2024 (7) TMI 1187 - HC - Income Tax

Revision u/s 263 - validity of Assessment Order passed by the AO by holding that it suffered from lack of territorial jurisdiction - HELD THAT - From perusal of the provisions of Section 124(3) it is clear that it has no application with respect to the proceedings u/s 263. The power of CBDT to confer jurisdiction under the Act, 1961 is undisputed. Neither the appellant has disputed the issuance of Notification dated 22.10.2014 by the CBDT nor it has been disputed for the appellant that the Jurisdictional Commissioner of Income Tax with respect to the assessee was the CIT 11, Kolkata when the order u/s 263 was passed. Thus, as on the date when the order u/s 263 was passed by the Commissioner of Income Tax IV, Kolkata, he was not the jurisdictional Commissioner and, thus, he inherently lacked jurisdiction to pass the order u/s 263. So far as Section 292BB is concerned, as reflected in substantial question of law no.(ii) aforequoted; we find that Section 292BB has no application on facts and circumstances of the present case. It relates to deemed service of notice and not to the territorial jurisdiction of an authority under the Act. Where an authority or court lacks inherent jurisdiction in passing a decree or order, the decree or order passed by such authority or court would be without jurisdiction, non est and void abinitio. Lack of territorial jurisdiction of the Commissioner of Income Tax IV who passed the order u/s 263 to exercise supervisory jurisdiction goes to the root of the matter and strikes at his very authority to pass the said order. Such defect is basic and fundamental and, therefore, the order passed by the aforesaid C.I.T having no territorial jurisdiction over the assessee, is nullity. Order or decree passed by a court having no jurisdiction, has been held to be nullity by Hon ble Supreme Court in Kiran Singh Vs. Chaman Paswan 1954 (4) TMI 48 - SUPREME COURT Hira Patari Vs. Kali Nath 1961 (5) TMI 58 - SUPREME COURT Balwant N Vishwamitra and Others Vs. Yadav Sada Shiv Mull 2004 (8) TMI 689 - SUPREME COURT The question of territorial jurisdiction as raised by the assessee has gone to the very root of the case. Such a question could be raised at any stage of the proceedings, to contend that the order passed by the CIT u/s 263 was without jurisdiction. In appeal the ground of territorial jurisdiction on the undisputed facts of the present case, as afore-noted, was rightly entertained by the ITAT. Substantial questions of law are answered in favour of the assessee.

Summary

Issues:
1. Territorial jurisdiction of the Assessing Officer in quashing the Assessment Order.
2. Entertaining the plea of territorial jurisdiction after the lapse of time limit specified in the Income Tax Act.

Analysis:
1. The High Court of Calcutta heard an appeal regarding the territorial jurisdiction issue raised by the appellant/revenue against the Assessment Order passed by the Assessing Officer. The respondent/assessee's assessment was initially completed by the ITO Ward No.12(2), Kolkata, but subsequent jurisdictional changes occurred. The respondent filed an appeal before the ITAT challenging the jurisdiction of the CIT-IV, Kolkata to pass orders under Section 263 of the Income Tax Act, 1961. The ITAT found that the CIT-IV, Kolkata did not have jurisdiction, as per a notification issued by the CBDT, and concluded that the order passed by CIT-IV was without jurisdiction. The High Court noted that the lack of territorial jurisdiction of the authority to pass an order renders the order null and void abinitio, citing relevant legal precedents. The Court upheld the ITAT's decision, dismissing the appeal and ruling in favor of the assessee against the revenue.

2. The appellant argued that the Tribunal should not have entertained the ground of territorial jurisdiction as the respondent did not raise any objection within the time limit specified under Section 124(3) of the Income Tax Act, 1961. However, the High Court analyzed Section 124(3) and concluded that it does not apply to proceedings under Section 263 of the Act. The Court emphasized that the power of the CBDT to confer jurisdiction is crucial, and in this case, the Commissioner of Income Tax-11, Kolkata had jurisdiction, not the Commissioner of Income Tax-IV, Kolkata who passed the order under Section 263. The Court clarified that Section 292BB, relating to deemed service of notice, does not apply to the issue of territorial jurisdiction. The High Court held that the question of territorial jurisdiction was fundamental and could be raised at any stage, supporting the ITAT's decision to entertain the jurisdictional issue raised by the respondent/assessee. Ultimately, the Court dismissed the appeal, upholding the ITAT's order in favor of the assessee and against the revenue.