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TMI Blog2016 (10) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax to exercise the powers and perform the function as conferred on or assigned to an Assessing Officer by or under the Act or a notification under section 120 of the Act, he is not competent to act as an Assessing Officer and pass an assessment order. It is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed without authority of law. Quash the assessment order on jurisdictional ground. - ITA NO.4497/Mum/2005, ITA NO.4542/Mum/2005 - - - Dated:- 31-10-2016 - Shri Sanjay Garg, Judicial Member, and Shri Ashwani Taneja, Accountant Member For the Appellant : Shri Dinesh Vyas, (AR) For the Respondent : Shri K. Srisha Murthy (DR) ORDER Per Ashwani Taneja (Accountant Member) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etext or the other and every time different officer would appear in this case and make request for adjournment on the ground that the order authorizing Additional Commissioner of Income Tax to pass the assessment order was not available on record and some more time was required to trace the same. On earlier two dates also, detailed order was passed by the Bench on the order sheet directing the department to argue the matter on the next date and if department still seeks adjournment, then heavy cost would be imposed on the department. But, despite that, department is taking this matter lightly and in a casual manner and is disregarding detailed orders passed by the Tribunal and the AO has also disregarded directions of the Tribunal. He has neither sent the record nor any proper explanation for not sending the records. 3.3. Under these circumstances, we went through the previous orders passed by the bench on the order sheet and accordingly it was felt necessarily that the AO should be summoned personally to explain his conduct and next date was given for hearing. Accordingly, the AO was personally present on the next date. But he again submitted that the order authorizing Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench was constrained to provide last opportunity to the Department. Today, i.e. 19.07.2016 the learned CIT-DR has again moved an application and requested fat two days time with an undertaking that no further adjournment shal l be requested. Since these are old appeals and considering that these appeals are to be disposed of on priority basis, though we are constrained to grant another opportunity to the Department as prayed but it is made clear that no further adjournment shal l be granted to the Department and adverse view wi l l be taken. I t is also made clear that i f the Department still seeks adjournment then the higher authorities of the Department of Revenue will he informed. The learned CIT-DR suggested that these appeal may be taken on 22n d July, 2016. Accordingly the appeals are fixed for hearing on 22.07.2016. 3.5. Accordingly, case was adjourned on 22.07.2016 and on the said date, Ld. CIT-DR again came out with a new plea for seeking adjournment and following order was passed on 22.07.2016: The Ld. CIT(DR), Shri Ajit Srivastava has f iled written submissions for which our attention was invited to page 16, paragraph (c) of the submissions dt 22-07- 2016. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the assessee was with respect to additional ground challenging legal competence of the Additional Commissioner for passing impugned order. The Ld. CIT-DR vehemently opposed the admission of additional grounds at this stage. It is noted that the assessee has filed its petition for admission of additional grounds with following request: Delhi Bench of the Hon'ble Tribunal in the case of Mega Corporation Ltd. vs. Additional CIT (ITA No.102/Del/2014), decided on 22/9/2015 on the facts similar to facts in the aforesaid Appeals of the appellant has held the Assessment Order to be invalid and bad in law. This Order of the Hon'ble Tribunal has just been reported and on the basis thereof, we propose to file the additional grounds of appeal challenging the validity of the Assessment Order passed in our case. Therefore, we hereby file the enclosed additional grounds of appeal in the Appeals referred to above and filed by us with a request that these grounds may please be adjudicated by the Hon'ble Tribunal. The additional grounds raised herein go to the very root of the matter and deal with the very jurisdiction and authority of the Assessing Officer to pass the Order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment passed by the higher authority (viz. Additional Commissioner of Income Tax) is without jurisdiction and needs to be quashed. 5. As held in Mega Corporation Ltd vs. Addl. CIT ITA No. 102/Del/2014. in a case where the proceedings have been initiated by one officer and the assessment order is passed by the another officer, the assessment order is bad in law and illegal and therefore the impugned assessment order in this case should he quashed. 3.9. We have gone through the aforesaid petition and final grounds raised by the assessee. 3.10. The solitary issue raised in these additional grounds is for challenging the jurisdictional validity of the assessment order on the ground that Additional Commissioner of Income Tax, who had passed impugned assessment order, did not have the authority of law to act as an Assessing Officer and to pass the impugned assessment order. 3.11. Admission of Additional Grounds: The assessee has challenged legal competence of the Additional Commissioner of Income tax to act as an Assessing Officer of the assessee and to pass the impugned assessment order by way of additional grounds. The issue raised by the assessee goes to the root of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called upon to do so. No order can be sustained in the eyes of law if its author does not have requisite sanction of the law. If an order does not possess requisite strength in the eyes of law and is void ab-initio, then it will remain so even if there is acquiescence or participation by the assessee in the proceedings carried out by the AO to frame the assessment order. It is well settled law that consent of the assessee cannot confer jurisdiction to an assessing officer who lacked jurisdiction under the law. Similarly, vice versa is also true i.e. absence of consent of the assessee shall not take away jurisdiction from an Assessing Officer who actually possessed a valid jurisdiction in the eyes of law. Thus, legal competence of the officer who passed the assessment order as well as validity of the assessment order must be examined on the basis of factual analysis and provisions of law and not on the basis of conduct of the assessee. This issue is not res-integra. Immediate reference in this regard can be made on the judgment of Hon ble Bombay High Court in the case of Inventors Industrial Corporation Limited Vs. CIT 194 ITR 548 (Bombay). Similar view was taken by Hon ble Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its. It has been argued at length by the Ld. Senior Counsel of the assessee that in this case first notice of assessment proceedings intimating change of jurisdiction was issued by ACIT circle 2(3) Mumbai, dated 5th September 2001 wherein it was claimed that the jurisdiction of assessment was with the said officer. Subsequently, notice u/s 143(2) was issued by the DCIT dated 01.12.2003. Thereafter a questionnaire was issued by the Additional Commissioner of Income Tax Range -2(3), Mumbai dated 10th February 2004 and finally the Additional Commissioner of Income Tax framed the assessment order. He took us through the various provisions of Income Tax Act to impress upon the point that Additional Commissioner of Income Tax was not legally competent to act as Assessing Officer and to pass assessment orders. He referred to provisions of section 2(7A) which provide definition of the term Assessing Officer . He also referred to the provisions of section 2(28C) which defines Joint Commissioner of Income Tax. It was argued that in the definition of Assessing Officer, earlier only Joint Commissioner was provided and Additional Commissioner was inserted subsequently. It was further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order. But, he maintained that even without and such specific order, the Additional Commissioner was legally competent to pass the impugned assessment order. 3.19. In rejoinder, Ld. Senior Counsel of the assessee again took us through all the previous order sheet entries recorded by the bench on earlier dates wherein bench had repeatedly directed and had given opportunity to the department to produce if there was any order authorizing the Additional Commissioner of Income Tax to pass impugned assessment order. It was further submitted by him that assessee is not challenging territorial jurisdiction of the assessee, but the assessee is challenging legal competence of the officer to pass the impugned Assessment order and it can be done at any stage. Under these circumstances, the restriction provided u/s 124 was not applicable. If the legal competence of the officer is challenged, then it is for the Revenue to establish that the officer was legally authorized to pass the assessment order. It was lastly argued that case of the assessee was squarely covered in view of various judgment relied upon by the counsel wherein it has been inter-alia held that if the law mandates a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pparently, Additional Commissioner of Income Tax was not successor of ACIT/DCIT who had issued earlier notice. But, the assessee has contended that there is nothing on record to show as to how the Additional Commissioner of Income Tax became AO of the assessee and passed the impugned assessment order. 3.22. Thus, the first issue raised by the assessee before us is that in this case assessment proceedings were initiated by the Assistant Commissioner of Income Tax but were taken over in the middle of the proceedings by the Additional Commissioner of Income Tax and completed by him without there being any valid transfer of jurisdiction from the Assistant Commissioner of Income Tax to the Additional Commissioner of Income tax, as required under section 127 of the Income Tax Act. In this regard, Ld. CIT-DR was of the view that the Additional Commissioner of Income tax and Assistant Commissioner of Income tax have concurrent jurisdiction over the assessee. In our view, contention of Ld. CIT-DR is not valid as it is not based upon correct appreciation of the law. It appears that Revenue has misunderstood and miss-applied the very concept of concurrent jurisdiction and has ignored the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferring the case from the DCIT to the Addl. CIT, Range 6, and New Delhi. The learned CIT(A) has held that in the cases of transfer of cases to another AO after issue of notice u/s 143(2) of the Act by another AO, the issue involves the interpretation of concurrent jurisdiction which is beyond the scope of this appeal within the restricted directions of the Hon ble ITAT. He has held that, in my considered opinion, since both Addl. CIT Range-6 and DCIT Circle-6(1) works as subordinate officer to the same CIT and the CIT having entire territorial jurisdiction, the passing of assessment order by the Addl. CIT after issue of notice u/s 143(2) by the DCIT Circle 6(1) does not affect the taxability of the appellant or appellant is not adversely affected by the order. The Hon ble Delhi High Court in the above context in the case of Valvoline Cummins Ltd. (supra) has held as under: 28. On the issue of concurrent jurisdiction between the Additional Commissioner and the Deputy Commissioner, learned counsel for the assessee relied upon a decision of the Calcutta High Court in Berger Paints India Ltd. v. Asstt. CIT [2000] 246 ITR 133. The Calcutta High Court had explained the meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r having passed the assessment order, the Additional Commissioner seems to have washed his hands of the matter and left it to the Deputy Commissioner to decide the stay petition filed under section 220(6) of the Act. We are of the opinion that this was not permissible in law. 9.1 We therefore hold that applying the above judicial position that assessment has to be completed by the authority who has initiated the proceedings for making assessment and any other authority can take over the proceedings only after a proper order of transfer u/s 127(1) or 127(2) of the proceedings. The revenue has not brought any order for transfer of the proceedings from DCIT, Circle-6(1), New Delhi to the Additional CIT, Range- 6, New Delhi and therefore it is quite evident that the Additional CIT, Range-6 took over the assessment proceedings without there being an order u/s 127(1). In the case of Prachi Leathers Pvt. Ltd. (supra), it has been held as under: 19. We are further of the opinion that the notice under section 143(2) of the Act having been issued by the Income-tax Officer, Range 6(2), Kanpur on 16.8.2002, it was Income-tax Officer alone who could frame the assessment subject however t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or subsection (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act. 3.25. Subsequently, the word Additional Commissioner was also added in the said definition by Finance Act, 2007, with retrospective effect from day 01.06.1994. Thus, from the above, it is clear that when the impugned assessment order was passed, definition of the word Assessing Officer did not include Additional Commissioner of Income Tax . It is further noted that section 2(28C) defines Joint Commissioner. Section 2(28C) was available on statute since 01.10.1998 and provide as under: 2(28C) Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under sub-section (1) of section 117. On the other hand, section 2(1C) defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in progress, the word Additional Commissioner was not available in the aforesaid section and therefore, it was not possible for the Chief Commissioner or the Commissioner to have authorized an Additional Commissioner for exercising powers and functions of an Assessing Officer for a particular assessee or classes of assessee. Even otherwise, no order could be shown to us, whereby any such authority was given to the Joint Commissioner of the Range. Under these circumstances, we find that the Revenue is not able to show any order or notification in favour of the Additional Commissioner authorizing him for performing the powers and functions of the Assessing Officer of the assessee. 3.27. During the course of hearing, Ld. CIT-DR had drawn our attention upon Board s Notification No.267/2001 dated 17-9-2001, Notification No.228/2001 dated 31.7.2001 and Notification No.335/2001 dated 29-10-2001 with a view to argue that the jurisdiction was assigned to all the officers including Additional Commissioner for exercise of powers as Assessing Officer, and thus the Additional Commissioner of Income Tax who had passed the impugned assessment order had inherent powers under the law to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax referred to in this notification to issue the orders in writing for the exercise of the powers and performance of the functions of the Joint Commissioners of Income tax, who are subordinate to them, in respect of such cases or classes of cases specified in the corresponding entries in column(6) of the Schedule-I and Schedule II of such persons or classes of persons specified in the corresponding entries in column(5) of the said Schedules, in such territorial areas specified in the corresponding entries in column (4) of the said Schedules, and in respect all of incomes or classes of income; (d) authorises the Joint Commissioner of Income Tax referred to in clause (c) of this notification, to issue orders in writing for the exercise of the powers and performance of the functions by the Assessing Officers, who are subordinate to them, in respect of such specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, in respect of which such Joint Commissioners of Income Tax are authorised by the Commissioner of Income Tax under clause (c) of this notification 3.31. Thus, in view of the aforesaid notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1)or subsection (2) of Section 120 or any other provision of this Act, and the 6[Additional Commissioner or]6 7[Additional Director or]7 5 Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act; 5.2 A plain reading of the aforesaid provision would show that it is in two parts. The first part provides that Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or Income Tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under section 120(1) or 120(2) or any other provision of this Act. The second part provides that Assessing Officer means the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under section 120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on or assigned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director and where any order is made under this clause, reference in any other provision of this Act or in any rule made there under to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or a Joint Director by whom, the powers and functions are to be exercised or performed under such order and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply. 5.4 The position which emerges thus is that an Additional Commissioner of Income Tax ipso facto cannot exercise the powers or perform the functions of an Assessing Officer under the Act. He can perform the functions and, exercise the powers of an Assessing Officer only if he is specifically directed under section 120(4)(b) of the Act. 3.33. Similar issue has been decided by the Lucknow bench of ITAT in the case of Prachi Leather Pvt. Ltd Vs. Additional CIT in ITA No. 26(L)/2010 dated 8.12.2010 relying upon its earlier order in ITA No.744/2004/Lucknow for assessment year 2001-02 decided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajan vs. DIT, 257 ITR 123, wherein the Hon'ble High Court, while discussing the powers of Additional Director Investigation, held as under: It is now well-settled that 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. A delegation of power is essentially a legislative function. Such a power of delegation must be provided by the statute. The director himself for certain matters is the delegating authority. He, unless the statute expressly states, cannot sub-delegate his power to any other authority. In any event, if an authority, which had no jurisdiction to issue such an authorization, did so, the same would be liable to be quashed as ultra vires. Thus, unless and until an amendment is carried out, by reason of the redesignation itself, read with the provisions of the General Clauses Act, the Addl. Director does not get any statutory power to issue authorization to issue warrant. Therefore, the Addl. Director (Investigation) cannot be said to have any power to issue any authorization or warrant to Joint Director. Consequently, notification dt. 6th Sep. 1989 is not valid in law to the said extent. 18.2 So f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income tax officer is either available on assessment record, or was produced by the revenue. Thus, in absence of any such order, it can t be established that said assessment order passed was within the jurisdiction of the Addl. Commissioner of Income Tax. Thus, the assessment completed by Additional Commissioner of Income Tax in the case being without jurisdiction, is void ab initio. Accordingly, the ground of appeal of the assessee is allowed. 3.37. In the case of Bindal Apparels Ltd vs. ACIT, Delhi Bench of ITAT took a similar view and held that in view of definition of Assessing Officer contained u/s 2(7A), an Additional Commissioner cannot be an authority to exercise and perform all or any of the powers of the functions of the Assessing Officer to make assessment of Income. The Bench analysed the provisions of Section 2(7A) as it existed prior to amendment made by Finance Act, 2007. 3.38. During the course of hearing, it was also submitted by Ld. CIT-DR to defend the impugned assessment order that in any case the assessment order has been passed by an officer of the rank of Additional Commissioner which is much superior to the rank of Assistant Commissioner and thus no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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