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TMI Blog2019 (4) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment completed u/s 143(3) of the Income Tax Act 1961 (the Act ). As common issues are involved, we are proceeding to dispose them off by this consolidated order for the sake of convenience. 2. The assessee has filed an additional ground of appeal on 17.03.2017 stating that (i) the assessment order dated 31.12.2007 passed by the Addl. Commissioner of Income Tax [in short Addl. CIT ] is bad in law, illegal and without jurisdiction and/or in excess of jurisdiction, as he failed to establish that he possessed legal and valid jurisdiction u/s 120(4)(b) of the Act to pass the order, (ii) Addl. CIT can perform functions and, exercise powers of an Assessing Officer only if he is specifically directed u/s 120(4)(b) of the Act and (iii) assessment has to be completed by the authority who has initiated proceedings for making assessment and any other authority can take over proceedings only after a proper order of transfer u/s 127(1) or 127(2) of proceedings. In this regard, the Ld. counsel of the assessee relied upon the order of the Co-ordinate Bench on similar facts and filed a copy of those orders. The Ld. counsel submits that the additional ground raised herein go to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat as per section 2(28C), the JCIT would also include Addl. CIT since Addl. CIT is an income tax authority u/s 117(1) of the Act. The Ld. DR further submits that the CBDT vide notification No. 267 dated 17.09.2001, issued u/s 120(4)(b) has conferred power upon Addl. CIT to act as an Assessing Officer . In this regard, the Ld. DR drew our attention to the CBDT Notification dated 17.01.2009. Also relying upon the Notification dated 01.08.2001, vide letter No. MIC/HQ-1/Jurisdiction/2001-02, it is submitted that the CIT in exercise of power conferred by the Board u/s 120(1) and 120 (2) of the Act vide Notification No. 732 (E) dated 31.07.2001 has directed the Additional/Joint CIT to exercise powers and perform functions of the Assessing Officer in respect of certain classes of person of a certain territorial area. Thus the Ld. DR submits that the Addl. CIT has validly exercised power of the Assessing Officer in initiating and completing the assessment proceedings in respect of the assessee. 5. We have heard the rival submissions and perused the relevant materials on record. We find that similar issue arose before the Co-ordinate Bench as mentioned by the Ld. counsel. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed 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 19 4 ITR 548 (Bombay). Similar view was taken by Hon ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 (Guj) . Recently Hon ble Delhi High Court handled a similar situation in the case of Valvoline Cummins Ltd 307 ITR 103 (Del) wherein challenge was made to the jurisdiction of Additional Commissioner of Income Tax who had passed the assessment order. It was contended on behalf of the Revenue that challenge of jurisdiction must be made within the stipulated time during the course of assessment proceedings in view of restrictions imposed by the provisions contained in section 124 of the Act. Hon ble Delhi High Court in the aforesaid case held as under:- This is well settled that mere acquiescence in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (by way of Advance tax, Regular tax or S.A. tax), Interest tax, Wcalth tax and payment u/s. 115-0 of the I.T. Act are also to be made w.e.f. 1.8.2001 to the credit of the ACTT Circle 2(3), Mumbai. 2. Similarly, jurisdiction over the Managing Director, Director, Manager, and Secretary of your also vests with the undersigned vide Notifications quoted supra. Consequently, all the ; of die above persons and follow up correspondences on that account are to be made with the All payments towards Income-tax and Wealth-tax w.e.f 01.08.2001 of the above persons are also to be made to the credit of ACIT Cir.2(3) Mumbai. This may be carefully noted. Your sFaithfully Sd/- (Jagadish Prasad Jangid) ACIT Cir. 2(3), Mumbai. 3.21 Thus, from the above, it is clear that initially the jurisdiction was with ACIT Cir. 2(3), Mumbai, for passing the assessment order. Subsequently, a notice u/s 143(2) was issued by DCIT Cir. 2(3) dated 1.12.2003 who was indeed successor to the first officer. Subsequently, assessee received a dated 10 th December, 2004 from the Additional CIT range 2(3) Mumbai. Apparently, Commissioner of Income Tax was not successor of ACIT/DCIT who had issued earlier notice. But, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by the Revenue Officers and their powers for transfer of cases from one Assessing Officer to the other. Section 127(1) inter-alia provides and mandates that the Commissioner may after recording his reasons for doing so, transfer any case from one Assessing Officer subordinate to him to any other Assessing Officer (whether with or without concurrent jurisdiction) also subordinate to him. Thus, mandatory requirement of the law in this regard is that an order In writing must be passed by the jurisdictional Commissioner of Income tax for effecting transfer of assessment proceedings from one Assessing Officer to the other. Law in this regard was explained in detail by Hon'ble Delhi High Court in the case of Vaholines Cummins Ltd. (supra). Similar view was taken by the Delhi bench of the Tribunal in the case of Mega Corpn. Ltd. (supra) following the aforesaid judgment of the Delhi High Court. Relevant part of order is reproduced below for the sake of ready reference:- ...... 9. Another contention specifically raised is that there is no transfer order u/s 127 of the Act from transferring the case from the DCIT to the Addl. CIT, Range 6, and New Delhi. The learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here both the authorities concurrently exercise power. One example that immediately comes to the mind is that of grant of anticipatory bail. Both the Sessions Judge and the High Court have concurrent power. It is not as if a part of that power can be exercised by the High Court and the balance power can be exercised by the Sessions Judge. If the High Court is seized of an application for anticipatory bail it must deal with it and similarly if the Sessions Judge is seized of an anticipatory bail, he must deal with it. There can be no joint exercise of power both by the High Court as well as by the Sessions Judge in respect of the same application for anticipatory bail. 30. In the facts of the present case, since the Additional Commissioner had exercised the power of an Assessing Officer, he was required to continue to exercise that power till his jurisdiction in the matter was over. His jurisdiction in the matter was not over merely on the passing of the assessment order but it continued in terms of section 220(6) of the Act in dealing with the petition for stay. What has happened in the present case is that after having passed the assessment order, the Additional Commissioner seems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is quashed as such, hi result, ground Nos. 1 and 2 are allowed. 3.23. In the case before us, the facts are identical. It is noted that Ld. CIT-DR as well as the Assessing Officer (present incumbent) who was personally present during the course of hearing before us, jointly stated that no such order (as prescribed under section 127(1) required to be passed by the jurisdictional Commissioner of Income tax) is available in the records. Thus, it is clear that there was no valid transfer of jurisdiction to the Additional Commissioner of Income Tax who had passed the impugned assessment order. Thus, impugned assessment order had been passed without assuming jurisdiction as per law. 3.24. Next issue raised by the Ld. Senior Counsel was that the Additional Commissioner who had passed the impugned assessment order was not authorized to act as assessing officer of the assessee and pass the impugned assessment order. We analyzed the provisions of law in this regard and find that section 2(7A) defines the term of Assessing Officer as under: Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of 'Assessing Officer' as contained in section 2(7A). Thus, it is clear as per the plain reading of the statute that when the assessment order was passed, the 'Additional Commissioner 1 was not authorized to act as Assessing Officer. 3.26. In addition to the above, it further noted by us that only that 'Joint Commissioner 1 was authorized to act as an Assessing Officer who was directed under clause (6) of sub- section 4 of section 120 to exercise or perform all or any of the powers and functions of an Assessing Officer as defined u/s 2(7A) of the Act-Now, if we refer to section 120. its perusal makes further clear that only CBDT can empower the Chief Commissioners or Commissioners for issuance of orders to the effect that powers and functions of an Assessing Officer for a particular assessee or classes of assessee shall be exercised by a 'Joint Commissioner'. Despite numerous directions, the Revenue was not able to bring before us any order wherein any specific authority was given by any Chief Commissioner or Commissioner authorizing the impugned Additional Commissioner to pass impugned assessment order. We find force in the argument of Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31.07.2001, S.O.880(E) dated 14.09.2001, S.O.881(E) dated 14.09.2001, S.O. 882(E) dated 14.09.2001 and S.O. 883(E) dated 14.09.2001 published in the Gazette of India, Part II, Section 3, subsection (if), Extraordinary. (Emphasis supplied) 3.29. Perusal of the aforesaid notification reveals that only those Joint Commissioners shall exercise the powers and functions of the Assessing Officers who have been authorized by the concerned Commissioners of Income tax in pursuance to the relevant notification conferring requisite powers to the concerned Commissioners. 3.30. Similarly notification No.228/2001, supra authorize the Commissioners of Income tax to issue orders for authorizing in turn the Joint Commissioner of Income tax who are subordinate to them for exercising of the powers and performance of the functions of the Assessing Officers. It also, inter alia, authorizes the Joint Commissioners who were so authorized by the Commissioners, to issue orders in writing to the Officers who are subordinate to them for the exercise of the powers and performance of the functions of the Assessing Officers for specified assessee or class of assessee. Relevant part of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The bench discussed entire law available on this issue and helcr that an 'Additional Commissioner of Income Tax' cannot ipso facto exercise the powers or perform the function 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)(6) of the Act to do so. Relevant part of the observations of the bench is reproduced hereunder for the sake of ready reference:- '........... We have considered the arguments advanced by the parties and perused the order of the learned CIT(A), comments of the Assessing Officer and material placed on record. The controversy raised in this appeal relates to the validity of order of assessment dated 29.12.2008 passed by Additional CIT, Range 6, New Delhi. According to the appellant/assessee, it is incumbent under the scheme of statute to vest the Additional CIT u/s 120(4)(6) of the Act to exercise or perform all or any of the powers and functions of Assessing Officer under the Act. 5.1 To examine the above contention, we consider it appropriate to firstly extract section 2(7A) of the Act which reads as under: 2(7A) Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall 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, references 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. 5.3 It will be seen that the said provision provides that Board may by general or special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on or as the case may be, assigned to, Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exercise the powers and perform the functions of an Assessing Officer if he is empowered by the CBDT as required under clause (6) of sub-section (4) of section 120....... 18.1 So far as the issue before us in the present appeal is concerned, it is now clear from the provisions as discussed hereinbefore that the Additional CIT could act and exercise the powers of an AO only in consequence upon delegation of such authority by the Board, Chief Commissioner of Income-tax or Commissioner of Income-tax as envisaged in the provisions of section 120(4)(6) of the Act. However, the power given to the Chief Commissioner of Income-tax or Commissioner of Income-tax being in consequence upon the delegation of power duly authorized by the Legislature, the Chief Commissioner of Income-tax or Commissioner of Income-tax were duty bound, if at all they were to exercise such delegated power to act according to the provisions of law; meaning thereby that it was incumbent upon the Chief Commissioner of Income-tax or the Commissioner of Income-tax, as the case maybe, if at all they wanted to authorize the Additional CIT to act and perform the functions of an AO, to pass a proper order delegating such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise 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. 3.35. Similar view has been taken by Lucknow Bench of IT AT in the case of Microfin Security (P.) Ltd. v. Addl. CIT [2005] 3 SOT 302 wherein it was held that in absence of any allocation being made in favour of Additional Commissioner to make an assessment, he cannot assume for himself such an authority so as to pass an assessment order. 3.36. Similar view has been taken recently in another judgment by the Delhi bench of the IT AT in the case of Harvinder Singh Jaggi v. Asstt. CIT [2016] 157 ITD 869/67 taxmann.com 109. Relevant part of observations of the Bench is reproduced below:- ....... As regard the contention of the assessee that no order under section 127 was passed by the Commissioner of Income-tax, the revenue has submitted that the Addl. Commissioner of Income Tax was provided concurrent jurisdiction over the cases through the order of the Commissioner of Income tax and, therefore, no separate order under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite sanction prescribed u/s 151 for reopening of an assessment was required to be obtained by the AO from Joint Commissioner of Income tax whereas the same was granted by Commissioner of Income tax and therefore the same was nullity in the eyes of law. Revenue took a stand that sanction was granted by an officer superior in rank and therefore, no prejudice was caused to the assessee. But Hon'ble High Court did not agree with the contention of the Revenue and observed that:- ........The expression Joint Commissioner is defined in section 2(28C) to mean a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income-tax under section 117(1). Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. The expression has a distinct meaning by virtue of the definition in section 2(28C). The Commissioner of Income tax is not a Joint Commissioner within the meaning of section 2(28C). There is no statutory provision under which power to be exercised by an officer can be~ exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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