2017 (12) TMI 297 - AT - Income Tax

Validity of the assessment made as the Additional CIT - Lack of inherent jurisdiction - transfer of case - Held that - Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Identical issue came up for consideration before the Tribunal in the case of Tata Communications Ltd. for A.Y. 2002-03,wherein decide the issue in favour of the assessee and quashed the assessment made by the Assessing Officer. The learned Standing Counsel even though tried his best and submitted exhaustive arguments to compel us to take a different view from the view which has been take by the co-ordinate bench under similar facts and circumstances of the case of the assessee in A.Y. 2001-02, he could not adduce any cogent material or evidence, which may prove that the facts and issue involved in the impugned assessment year in the additional ground taken by the assessee is different from that of A.Y. 2001-02. He went on again and again submitting before this Tribunal that if the entire order is quashed after such a long time without deciding the merits of the case, would cause unusual financial burden on the Revenue to refund the taxes paid. The Standing Counsel should understand that this Tribunal is not to decide the mercy petition but has to decide the issue before it in accordance with the settled judicial principles of law. The Tribunal is not to decide the issue on the basis of human and irrelevant consideration. We noted that Hon ble Supreme Court in the case of CIT vs. Shelly Products & Another (2003 (5) TMI 4 - SUPREME Court) clearly held that taxes paid by the assessee on the returned income cannot be refunded. We, therefore, following the principle of judicial discipline hold that in the facts of the present case, the Additional CIT in the absence of a valid order u/s. 120(4)(b) has well as section 127(1) of the Act would not have exercised power of a Assessing Officer to pass impugned assessment order. Accordingly, the impugned assessment order passed is without jurisdiction would have no show and, therefore, quash the same.

Issues Involved:
1. Validity of the assessment order dated 15.03.2005.
2. Jurisdiction of the Additional Commissioner of Income Tax to pass the assessment order.
3. Admission of additional grounds of appeal after a significant delay.
4. Validity of the order passed under Section 263 of the Income Tax Act.

Detailed Analysis:

1. Validity of the Assessment Order Dated 15.03.2005:
The assessee challenged the assessment order dated 15.03.2005 on the grounds that it was "bad in law, illegal and without jurisdiction." The Additional Commissioner of Income Tax, who passed the order, did not establish that he possessed the legal and valid jurisdiction under the Act. The Tribunal noted that the jurisdiction to pass the assessment order was initially with the Assistant Commissioner of Income Tax, and there was no valid transfer of jurisdiction to the Additional Commissioner under Section 127 of the Act. Hence, the assessment order was quashed as it was passed without proper jurisdiction.

2. Jurisdiction of the Additional Commissioner of Income Tax:
The Tribunal examined whether the Additional Commissioner of Income Tax had the authority to act as an Assessing Officer. The definition of "Assessing Officer" under Section 2(7A) of the Income Tax Act, as it stood at the relevant time, did not include the Additional Commissioner. The amendment to include the Additional Commissioner came into effect retrospectively from 01.06.1994 through the Finance Act, 2007. However, the Tribunal found that there was no specific order or notification authorizing the Additional Commissioner to perform the functions of an Assessing Officer. Therefore, the assessment order passed by the Additional Commissioner was held to be without jurisdiction and was quashed.

3. Admission of Additional Grounds of Appeal After a Significant Delay:
The assessee raised additional grounds of appeal challenging the jurisdiction of the Additional Commissioner after about ten and a half years. The Tribunal admitted the additional grounds, noting that they were purely legal and did not require any fresh investigation of facts. The Tribunal referred to the Supreme Court's decision in National Thermal Power Co. Ltd. v. CIT, which allows raising legal grounds at any stage if they go to the root of the matter. The Tribunal dismissed the Revenue's argument that the additional grounds should not be admitted due to delay and acquiescence by the assessee.

4. Validity of the Order Passed Under Section 263:
The appeal in ITA No. 193/Mum/2006 was against the order passed by the CIT under Section 263, which was based on the assessment order dated 15.03.2005. Since the Tribunal quashed the assessment order for being without jurisdiction, the order passed under Section 263, which was based on the assessment order, also became invalid. Consequently, the Tribunal quashed the order passed under Section 263.

Conclusion:
The Tribunal quashed the assessment order dated 15.03.2005 for being passed without jurisdiction by the Additional Commissioner of Income Tax. The additional grounds of appeal raised by the assessee were admitted despite the significant delay, as they were purely legal and went to the root of the matter. The order passed under Section 263 was also quashed as it was based on the invalid assessment order. The appeals filed by the assessee were allowed, and the appeal filed by the Revenue was dismissed.

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