs. 25,54,306/- was filed and verified in remand proceedings. The CIT(A) deleted the Rs. 12,23,461/- addition but left the additional claim of Rs. 5,33,806/- unadjudicated. 16. As the evidences for entire amount of Rs. 25,54,306/- is on record and the claim is legally allowable, the additional claim of Rs. 5,33,806/- should be allowed to the assessee." 13. Coming to the first contention of the assessee, challenging the pecuniary jurisdiction of the Ld. AO, the Ld. AR drew our attention to the various documents placed on record. The copy of the ITR along with computation of income for AY 2011-12, dated 31.03.2012, placed at pages 1 to 7 of the assessee's paper book, reflects the returned income of Rs. 31,50,524/-, which is further corroborated from the assessment order, it self. It was further pointed out that notice under section 148 of the Act was issued by the ITO, Ward 24(2)(4), Mumbai, on 31.03.2017, a copy whereof is placed at page 8 of the paper book. In response to the aforesaid notice, the assessee, vide communication dated 08.05.2017, informed the Ld. AO that the return of incom....
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.... relied upon section 120 of the Act. In this regard, the assessee referred to the notification issued by the CBDT in Instruction No.1 of 2011. The learned Tribunal took into consideration the facts of the case and found that the assessment has been framed by the Assessing Officer, who inherently lacks jurisdiction to do so. 6. The learned Tribunal took note of the decision of a Co-ordinate Bench of the learned Tribunal in the case of Bhagyalaxmi Conclave (P) Ltd. v. DCIT [IT Appeal No. 2517/Kol/2019, dated 3-2-2021] Apart from other decisions and allowed the assessee's appeal, the revenue had challenged the order passed in the case of Pr. CIT v. Bhagyalaxmi Conclave (P) Ltd. [ITAT No. 221 of 2022, dated 6-12-2022] etc. and by a judgment reported in 2022 (12) TMI 1514, the appeal filed by the department was dismissed wherein one of the questions framed is identical to the substantial questions of law suggested by the revenue in the instant case. Thus, we find that the learned Tribunal was right in allowing the assessee' appeal and setting aside the order passed by the Assessing Officer on the ground of lack of inherent jurisdiction." 2 Principal Commissione....
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.... 32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions." 23. As the Hon'ble Apex Court in Rajeev Bansal has clearly held that" if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner. Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions l....
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....mann.com 3] (Raipur Trib.) dated 07.07.2023 "16. We have considered the rival submissions, perused the material available on record and the case laws pressed into our service. Regarding admissibility of additional legal ground of the assessee with respect to challenging the jurisdiction of the AO which was not challenged before the AO under the provisions of Section 124(3) of the Act within the stipulated time period of one month from the date of which the notice u/s.143(2) of the Act was served upon the assessee, as opposed by the Id.Sr. DR, we take guidance from the observation of the coordinate bench of this Tribunal in the case of Sudhir Kumar Agrawal, (supra), wherein it has been observed in para 14 as under :- 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 Shri Sudhir Kumar Agrawal, Durg v. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 from the date on which he was served with the notice(s) u/ss.143(2) and 142(1), dated 03.03.2015, therefore, it was not permissible for him to challenge the s....
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....t is drawn from a recent judgment of the Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income-tax v. Nopany& Sons [2022] 136 taxmann.com 414/286 Taxman 388 (Calcutta). 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 Shri Sudhir Kumar Agrawal, Durg v. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 of OSL. Developers (p) Ltd. v. 170, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise v. ACIT (2021) 1871TD 111 (Gau.). Accordingly, on the basis of our aforesaid obse....
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.... Andolan (2003) 184 CTR (SC) 450: 2003 (8) SCALE 287, 308 Collector of Central Excise v. Usha Martin Industries 1994 (94) ELT: 1997 (7) SCC 47 Ranadey Micronutrients v. CCE 1996 (8) ELT 19: 1996 (10) SCC 387; Collector of Centra Excise v. Jayant Dalai (P) Ltd. 1998 (100) ELT 10: 1997 (10) SCC 402; Collector of Centra. Excise v. Kores India Ltd. 1997 (89) ELT 441: 1997 (10) SCC 338; Paper Products Ltd. v. Collector of Central Excise 1999 (112) ELT 765: 1997 (7) SCC 84; Dabur India Ltd. v. CCE 2003 (157) ELT 129). 8. The somewhat different approach in M/s. Hindustan Aeroneutics V. Commissioner of Income Tax, Karnataka, Bangalore 2000 (5) SCC 365 by two learned Judges of this Court, apart from being contrary to the stream of authority cannot be taken to have laid down good law in view of the subsequent decision of the Constitution Bench in Collector of Central Excise, Vadodara V. Dhiren Chemical Industries. After this Court had construed an exemption notification in a particular manner, it said (p. 130 of SCC and p. 557 of ITR): "We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have b....
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....on 119 of of the Act is for proper working of the Act, which should be followed by the revenue authorities in true spirit. Accordingly, the Tribunal quashed the reassessment framed by the ITO/AO, who was having no jurisdiction over the assessee. 19. Further, the coordinate bench of the Tribunal in the case of Ravi Sherwani (supra), in para 11 has held that, "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 (supra); 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, ie an A.O who was not vested with pecuni....
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....o the proceedings initiated by an Assessing Officer lacking the requisite pecuniary jurisdiction, cannot be sustained in law. We further find that the proceedings culminating in the impugned reassessment order are also not in conformity with the principles laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO & Ors. (259 ITR 19), while the notice u/s 143(2) was issued by an AO not having valid jurisdiction on the case of assessee, as followed and reiterated in the various judicial pronouncements relied upon by the assessee and referred to in the written submissions extracted hereinabove. 17. Adverting to the merits of the additions, we find that the Ld. CIT(A) has examined the issues in detail and, in the course of appellate proceedings, called for a remand report from the Ld. AO. The Ld. AO, upon examination of the material furnished by the assessee, submitted a remand report which did not contain any adverse finding so as to dislodge the claims of the assessee. Taking into consideration the material available on record and the remand report of the Ld. AO, the Ld. CIT(A) recorded his findings and deleted the impugned additions. Before us, the....