2021 (5) TMI 788 - AT - Income Tax

Exercising power of AO by the Addl. CIT - Validity of framing of assessment by the ld. Additional Commissioner of Income Tax, Range 2(2) - draft assessment as well as the final assessment orders were framed by the Additional Commissioner of Income Tax, Range-2(2), Mumbai - HELD THAT - As decided in M/S. TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.,) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 (3) , MUMBAI AND VICE-VERSA 2019 (8) TMI 1446 - ITAT MUMBAI wherein held in absence of a valid notification under section 120(4)(b) the Addl. CIT cannot exercise power of an Assessing Officer. 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. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the assessment framed by the Additional Commissioner of Income Tax.
2. Jurisdiction and authority of the Additional Commissioner to act as an Assessing Officer.
3. Admission of additional grounds challenging the legal competence of the Additional Commissioner.
4. Impact of the absence of a proper order under Section 120(4)(b) or Section 127(1) of the Income Tax Act.

Detailed Analysis:

1. Validity of the Assessment Framed by the Additional Commissioner of Income Tax:
The primary issue raised was the validity of the assessment orders framed by the Additional Commissioner of Income Tax, Range 2(2), Mumbai. The assessee argued that the draft assessment order dated 30 December 2010 and the final assessment order dated 24 October 2011 were illegal, bad in law, and without jurisdiction because the Additional Commissioner failed to establish that he possessed the legal and valid powers of performing functions of an Assessing Officer conferred on him under Section 120(4)(b) of the Income Tax Act.

2. Jurisdiction and Authority of the Additional Commissioner to Act as an Assessing Officer:
The Tribunal examined whether the Additional Commissioner had the competence and jurisdiction to pass the assessment orders. It was found that both the draft and final assessment orders were framed by the Additional Commissioner of Income Tax, Range 2(2), Mumbai. The Tribunal noted that the issue of jurisdiction was squarely covered in favor of the assessee by the decision in the case of Tata Communications Ltd. vs. Additional CIT, where it was held that without a valid notification under Section 120(4)(b), the Additional Commissioner could not exercise the powers of an Assessing Officer.

3. Admission of Additional Grounds Challenging the Legal Competence of the Additional Commissioner:
The Tribunal admitted the additional ground raised by the assessee challenging the validity of the assessment framed by the Additional Commissioner. It was argued that the issue went to the root of the matter and did not involve verification of facts, making it a legal issue fit for adjudication. The Tribunal found that the arguments and submissions of the Departmental Representative were already considered in the Tata Communications case and reiterated that the Additional Commissioner could not act as an Assessing Officer without a valid order under Section 120(4)(b).

4. Impact of the Absence of a Proper Order Under Section 120(4)(b) or Section 127(1):
The Tribunal emphasized that the absence of a proper order under Section 120(4)(b) or Section 127(1) meant that the Additional Commissioner did not have the authority to act as an Assessing Officer. The Tribunal referred to multiple decisions, including those in the cases of Tata Sons Ltd., Mega Corporation Ltd., and Kishore Vithaldas, which supported the view that the Additional Commissioner could not assume the role of an Assessing Officer without explicit authorization. Consequently, the assessments framed by the Additional Commissioner were deemed void ab initio and quashed.

Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the assessment orders framed by the Additional Commissioner of Income Tax, Range 2(2), Mumbai, on the grounds of lack of jurisdiction and authority. The additional grounds raised by the assessee were admitted, and the assessments were annulled due to the absence of a valid order under Section 120(4)(b) or Section 127(1). As a result, the original grounds on merits were rendered infructuous and not adjudicated.