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TMI Blog2006 (3) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction of such IT authorities is regulated by Chapter XIII-B. The machinery provision regulating procedure for assessment in various sections like, 142, 143, 144 or 148 has used the expression AO to carry out these functions . For the purpose of this Act, an AO is not a class of IT authorities. This is only a designation given to certain IT authorities to exercise or perform all or any of the powers and functions conferred on or assigned to them. There been the intention to include Addl. CIT to be an AO or that the powers of AO were to be delegated to the Addl. CIT, then, his name would have been included in s. 120(4)(b) itself or at least in the definition of AO contained under sub-s. (7A) of the s. 2 of the Act. If the Parliament in its wisdom did not include Addl. CIT in the definition of AO such authority would be barred to act as an AO even if the powers arepowers ed upon him, when the purpose can be achieved by delegation of authority to Jt. CIT or Jt. Director, and it shall not be mandatory that one should mechanically attribute the meaning assigned to Jt. CIT under sub-s. (28C) of s. 2 of the Act and import the same in the definition clause of AO given under sub-s. (7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law, in not accepting the contention of the assessee that the enhancement of sales by Addl. CIT to Rs. 6 crores as against Rs. 5,48,90,910 as per books of account maintained in the normal course of business by the assessee is arbitrary, without even any basis and without any adverse material or evidence. 8. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in not accepting the contention of the assessee that the estimation of GP rate by the AO at 21 per cent is arbitrary, without even basis and without any material and evidence. 9. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the evidence and explanation submitted by the assessee in support of the GP rate declared by it as per books of account. 9. (ii) On the facts and circumstances of the case, the learned CIT(A) was not justified in making a presumption that the assessee has earned income outside the books of account after the date of the survey despite the fact that there was no material and basis for making such presumption. 10. On the facts and circumstances of the case, the learned CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and furnish evidence in support of the income returned. The assessment has been completed by Addl. CIT, Range-20 on 28th March, 2002 at an income of Rs. 49,98,710 by rejecting the accounts. The sales have been estimated at Rs. 6 crores as against the declared sales of Rs. 5,48,90,910 by applying a GP rate of 2 per cent. The profits thus have been estimated at Rs. 46,95,347. This included the amount of excess stock found during survey on 21st Jan., 1997 and surrendered by the assessee. Telescoping for Rs. 25,00,000 offered for taxation on account of investment in building and included in the returned income also stood allowed. 3. Before the learned CIT(A), the assessee challenged the validity of assessment made by Addl. CIT, Range-20, as he could not be the AO within the meaning of s. 2(7A) of the Act nor there was any order directing transfer of jurisdiction of his case nor any directions were issued by the learned CIT, Delhi, within the powers vested in him under s. 120(4)(b) of the Act to perform functions of the AO in his case. The learned CIT(A), however, rejected the contention of the appellant and held that the AO had correctly been assigned the jurisdiction to assess this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific order has to be passed in writing by the CIT transferring the jurisdiction from the existing AO to the Jt. CIT. This issue was taken up in the course of hearing before the CIT(A). The Addl. CIT in his remand report has enclosed letter dt. 14th Feb., 2002 whereby, as per the Addl. CIT the jurisdiction in this case was transferred to him. However, the said letter nowhere transfers the jurisdiction of the appellant's case to the Addl. CIT. The said letter reads as under: I am forwarding herewith the copy of Board's letter F. No. 187/2002-ITA, dt. 7th Feb., 2002. The Board has clarified that the Board's notification dt. 17th Sept., 2001 will supercede all the earlier guidelines issued by Board. The Addl. CIT/Jt. CIT is entitled to exercise all the powers and functions of an AO working under him. He can also finalise the assessment under his signatures. It is, therefore, clarified that the Addl. CIT/Jt. CIT may pick up any such case wherein he feels that the assessment order has to be passed under their signature. The report of cases taken by Jt. CIT for making assessments directly under his signature may be intimated to the undersigned. 7. On going through the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgment of the Delhi Bench in the case of Mitsubishi Corporation vs. Dy. CIT (2004) 86 TTJ (Del) 139 (2003) 85 ITD 414 (Del) where the Delhi Tribunal has held that Jt. CIT can exercise the powers and functions of AO if he has been specifically directed under s. 120(4)(b) of the Act. In the absence of any specific order, the Jt. CIT shall not be entitled to perform the powers and functions of the AO. This was the contention of the Revenue in the abovesaid case which was upheld by the Delhi Bench. 10. The learned Departmental Representative in his reply submitted that as per the scheme of the Act, the Addl. CIT can be an AO. The Department has restructured its whole set up in the year 2001 and after restructuring the Addl. CIT can be an AO and there is no need for issuing any further orders. As per the learned Departmental Representative this is a question of jurisdiction and as such provision of s. 124(3) shall be applicable. As regards the issue that the Addl. CIT cannot be an AO within the meaning of s. 2(7A) of the Act, the learned Departmental Representative made reference to s. 2(28C) of the Act which defines Jt. CIT to be a Jt. CIT or an Addl. CIT under s. 117(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly in the definition of AO. It is only by the definition of Jt. CIT and that too when directed under cl. (b) of sub-s. (4) of s. 120, he can be defined as an AO. In the absence of any such directions, it is thus unthinkable for him to be an AO. He is lawfully seized with the jurisdiction of an AO only when such jurisdiction is conferred upon him by virtue of directions given by the Director General or Chief CIT or CIT in the manner contained under cl. (b) of sub-s. (4) of s. 120 of the Act and it is by no other manner or means he is authorized to exercise the powers and functions of the AO. We, therefore, reproduce the relevant provisions of sub-s. (4) of s. 120 of the Act. Sub-s. (4) 'Without prejudice to the provisions of sub-ss. (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein: (a) authorize any Director General or Director to perform such functions of any other IT authority as may be assigned to him by the Board. (b) empower the Director General or Chief CIT or CIT to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the AO b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction dt. 20th Sept., 2001 however, is not found to have been lifted. Let that as it may be, the fact remains that a Jt. CIT shall exercise the powers and functions of the AO only if he is authorized by the CIT. The Board, therefore, did not give any blanket power to the Jt. CITs to pick and choose any case of a person or income for making assessment thereof or to exercise the powers and functions of AO in respect of such person/persons. There is thus no divergence between the aforesaid Board notification and the mandatory provisions contained under cl. (b) of sub-s. (4) of s. 120 of the Act also. We also find that learned CIT (Delhi-V), New Delhi, had written a letter dt. 14th Feb., 2002 to all the Addl. CIT/Jt. CIT under his charge, copy placed at assessee's paper book p. 261. He has forwarded the Board letter dt. 7th Feb., 2002 to all these officers and has clarified that the Addl. CIT/Jt. CIT may pick up any such case wherein he feels that the assessment order has to be passed under their signature. The report of cases taken by Jt. CIT for making assessments directly under his signature may be intimated........ . This clarification given by learned CIT cannot be termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned down the plea of Revenue that in view of definition of Director General or Director given under s. 2(21), the Addl. Director, Jt. Director and Asstt. Director as well will have the powers to issue search warrants. The Court thus stated: When a power is given to do certain thing in a certain manner, the same must be done in that manner alone or not at all. All other proceedings are necessarily forbidden. 15. The learned counsel has sought to place reliance on the decision by Lucknow Bench of the Tribunal in the case of Microfin Securities (P) Ltd. vs. Addl. CIT where it has been held that Addl. CIT as has been referred to in Instruction No. 1/2002, dt. 21st Jan., 2002, is not an authority who can act as an AO within the meaning of s. 2(7A) of the Act. It has further been held that even after such amendment restrictions on Addl. CIT to make assessment as per Instruction dt. 20th Sept., 2001. continues. 16. We have heard the parties at length with reference to the statutory provisions contained under the Act and the precedents cited at Bar. The question which arises for our consideration is as to whether the Addl. CIT has the requisite jurisdiction to act as an AO to make asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority alone and not by any other person by extending the meaning of such authority. 19. The IT authorities can be found defined under s. 116 of the Act and such authorities have been assigned different powers and functions under the Act which have to be exercised or performed by those authorities in the manner provided by the statute and by no other manner. It is so because when a power is given to do a certain thing in a certain manner, the same must be done in that manner or not at all. All other proceedings are necessarily forbidden. A useful reference for this may be had from the judgments in the case of Nazir Ahmad vs. The King Emperor AIR 1936 PC 253 : (1936) 63 IA 372, Viteralli vs. Saton 3 Law Ed. 1012 and Ramana Dayaram Shetty vs. International Airport Authority of India (1979) SCC 489 : AIR 1979 SC 1628. 20. Furthermore, s. 2 of the Act which defines expression AO opens with the expression In this Act, unless the context otherwise requires . While interpreting a definition, it therefore, has to be borne in mind that the interpretation placed on it should not only be not repugnant to the context, it should also be such as would add the achievement of the purpose which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative particularly when the Jt. CIT or the Jt. Director was included as an IT authority w.e.f. 1st Oct., 1998, under s. 116 of the Act when the Addl. CIT was already there in the definition of IT authorities w.e.f. 1st June, 1994. It follows therefrom that had there been the intention to include Addl. CIT to be an AO or that the powers of AO were to be delegated to the Addl. CIT, then, his name would have been included in s. 120(4)(b) itself or at least in the definition of AO contained under sub-s. (7A) of the s. 2 of the Act. If the Parliament in its wisdom did not include Addl. CIT in the definition of AO such authority would be barred to act as an AO even if the powers are delegated upon him, when the purpose can be achieved by delegation of authority to Jt. CIT or Jt. Director, and it shall not be mandatory that one should mechanically attribute the meaning assigned to Jt. CIT under sub-s. (28C) of s. 2 of the Act and import the same in the definition clause of AO given under sub-s. (7A) of s. 2 of the Act. 22. In the case of Dr. Nalini Mahajan vs. Director of IT (Inv.), the Hon'ble Delhi High Court was seized with a similar question as to whether the Addl. Director (Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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