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TMI Blog2023 (7) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been no case for the assessee to raise the issue of wrong assumption of jurisdiction. When the notice issued u/s. 143(2) of the Act is itself invalid owing to the wrong assumption of jurisdiction, the assessment framed thereafter has no legs to stand. Respectfully following the observations of the coordinate bench of the Tribunal in the case reproduced hereinabove, we set aside the order of the ld. CIT(A) and strike down the assessment order dated 27.03.2014. The legal ground raised by the assessee is allowed. - SHRI RAVISH SOOD, JM AND SHRI ARUN KHODPIA, AM For the Assessee : Shri Sunil Kumar Agrawal, CA For the Revenue : Shri N.C.Roy, Sr. DR ORDER PER ARUN KHODPIA, AM: The assessee has filed this appeal against the order passed by the CIT(A)-I, Raipur, dated 01.02.2016 for the assessment year 2011-2012, on the following ground :- The Assessee / Appellant has submitted all required information documents to substantiate the genuineness of operational expenses but the Assessing Officer was merely not satisfied for want of paper supporting and made additions. Subsequently, the First Appellate Authority has not gone through the supporting information / documents thoroughly so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of Hon ble Supreme Court in the case of NTPC Ltd (1998) (SC); and submitted that the above additional ground of appeal may kindly be allowed and the appeal may kindly be decided on the legal ground. 4. Ld. Sr.DR objected to the admissibility of additional ground raised by the assessee before the Tribunal as the same were never raised before the revenue authorities. 5. In view of the judgment of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., reported in (1998) 229 ITR 383 (SC), it is open to the assessee to raise the points of law even before the Tribunal which was not raised earlier. Therefore, the arguments advanced by the ld. Sr. DR objecting to the additional ground of assessee, is not accepted and the legal grounds raised in the form of additional ground is admitted and taken on record. 6. Brief facts of the case are that the assessee is engaged in the business of cement transportation filed its return of income on 26/09/2011 electronically declaring total income of Rs. 23,44,310/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 23.09.2013. During the course of assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on 23.09.2013 by the ITO-1(1), Raipur, who was not having pecuniary jurisdiction over the assessee. However, in absence of valid notice u/s. 143(2) of the Act, framing of assessment u/s. 143(3) of the Act is invalid, bad in law, non-est and is liable to be quashed. Ld. AR drew our attention to the CBDT Instruction No. 1/2011, dated 31.01.2011 placing the argument that the instruction of CBDT was binding on the revenue authorities u/s. 119 of the Act and in contravention thereto issuing notice u/s. 143(2) of the Act by the AO, who had not possessed valid jurisdiction over the assessee, is liable to be quashed. Instruction No. 1/2011, dated 31.01.2011 issued by the CBDT reads as under :- INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], ________________________________________________ SECTION 119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny CIT charge leads to a substantially uneven distribution of workload between DCsIT/ACsIT am ITOs, the CCIT/DGIT may adjust the above limits by an amount of upto Rs. 5 lakhs to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. 3. It is further clarified that the mofussil areas referred to in the Instruction No. 1/2011 means all stations other than the metro cities. of Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Ahmedabad, Pune and Bangalore. 11. Based on the aforesaid instruction, the office of the Chief Commissioner Income Tax, Raipur issued a Notification dated 30.05.2011 to be followed by the revenue authorities for assigning case to ITO land ACITs/DCITs with monetary limit as prescribed therein, copy of the same is reproduced hereunder :- 12. In view of the above CBDT Instructions and the Notification issued by the CCIT, Raipur, ld. AR submitted that the assessment framed by the AO on the basis of invalid notice issued u/s. 143(2) of the Act, deserves to be quashed. To support his contentions, ld. AR relied on the following case laws :- i) Indian Oil Corporation Ltd., [21004] 267 ITR 272 (SC); ii) Amal Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the I.T.O.-l(l), Raipur which was duly served upon the assessee on 26-09-2013. Subsequently, notice u/s 142(1) dated 11-11-2013 was issued by the D.C.I.T.-l(l), Raipur and assessment order was passed on 27-03-2014. Dispute over jurisdiction to assess the case (3). The jurisdiction of the Deputy Commissioner of Income Tax, Circle-1(1), Raipur, the territorial areas assigned are ITO Ward-1(1) to (4) and the range code is 1. Here, the territorial jurisdiction of ITO Ward-1(1), DCIT-Cir-l(l) and the range code for his jurisdiction is 1. Therefore, the assessment is within the same Ward/Circle and there is no prejudice caused to the petitioner. (4). In the judgment of Hon'ble Madras HC vide W.P. Nos. 5792 5793 of 2013 dtd. 27.11.2014 it was pronounced that The circular dated 31.01.2011, has been issued by the Board in exercise of its power under Section 119 of the Act, which gives instruction regarding income limits for assigning cases to the Deputy Commissioners/Assistant Commissioners/ITOs. It was pointed out by the Board that references have been received from large number of the tax payers especially from mofussil areas that the existing monetary limits for assigning cases to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een an order issued by the Board, an instruction given by the Board and a direction issued by the Board to the Income Tax Authorities and none of this can interfere with the right of the Income Tax Authority, while making an assessment proceedings or by the Commissioner (Appeals) while exercising appellate functions. Admittedly, the proceedings dated 31.01.2011/08.04.2011 are instructions and are not orders or circulars. An instruction issued, cannot obliterate or deny the powers of the Director General or the Chief Commissioner or the Commissioner to exercise power of transfer under Section 127 of the Act. (7) The tax information network of the Income Tax Department, has published a tabulated statement mentioning the Ward/Circle/Range/Commissioner, description, area code, AO type, Range Code and AO number. (8) Further, it is to be seen as to whether the instruction issued with regard to the pecuniary jurisdiction issued by the Board from time to time is as sacrosanct and cannot be amended. (9) It is seen that after the issuance of the instruction dated 31.01.2011, a subsequent instruction was given on 08.04.2011. The said instruction modifies the earlier instruction dated 31.01.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional ground under rule 29 is added by the assessee for adjudication on 20-7-2022, Paper book withdrawn on 04-11-2022 and submitted fresh paper book. Additional ground-1 was added on 04-11-2022 challenging the jurisdiction of the assessee and was again revised on 04-11-2022 adding ground no 02 to adjudicate adhoc addition made in the case. 4. Evidences for payment of tax is not on records. 5. The revenue involved is Rs. 16,42,450/- is lower than prescribed limit specified in CBDT Circular no 17/2019 dated 08-08-2019 and does not falls under exceptional cases vide CBDT circular no 03/2018 dated 11-07-2018. 6. Direction to produce case records was given to the AO on 23-07-2022, clarification sought on PAN history was furnished on 01-08-2022, clarification sought on issuance of notice under section 143(2) was furnished on 15-11-2022 and revised clarification was also furnished on 15-11-2022, personal attendance of the AO was directed on 21-11-2022. 7. The assessee filed affidavit on 26-11-2022 under rule 10 to clarify filing of ITR and search proceedings. 8. Brief of A0,s observation:- Order under section 143(3) of the Act was passed and income was assessed at Rs. 56,27,200/- the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 124(3) of the Act within the stipulated time period of one month from the date of which the notice u/s. 143(2) of the Act was served upon the assessee, as opposed by the ld.Sr. DR, we take guidance from the observation of the coordinate bench of this Tribunal in the case of Sudhir Kumar Agrawal, in ITA No. 158/RPR/2017, order dated 17.10.2022/[2023] 221 TTJ 687 (Raipur-Trib), wherein it has been observed in para 14 as under :- 14. We shall now deal with the objection raised by the Ld. DR that as the assessee had not called in question the jurisdiction of the Income-Tax Officer, Ward-2(2), Bhilai within the stipulated time period of one month Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 from the date on which he was served with the notice(s) u/ss.143(2) and 142(1), dated 03.03.2015, therefore, it was not permissible for him to challenge the same for the first time in the course of the proceeding before the tribunal. Having given a thoughtful consideration to the aforesaid claim of the ld. DR we are unable to persuade ourselves to subscribe to the same. On a careful perusal of Section 124 of the Act, it transpires that the same deals with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO, Ward-4 without issuing notice u/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant point of time, the Hon'ble High Court quashed the assessment. Apart from that, the aforesaid view is also supported by the order of the ITAT, Kolkata 'B' Bench in the case Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee's objection to the validity of the jurisdiction assumed by the Income-Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No. 1/2011, dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and 06/2011, dated 08.04.2011, therefore, the instruction assumed was invalid in terms of non-following the binding instructions issued by the CBDT and, therefore, the order remained on the basis of such reopening was also void ab initio and needs to be struck down. In this regard, reliance can be placed on the decision of Hon ble Supreme Court in the case of Indian Oil Corporation Ltd., reported in (2004) 267 ITR 272 (SC), wherein the Hon ble Supreme Court, considering various earlier judgments, has held that the circulars issued u/s. 119 of the IT Act are binding on the revenue. The relevant observations of the Hon ble Supreme Court are as under :- 7. This Court has, in a series of decisions, held that circulars issued under Section 119 of the Income Tax Act, 1961 and 37B of Central Excise Act are binding on the Revenue. (See Navnit Lal C Jhaveri vs. K.K. Sen (1965) 56 ITR 198 (SC); Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 (1971) 82 ITR 913 (SC); K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : 1981 (4) SCC 17i Union of India vs. Azadi Bachao Andolan (2003) 184 CTR (SC) 450 : 2003 (8) SCALE 287, 308 Collector of Central Excise vs. Usha Martin Industries 1994 (94) ELT : 1997 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars. 19. In the case of Khirod Kumar Pattnaik, the Cuttack Bench of the Tribunal in ITA No. 319/CTK/2019, vide order dated 10.12.2020, has held that, it was the duty of the revenue authorities to give effect to the circulars/instructions issued by the CBDT which are binding on them. If the CBDT Instruction No. 1/2011, dated 31.01.2011 No. 6/2011, dated 08.04.2011 is not accepted by the revenue authorities, as has been occurred in the present case in hand, anyone can frame the assessment/reassessment even having no jurisdiction to enter into the same. The power conferred upon the CBDT to issue instructions and directions by section 119 of the Act is for proper working of the Act, which should be followed by the revenue authorities in true spirit. Accordingly, the Tribunal quashed the reassessment framed by the ITO/AO, who was having no ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations of which have been reproduced in the foregoing paragraphs, which has already been followed in the case of Amarjeet Singh Bhatia (supra), considering the observations made in the case of Durga Manikanta Traders (supra), held that the assessment framed by the AO on the basis of notice issued u/s. 143(2) of the Act by the non-jurisdictional officer is void ab initio. In the present case, the ITO-1(1), Raipur having no jurisdiction over the assessee issued notice u/s. 143(2) of the Act, overlooking the binding Instructions of the CBDT as well as the Notification issued by the CCIT, Raipur, which is not sustainable in the eyes of law. Had the notice u/s. 143(2) of the Act been issued by the jurisdictional AO, i.e. DCIT-1(1), who was having pecuniary jurisdiction over the assessee, there would have been no case for the assessee to raise the issue of wrong assumption of jurisdiction. When the notice issued u/s. 143(2) of the Act is itself invalid owing to the wrong assumption of jurisdiction, the assessment framed thereafter has no legs to stand. Respectfully following the observations of the coordinate bench of the Tribunal in the case reproduced hereinabove, we set aside the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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