2020 (3) TMI 1068 - AT - Income Tax

Transfer of case - Validity of the assessment orders passed by the Additional CIT u/s 143(1) - Lack of inherent jurisdiction - whether there was any order / notification issued u/s 127/ 120(4)(b) - HELD THAT - We note that as per section 2(7A) AO means inter alia an Addl. CIT who is directed u/s.120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on, or assigned to, an AO under the Act. As per Section 120(4)(b) of the Act, the CBDT has to first empower the Commissioner to issue orders and then the said authority has to assign or confer the authority of the AO on the Addl.CIT. In the present case none of such notifications/ orders as required by section 120(4)(b) of the Act have been issued. Further, as per section 127 of the Act when there is a transfer of jurisdiction, then the condition therein has to be fulfilled. In the present case, originally the jurisdiction to make the assessment over the company was with the Asstt.CIT. The assessment order has been passed by the Addl.CIT without any transfer of jurisdiction in his favour. Further, on a specific query of the Bench to the Ld.DR in the course of the hearing on as to whether there was any order/ notification issued under section 127/ 120(4)(b) of the Act, the Ld.DR conceded that there were no such orders issued. In view of the thereof, the ld Counsel of the assessee company argued that as the Addl.CIT did not possess the relevant jurisdiction to act as on AO, the assessment order passed by him under section 143(3) of the Act dated 29.12.2008 is without jurisdiction, illegal, bad in law and hence ought to be quashed. Respectfully, following assessee's own case 2019 (4) TMI 510 - ITAT MUMBAI , 2017 (12) TMI 297 - ITAT MUMBAI and 2016 (10) TMI 1228 - ITAT MUMBAI we allow the additional ground raised by the assessee challenging the validity of the assessment framed by the Addl.CIT and accordingly, quash the assessment framed under section 143(3) of the Act. The cross appeal of the revenue is rendered infructuous as we have already quashed the assessment order passed by the Addl. CIT in the above para. Accordingly, the same is dismissed. Since, we have quashed the assessment order on jurisdictional issue, the other grounds on jurisdictional issue as well as on merits have become academic and hence, not adjudicated.

Summary

Issues Involved:
1. Jurisdiction of the Additional Commissioner of Income Tax (Addl. CIT) to pass the assessment order.
2. Validity of the assessment orders passed by the Addl. CIT.
3. Admissibility of additional grounds of appeal raised by the assessee.
4. Legal competence of the Addl. CIT to act as an Assessing Officer (AO).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Additional Commissioner of Income Tax (Addl. CIT) to pass the assessment order:
The core issue raised by the assessee was the jurisdiction of the Addl. CIT to pass the assessment order. The assessee argued that the Addl. CIT lacked the jurisdiction to pass the assessment order under section 143(3) of the Income Tax Act, 1961, as there was no order under section 120(4)(b) or section 127 transferring such jurisdiction to the Addl. CIT. The Tribunal noted that as per section 2(7A) of the Act, an AO includes an Addl. CIT only if directed under section 120(4)(b) to exercise such powers. The Tribunal found no evidence of any order or notification conferring such jurisdiction on the Addl. CIT. Consequently, the Tribunal held that the Addl. CIT did not possess the relevant jurisdiction to act as an AO, rendering the assessment order dated 29.12.2008 without jurisdiction, illegal, and bad in law.

2. Validity of the assessment orders passed by the Addl. CIT:
The Tribunal examined whether the assessment orders passed by the Addl. CIT were valid. The Tribunal referred to several judicial precedents, including the case of Tata Communications Ltd., where it was held that the absence of a valid order under section 120(4)(b) or section 127 invalidates the assessment order passed by the Addl. CIT. The Tribunal reiterated that the Addl. CIT could not assume the role of an AO without proper authorization. Therefore, the assessment orders for AY 2006-07 and AY 2007-08 were quashed due to the lack of jurisdiction.

3. Admissibility of additional grounds of appeal raised by the assessee:
The Tribunal considered the admissibility of the additional grounds of appeal raised by the assessee. The assessee argued that these grounds were purely technical and legal, challenging the validity of the assessment orders on jurisdictional grounds. The Tribunal, relying on the decisions of the Supreme Court and High Courts, admitted the additional grounds, stating that jurisdictional issues go to the root of the matter and do not require further verification of facts. The Tribunal emphasized that the assessee is at liberty to raise legal issues at any stage of the proceedings.

4. Legal competence of the Addl. CIT to act as an Assessing Officer (AO):
The Tribunal analyzed the legal competence of the Addl. CIT to act as an AO. The Tribunal noted that as per section 2(7A) and section 120(4)(b), only those Addl. CITs who are specifically authorized by the CBDT or Commissioner can exercise the powers of an AO. The Tribunal found that no such authorization was granted to the Addl. CIT in the present case. The Tribunal referred to the decision in Tata Sons Ltd., which held that the Addl. CIT could not act as an AO without proper authorization. Consequently, the Tribunal concluded that the assessment orders passed by the Addl. CIT were without jurisdiction and invalid.

Conclusion:
The Tribunal quashed the assessment orders for AY 2006-07 and AY 2007-08 passed by the Addl. CIT due to the lack of jurisdiction and proper authorization. The appeals of the assessee were partly allowed, and the appeals by the Revenue were dismissed. The Tribunal emphasized that jurisdictional issues can be raised at any stage and must be addressed based on the legal framework and judicial precedents.