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TMI Blog2024 (4) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) by an AO whose jurisdiction is under challenge who at the threshold itself did not had the jurisdiction over the assessee for issuing notice u/s. 143(2) of the Act. In the present case, both the notice issued u/s. 143(2) and the assessment completed thereafter are by an officer who does not have jurisdiction in terms of CBDT Instruction no. 1/2011, owing to nil income return filed by the assessee. As noted in the case of Kalinga Institute of Industrial Technology [ 2023 (6) TMI 1076 - SC ORDER ] that jurisdiction changed after the returns were filed. Also, it noted that the High court had granted liberty to the concerned authority to issue appropriate notice. It further clarified that the AO is free to complete the assessment if the assessment order is not issued. Accordingly, we allow the additional ground raised by the assessee and hold that the assessment order framed in the case of the assessee is without jurisdiction and is a nullity. The impugned assessment order is hereby quashed since the AO i.e. ACIT, Circle-36, Kolkata framed the said assessment did not have jurisdiction over the assessee as mandated by CBDT Instruction No. 1/2011. Appeal of the assessee is allowed.< ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mi Textiles Mills Ltd. (1967) 66 ITR 710 (SC) whereby even if such additional ground is not taken in appeal memo or before lower authorities , appellate authority has jurisdiction to entertain an alternative plea raised during hearing of the appeal. On confronting the submission to the Ld. Sr. DR, nothing objectionable was submitted on its admission. Accordingly, this additional ground raised by the assessee which is purely legal ground and goes to the root of the matter, is admitted for adjudication. 4. Brief facts of the case are that assessee filed its return of income on 26.09.2014 reporting total income as nil. Case of the assessee was selected for scrutiny assessment through CASS. Notice u/s. 143(2) of the Act dated 31.08.2015 was issued and served on the assessee on 10.09.2015. In the course of assessment, Ld. AO noted that assessee had earned long term capital gain from sale of shares of Ashika Credit Capital Ltd. of Rs. 29,73,500/- for sale of Rs. 42,27,500/- which has been claimed as exempt u/s. 10(38) of the Act. Several other disallowance/additions were made towards bogus interest u/s. 69C, interest expenditure attributable to negative capital, u/s. 14A read with Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. For this, he placed reliance on the decision of Hon'ble Supreme Court in the case of ACIT Vs. Hotel Bluemoon 321 ITR 362 (SC). In the present case of the assessee notice u/s. 143(2) has been issued by Ld. ACIT who is not the AO having competent jurisdiction. Since the notice has been issued by a non-jurisdictional AO i.e. ACIT, the said notice issued by him does not have any legal sanctity. Therefore, consequent to such an invalid notice, assessment framed thereafter by Ld. ACIT is also bad in law. 7. Per contra, Ld. Sr. DR could not rebut the aforesaid legal proposition based on aforesaid factual aspect put forth by the Ld. Counsel for the assessee. The only assertion made by him was that the higher authority i.e. ACIT had all the concurrent jurisdiction to exercise his powers which the Income Tax Officer has, who is an officer below the rank of ACIT. A written submission by the Ld. Sr. DR is also placed on record which deals with merit of the case only. 8. We have considered the rival contentions and gone through the records. Before proceeding further, it will be appropriate to refer to section 120 of the Act which, for the sake of ready reference, is reproduced as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. Income Declared (Mofussil areas) Income declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lcs Above Rs. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011." 8.3. A perusal of the above provision of law along with the CBDT Instructions would show, in this case, the competent officer to proceed with the assessment by way of issue of notice u/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of DCIT Vs. Kalinga Institute of Industrial Technology [2023] 151 taxmann.com 434 (SC) to contest that assessee did not raise objection in accordance with sec. 124(3) within 30 days of issuance of service of notice u/s. 143(2) and participated in the assessment proceedings. Therefore, he has no legal ground to challenge the assessment at this stage. 10.1. On the contentions raised by the Ld. Sr. DR on this aspect, we refer to section 124 of the Act which is extracted as under: "Jurisdiction of Assessing Officers.-- 124. (1) Where by virtue of any direction or order issued under sub-section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction-- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. (2) Where a question arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120." 11. From sub-section (1) of the aforesaid section, it is important to note that AO has to be vested with jurisdiction over any area as prescribed in clause (a) and (b). In sub-section (3), an assessee is not entitled to call for the jurisdiction of AO after the expiry of one month from the date on which it was served with a notice u/s. 143(2). Further, sub-section (5) states that every Assessing Officer shall have all the powers conferred by or under the Act on an Assessing Officer in respect of the income accruing or arising or received within the area over which he has been vested with jurisdiction by virtue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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