2022 (3) TMI 147 - AT - Income Tax

Validity of jurisdiction framed by Addl. CIT, Range-7, Kolkata - proof of order passed u/s 127(1) of the Act transferring jurisdiction to Addl. CIT - HELD THAT - The department to perform various functions, we observe that the Add. CIT is not an AO within the meaning as defined by reason of fact u/s 2(7A) of the Act. From the perusal of the definition of AO, we note that the Add. CIT can be an AO and can exercise power as the Assessing Officer under an order of the Central Board of Direct Taxes and subject to such conditions and restrictions as may be specified therein empowering Principal Chief Commissioner or Chief Commissioner or commissioner to issue orders in writing - We note that the revenue has failed to place before us any such order passed u/s 120(4)(b) and order u/s 127 of the Act post restricting of jurisdiction vide notification no. 2752(E) w.e.f. 15.11.2014 for transferring jurisdiction to Add. CIT Range 7 as the earlier notification has been superseded by the above notification. We find merit in the contentions of the ld. AR with regard to invalid jurisdiction being exercised by Add. CIT who passed the order without there being an order u/s 127 of the Act pursuant to order u/s 120(4)(b). The case of the assessee is squarely covered by the decision of the coordinate bench in DCIT vs M/s. Ganesh Realty Mall Development Pvt. Ltd. 2019 (1) TMI 1686 - ITAT KOLKATA in which identical issue has been decided in favour of the assessee.

Summary

Issues: Jurisdictional challenge regarding assessment order validity

The appellant challenged the assessment order for the assessment year 2012-13, arguing that it was passed without valid jurisdiction as there was no order transferring jurisdiction to the Additional CIT. The appellant contended that the assessment order lacked jurisdiction due to the absence of an order under section 127(1) of the Income Tax Act transferring the case between subordinate officers. The appellant relied on restructuring of jurisdiction and cited specific orders and notifications to support their argument. The appellant also referenced previous decisions where similar jurisdictional issues led to assessments being deemed invalid. The appellant emphasized that the Additional CIT could only perform functions as the Assessing Officer if specifically directed under the Act post restructuring of jurisdiction. The appellant sought to quash the assessment on grounds of invalidity and being bad in law.

The Departmental Representative argued that the delegation of powers and jurisdiction within the department was an internal exercise, contending that the appellant had no standing to challenge it as no prejudice was caused. The Departmental Representative asserted that the Additional CIT, being an official of the department, had the authority to pass the assessment order despite the restructuring of jurisdiction.

The Tribunal examined the provisions of the Income Tax Act and the hierarchy within the department to perform various functions. It was observed that the Additional CIT did not qualify as an Assessing Officer as defined under the Act. The Tribunal noted that for the Additional CIT to act as an Assessing Officer, there needed to be an order from the Central Board of Direct Taxes under section 120(4)(b) and an order under section 127 transferring jurisdiction post-restructuring. The Tribunal found that the revenue failed to provide such orders or notifications, thereby supporting the appellant's contention of invalid jurisdiction. Relying on a previous decision with a similar issue, the Tribunal quashed the assessment, holding it was framed without valid jurisdiction. As a result, the appellant's additional grounds challenging the assessment were allowed, and the appeal was granted on the jurisdictional issue.

Since the appeal was allowed based on the jurisdictional challenge, the Tribunal did not adjudicate on the merits of the other grounds raised by the appellant. Consequently, the appeal of the assessee was allowed, and the assessment order was deemed invalid and quashed.