9911796707
TMI Blog2025 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain of Rs. 1,29,82,516/- claiming exemption u/s 10(38) of the Act. The Assessing Officer reproduced the computation as under :- Sale consideration of 50000 shares of Turbotech Engineering Ltd. 1,31,00,220/- Less : Cost of acquisition 1,00,000/- Less : Expenses on Transfer 17,704/- Long term capital gain exempt u/s 10(38) 1,29,82,516/- 4. The Assessing Officer noticed that the assessee has transacted with the scrip of Turbotech Engineering Ltd. (TTE) and observed that the relevant scrip is one of the various scrips which were involved in generation of fictitious long term capital gain. Accordingly, a show-cause notice dated 13.12.2016 was issued to the assessee and in the notice, the Assessing Officer has basically relied on the enquiry/investigations conducted by the Investigation Wing, Kolkata and based on the search/survey operation conducted in various entry operators and based on the statements recorded from various entry operators, he observed that from the investigation, it was emerged that some brokers have accepted that they have worked as entry operators for providing accommodation entry for long term capital gain in lieu of commission. It was also found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer discussed various modus operandi relating to generating long term capital gain in a penny stock transaction and he discussed the same in length in his order. He treated the TTE scrip as penny stock and by relying on the decision of Hon'ble Supreme Court in Durga Prasad More vs. CIT and other decisions in relation to section 68, he treated the long term capital gain declared by the assessee as unexplained credit u/s 68 read with section 115BBE of the Act and also further added the commission incurred by the assessee for availing the above LTCG income and made the addition u/s 69C read with section 115BBE relating to commission paid to the extent of Rs. 6,55,011/-. 6. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-22, New Delhi and filed detailed submissions. After considering the detailed submissions of the assessee, ld. CIT (A) dismissed the appeal filed by the assessee and sustained the addition. 7. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- "1. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs. 1,31,00,220/- made by the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 27.11.2024. For the sake of clarity, the same are reproduced below:- "As regards jurisdiction of the Assessing Officer to issue notice u/s 143(2) of the Act, this is relevant to mention that as per PAN based jurisdiction, the jurisdiction over the case at the time of notice issued i.e. as on 28.08.2015 was with ITO, Ward - 11(3), New Delhi. Thereafter, it appears that the jurisdiction was transferred to Circle - 11(2), Delhi on 21,07.2016 who has passed the assessment order after allowing due opportunity to the assessee. Copy of the PAN based jurisdiction is enclosed. Hence, the challenge of the assessee w.r.t jurisdiction of the AO who has issued notice u/s 143(2) of the Act, is patently incorrect. It also appears from the submission of the assessee that the assessee has never raised the issue of jurisdiction either before the AO or before the first appellate authority. In that situation, raising the issue by the assessee at 2ND appeal stage before the Hon'ble ITAT is barred by limitation by application of section 124(3)(a) of the Act which reads as under: "Jurisdiction of Assessing Officers. 124. (1) and (2)** (3) No person shall be entitled to call in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction. In this respect, it is humbly submitted that nothing has been specifically referred to in section 124(3)(a) of the Act to infer that it deals with only territorial jurisdiction and not the pecuniary jurisdiction. It is relevant to mention that the heading of section 124 of the Act specifically refers "Jurisdiction of Assessing Officers" and it does not limit it to territorial jurisdiction, Further, section 124(3)(a) of the Act also does not refer to any territorial jurisdiction. Hence, it is respectfully submitted that the assessee is barred by the operation of section 124(3)(a) of the Act to raise this issue after participating with the whole assessment proceedings and first appellate proceedings as well. In view of the above facts and legal position as it stands, Hon'ble ITAT may be prayed for not entertaining the additional grounds of jurisdiction raised by the assessee at this stage. In this respect, reliance may be placed upon the following judgements of Hon'ble Apex Court and subordinate courts: (i) Hon'ble Supreme Court in the case of DCIT (Exemption) vs. Kalinga Institute of Industrial Technology (2023] 151 taxmann.com 434 (SC), headnotes of which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned reopening notice - Held, yes [Para 20) [In favour of revenue]" iii) Hon'ble Allahabad High Court in the case of Commissioner of Income-tax, Gorakhpur Vs. All India Children Care & Educational Development Society [2014] 41 taxmann.com 20 (Allahabad), headnotes of which read as under: "Section 124 of the Income-tax Act, 1961 - Assessing Officer - Jurisdiction of - Assessment years 1993-94 to 1995-96 and 1997-98 - Whether Tribunal is not a competent authority to adjudicate upon jurisdiction of Assessing Officer when it is not raised before Assessing Authority - Held, yes (Para 18) /In favour of revenue)" (iv) Hon'ble ITAT, Kolkata, Bench - A in the case of Tarasafe International (P.) Ltd. Vs. DCIT (2023) 153 taxmann.com 282 (Kolkata - Trib.), headnotes of which read as under: "Section 143, read with section 124, of Income-tax Act, 1961 - Assessment - Issue of notice (Jurisdiction) - Assessment year 2013-14 - Assessee was issued with notice under section 143(2) by Income-tax Officer, Ward- 10(3), Kolkata - This notice was issued for scrutinizing return of assessee n According to assessee, Income-tax Officer, Ward-10(3) was not having jurisdiction over assessee, rath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation, 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. 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: Income Declared (Mofussil areas) Income Declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs 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 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 from1-4-2011." 11.1 He submitted that however, in the present case, notice u/s 143(2) was issued by ITO, Ward 11(3) on 28/08/2015, who did not have jurisdiction over the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law. 6. In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019. 7. Consequently the order dated 18th November, 2019 rejecting Petitioner's objection is also quashed and set aside." 11.2 Further he relied on the cases of YKM Holdings Pvt. Ltd. v. ACIT Circle-4(1) ITA No. 1020/DEL/2019, Monarch & Quershi Builders v. ACIT Circle - 33(2) ITA No. 2026/MUM/2023 and Sapna Rastogi v. ITO Ward - 1(2)(5), Meerut - ITA No. 617/DEL/2024, where similar view was considered and decided that no jurisdiction over the assessee and issue of notice u/s 143(2) of the Act issued by the non-jurisdictional officer is bad in law. 11.3 He submitted that in view of the above decisions, it is evident that notice u/s 143(2) issued in this case is without jurisdiction and, therefore the said notice along with the assessment order passed on the foundation of such notice is liable to be quashed. 11.4 Further, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 Thus, in view of the above decision of Hon'ble Jurisdictional High Court decision, he prayed that the assessment order passed is without jurisdiction and accordingly, the appeal filed by the assessee be allowed. 11.6 Further ld. AR for the assessee submitted the submissions on merit as under :- "1. On a reference from Pr. DCIT [Investigation) Kolkata, SEBI had conducted an inquiry about the manipulations in the subject scrip 'Turbotech Engineering Ltd'. During the course of investigation nine connected entities were found guilty of manipulating this scrip in clear violation of section 11[1], 11[4] and 11B of SEBI Act, 1992 and they were debarred from dealing in securities for seven years vide SEBI's final order dated 14.5.2019 [copy attached].(Annexure A) 2. The Hon'ble D Bench of IT AT Chennai in the case of Sudha Eashwar ITA No.2342/Chny12019, vide order dated 02.01.2020, dismissed the appeal of the assessee whereby a claim of exempt LTCG was made on the transactions in the same scrip 'Turbotech Engineering Ltd'. Copy of the order is attached. (Annexure B) 3. The Hon'ble Indore of IT AT, vide order dated 17.8.2022 in ITA No.74IInd12019, also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the rival submissions and material placed on record. We observed that assessee has filed its return of income declaring income of Rs. 59,68,220/-. As per the CBDT Instruction No.01/2011, the jurisdiction over the assessee's case lies only with Assistant/Deputy Commissioner of Income-tax as the income declared by the assessee is above Rs. 20 lakhs falls under the category of non-corporate returns. It is brought to our notice that notice u/s 143(2) was issued by the ITO, Ward 11 (3) on 28.08.2015, who do not have jurisdiction over the assessee in the case considering the fact that the return of income declared by the assessee is over and above Rs. 20 lakhs. The assessment was completed by the DCIT, Circle 11 (2), New Delhi u/s 143(3) of the Act. However, we observed that the jurisdiction lies only with DCIT, however the statutory notice u/s 143(2) was issued by the ITO instead of the present Assessing Officer i.e. DCIT. In this regard, the Assessing Officer also filed the submissions which are placed on record in which it was submitted that as per the PAN based jurisdiction, the jurisdiction over the case at the time of issue of notice with the ITO, Ward 11(3). Thereafter, the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil areas) Income Declared (Metro cities) ITOS ACS/DCS ITOS DCS/ACS Corporate returns Upto Rs. 20 lacs 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 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." 6. In the instant case, the notice under section 143(2) of the Act stood issued to the assessee on 12.04.2016 by ITO Ward 27(4), Delhi. In July, 2016, the ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/-. Copy of the said transfer memo is enclosed in page 5 of the paper book. After the transfer of jurisdiction from ITO to DCIT, no fresh notice under section 143(2) of the Act was issued by ACIT, Circle 4(1), Gurgaon. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC. 3. Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice. 4. We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
