2021 (10) TMI 1058 - HC - Income Tax

Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - assessee s case was transferred from ACIT, Circle 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) - HELD THAT - As assessee s case was transferred from ACIT, Circle 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) dated 20.07.2009; notices under Section 153C for the assessment years under consideration were issued by the DCIT, Central Circle, Bengaluru on 11.05.2009; date of transfer of files from ACIT is 19.08.2009. Thus, it is ex-facie apparent that the notices under Section 153C were issued prior to transfer of case and jurisdiction conferred on the DCIT. It is well settled by now that any order passed without jurisdiction is invalid. As in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT wherein, it has been held that the assessment order passed against the non-existent company is a substantive illegality and not a procedural violation of the nature adverted to Section 292B. Thus, it is well established that the notice issued by the DCIT Circle 1(1), Bangalore, is without jurisdiction and as such, all further proceedings would render void ab initio. The arguments of the learned counsel for the revenue with respect to Sections 292B and 292BB do not merit any consideration. - Decided in favour of assessee.

Summary

Issues Involved:

1. Limitation of directions by the Dispute Resolution Panel (DRP).
2. Jurisdiction under Section 153C without handing over assets.
3. Recording of satisfaction under Section 153C.
4. Issuance of notice under Section 153C without proper application of mind.
5. Review of Transfer Pricing Officer (TPO) order under Section 92CA(3).
6. Directions by DRP on Advertising, Marketing, and Promotion (AMP) expenditure.
7. Validity of proceedings under Section 153C due to invalid requisition proceedings.
8. Validity of reference to TPO without incriminating material.
9. Jurisdiction of notices issued under Section 153C.

Issue-wise Detailed Analysis:

1. Limitation of Directions by DRP:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

2. Jurisdiction under Section 153C without Handing Over Assets:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

3. Recording of Satisfaction under Section 153C:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

4. Issuance of Notice under Section 153C without Proper Application of Mind:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

5. Review of TPO Order under Section 92CA(3):
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

6. Directions by DRP on AMP Expenditure:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

7. Validity of Proceedings under Section 153C due to Invalid Requisition Proceedings:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

8. Validity of Reference to TPO without Incriminating Material:
The court did not explicitly address this issue in the final judgment, as the resolution of substantial question of law 'H' rendered other questions academic.

9. Jurisdiction of Notices Issued under Section 153C:
The court primarily addressed this issue. The assessee argued that the Deputy Commissioner of Income Tax (DCIT), Central Circle, Bengaluru, issued notices under Section 153C without proper jurisdiction, as the jurisdiction was conferred only on 20.07.2009, whereas the notices were issued on 11.05.2009. The court cited multiple judgments, including Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd., and Commissioner of Income tax-1, Nagpur vs. Lalitkumar Bardia, to support the principle that any order passed without jurisdiction is invalid. The court concluded that the notices issued by the DCIT were without jurisdiction, rendering all subsequent proceedings void ab initio. Sections 292B and 292BB did not apply as they pertain to procedural defects, not substantive jurisdictional issues. The court also noted that the amendment to Section 124(3)(c) effective from 01.06.2016 was prospective and did not apply to the case.

Judgment:
The court allowed the appeal filed by the assessee, answering substantial question of law 'H' in favor of the assessee and against the revenue. Consequently, the other substantial questions of law were rendered academic. The appeals filed by the revenue were dismissed.