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2019 (8) TMI 1446 - AT - Income TaxPower to Addl. CIT to perform as AO - Jurisdiction - Validity of framing of assessment by the Learned Additional Commissioner of Income Tax - Penalty u/s. 271(1)(c) - whether the Addl. CIT, Range -1(3), Mumbai had the competence and jurisdiction to pass the assessment order in the case of the assessee? - HELD THAT - As decided in own case we allow the additional grounds raised by the assessee challenging the validity of assessment framed by the ld Addl. CIT and accordingly quash the assessment so framed. Since we have quashed the assessment order on legal / jurisdictional issue, the grounds rasied on merits have become infructuous and hence not adjudicated. Since the quantum assessment framed for the Asst Year 2003-04 is quashed as per findings given supra, the penalty u/s 271(1)( c) of the Act will have no legs to stand. Hence the appeal of the assessee allowed.
Issues Involved:
1. Validity of the assessment order passed by the Additional Commissioner of Income Tax. 2. Jurisdiction of the Additional Commissioner of Income Tax to act as an Assessing Officer. 3. Admissibility of additional grounds raised by the assessee. 4. Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order Passed by the Additional Commissioner of Income Tax: The primary issue raised by the assessee was that the assessment order dated 14/02/2006 passed by the Additional Commissioner of Income Tax under section 143(3) is "bad in law, illegal and without jurisdiction." The Tribunal found that the Additional Commissioner of Income Tax did not possess the legal jurisdiction to pass the assessment order as he was not vested with such powers under section 120(4)(b) of the Act. The Tribunal noted that the assessment was initiated by the Deputy Commissioner of Income Tax (DCIT) and later taken over by the Additional Commissioner without a proper transfer of jurisdiction under section 127 of the Act. This made the assessment order null and void. 2. Jurisdiction of the Additional Commissioner of Income Tax to Act as an Assessing Officer: The Tribunal examined whether the Additional Commissioner had the jurisdiction to act as an Assessing Officer. According to section 2(7A) of the Act, the Additional Commissioner can only act as an Assessing Officer if directed under section 120(4)(b). The Tribunal found that there was no notification or order under section 120(4)(b) conferring such jurisdiction on the Additional Commissioner. The Tribunal referred to various notifications and concluded that none of them authorized the Additional Commissioner to act as an Assessing Officer. Consequently, the Tribunal held that the assessment order passed by the Additional Commissioner was without jurisdiction and thus invalid. 3. Admissibility of Additional Grounds Raised by the Assessee: The assessee raised additional grounds challenging the jurisdiction of the Additional Commissioner. The Tribunal admitted these additional grounds, stating that they were purely legal and jurisdictional issues that could be decided based on the facts available on record. The Tribunal referenced the Supreme Court's decision in NTPC Ltd. vs. CIT, which allows for the admission of additional grounds if they pertain to legal issues for which facts are already on record. The Tribunal rejected the revenue's objections to the admission of these additional grounds. 4. Imposition of Penalty under Section 271(1)(c) of the Income Tax Act, 1961: Since the Tribunal quashed the assessment order on jurisdictional grounds, the penalty imposed under section 271(1)(c) for the assessment year 2003-04 also could not stand. The Tribunal allowed the assessee's appeal against the penalty order and dismissed the revenue's appeal supporting the penalty. Conclusion: The Tribunal quashed the assessment orders for both the assessment years 2003-04 and 2004-05, holding them as void ab initio due to lack of jurisdiction by the Additional Commissioner of Income Tax. Consequently, the penalties imposed under section 271(1)(c) were also annulled. The Tribunal's decision was based on the absence of proper jurisdictional authority conferred on the Additional Commissioner to act as an Assessing Officer. The appeals by the assessee were allowed, and those by the revenue were dismissed.
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