2023 (10) TMI 1360 - AT - Income Tax

Validity of reopening of assessment - jurisdiction over the assessee for framing of assessment - need for the passing of an order u/s 127 - jurisdiction over the assessee vested with ITO OR ACIT-3(1), Raipur - As it is stated by the A.O that since the case of the assessee was transferred from one Range to another pursuant to order u/s 120 of the Act, therefore, there was no need for the passing of an order u/s 127 of the Act HELD THAT - On what basis the case of the assessee de-hors any order as per the mandate of Section 127 of the Act was initially transferred by the ITO, Ward-1(2), Raipur on 05/02/2014 to the DCIT, Circle-1(1), Raipur. At this stage, it would be relevant to observe that as per sub-section (3) of Section 127 of the Act, even in case there is a transfer of any case from any A.O or AOs (whether with or without concurrent jurisdiction) to any other A.O or AOs (whether with or without concurrent jurisdiction), the requirement of passing an order of transfer under the aforesaid statutory provision is required and the same cannot be dispensed with. I may further observe that the order of transfer of the assessee s case by the ITO-Ward 1(2), Raipur to DCIT-Circle 1(1), Raipur on 05.02.104 was much prior to Notifications No. 1/2014-15, dated 15.11.2014 and Notification No. 1/2014-15, dated 15.11.2014, based on which jurisdiction over the case of the assessee was vested with the DCIT/ACIT-3(1), Raipur, as brought to our notice by the A.O. As the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No. 1/2011 (supra) r.w. CBDT Instruction No. 6/2011 (supra )was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus assessment quashed for want of valid assumption of jurisdiction by the A.O - Ground raised by the assessee is allowed .

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer (A.O)
2. Validity of assessment under Section 147 vs. Section 153C
3. Addition of Rs. 21,75,000 under Section 69
4. Violation of principles of natural justice

Summary of Judgment:

1. Jurisdiction of the Assessing Officer (A.O):
The assessee contested that the ACIT-3(1), Raipur, did not have jurisdiction over his case as per the monetary threshold limits laid down by CBDT Instruction No. 1/2011 and No. 6/2011. The Tribunal found that the ACIT, Circle-3(1), Raipur, had wrongly assumed jurisdiction. The CBDT instructions specified that cases with declared income up to Rs. 15 lakh should be handled by ITOs, not ACs/DCs. The assessee had declared Nil income, so the jurisdiction should have been with the ITO, Ward-1(2), Raipur. The Tribunal quashed the assessment order passed by ACIT, Circle-3(1), Raipur, for lack of valid jurisdiction.

2. Validity of assessment under Section 147 vs. Section 153C:
The assessee argued that the assessment should have been framed under Section 153C, not Section 147, as the proceedings were based on documents seized during a search on the "Sharma Group." The Tribunal did not delve into this issue as the assessment was already quashed for lack of jurisdiction.

3. Addition of Rs. 21,75,000 under Section 69:
The A.O had made an addition of Rs. 21,75,000 to the assessee's income under Section 69, based on cash transactions found in seized documents. Since the assessment itself was quashed for lack of jurisdiction, this issue was not addressed further by the Tribunal.

4. Violation of principles of natural justice:
The assessee contended that the CIT(A) had passed an ex-parte order without providing sufficient opportunity for a hearing, violating the principles of natural justice. This issue was also left open as the assessment was quashed on jurisdictional grounds.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment order for want of valid jurisdiction by the A.O. The other contentions raised by the assessee were left open.