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2021 (11) TMI 772 - AT - Income TaxValidity of notice u/s 143(2) - Jurisdiction of ACIT to issue notice - Proof of ay valid transfer by the competent authority from Income Tax Officer to ACIT - HELD THAT - Jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal 2021 (2) TMI 181 - ITAT KOLKATA , wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. - Decided in favour of assessee. assessment order passed u/s 143(3) of the Act by the ACIT being without jurisdiction is bad in law and the same is accordingly set aside. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of the Assistant Commissioner of Income Tax (ACIT) to issue notice under Section 143(2) and frame assessment under Section 143(3) of the Income Tax Act. 2. Disallowance of ?11,57,572 under Section 2(24)(x) read with Section 36(1)(va) of the Income Tax Act. 3. Interpretation of Section 43B of the Income Tax Act. 4. Retrospective application of amendments made by Finance Act, 2021. 5. Legitimacy of findings under Section 36(1)(va) of the Income Tax Act. Detailed Analysis: 1. Jurisdiction of the ACIT: The primary issue raised by the assessee was the jurisdiction of the ACIT to frame the assessment order under Section 143(3) of the Income Tax Act. The assessee contended that the returned income was less than ?30 lakhs, and as per CBDT instructions, the jurisdiction to frame the assessment lies with the Income Tax Officer (ITO) and not the ACIT. The Tribunal referred to Section 120 of the Act, which allows the Board to fix jurisdiction based on territorial area, persons, classes of persons, incomes, or classes of income. The Tribunal also referred to CBDT Instruction No.1/2011, which specifies that for corporate returns in metro cities, the jurisdiction of ITOs is up to ?30 lakhs and above ?30 lakhs for ACITs/DCITs. The Tribunal noted that the assessment was framed by the ACIT without any transfer order from the competent authority as required under Section 127 of the Act. The notice under Section 143(2) issued by the ACIT was beyond his jurisdiction and therefore void ab initio. The Tribunal cited various decisions, including ITA No.2517/Kol/2019 and Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, which supported the view that assessments framed by officers without pecuniary jurisdiction are bad in law. Consequently, the Tribunal held that the assessment framed by the ACIT was invalid due to lack of jurisdiction. 2. Disallowance under Section 2(24)(x) read with Section 36(1)(va): The assessee challenged the disallowance of ?11,57,572 made by the ACIT under Section 2(24)(x) read with Section 36(1)(va) of the Income Tax Act. The Tribunal did not delve into the merits of this issue as it had already set aside the assessment order on jurisdictional grounds. 3. Interpretation of Section 43B: The assessee argued that the CIT(A) erred in upholding the disallowance under Section 43B of the Income Tax Act. However, since the Tribunal annulled the assessment order on jurisdictional grounds, this issue was not specifically addressed in the judgment. 4. Retrospective application of amendments by Finance Act, 2021: The assessee contended that the CIT(A) erroneously applied the amendments made by the Finance Act, 2021 retrospectively. Again, this issue was not specifically addressed by the Tribunal as the assessment order was already annulled. 5. Legitimacy of findings under Section 36(1)(va): The assessee argued that the findings under Section 36(1)(va) of the Income Tax Act were illegal and unjustified. As the Tribunal had already set aside the assessment order on jurisdictional grounds, this issue was not specifically addressed. Conclusion: The Tribunal concluded that the assessment order passed by the ACIT was invalid due to lack of jurisdiction, as the returned income of the assessee was less than ?30 lakhs, and the jurisdiction to frame the assessment lay with the ITO. Consequently, the appeal of the assessee was allowed, and the assessment order was set aside. The other issues raised by the assessee were not specifically addressed as the primary issue of jurisdiction was decided in favor of the assessee.
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