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TMI Blog2025 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment u/s 143(3) of the Act and that there is an unwarranted defect in this case which is not curable. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... d credit is totally erroneous and arbitrary. 3. The allegations made / doubts raised in the show cause are vague and baseless. The allegations are based upon conjecture & surmises. The statements referred to in your questionnaire are not relevant to my case. You have not provided the copies of any statement. However, in the limited reference made to various statements in your questionnaire, these are totally irrelevant to my case as nowhere my name is mentioned. If anybody has stated anything adverse against me, kindly provide us copy of such statements, if any, along with opportunity of cross examination of such person(s). Your goodself will appreciate that statement recorded behind the back of assessee without providing opportunity of cross examination has no evidentiary value in law, it is also against the principal of natural justice." 5. After considering the above submissions, the Assessing Officer rejected the submissions of the assessee and observed that assessee has earned huge capital gain within a short period of time by investing in a penny stock whose fundamentals have no support for a premium it commanded and the Assessing Officer discussed various modus operandi r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is bad-in-law and without jurisdiction and accordingly, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed. 2. On the facts and circumstances of the case and in law, there is no valid notice u/s 143(2) issued in this case and accordingly the assessment order passed on the foundation of such notice is liable to be quashed. 3. On the facts and circumstances of the case and in law, the assessment order passed in this case is without jurisdiction and therefore, the same is liable to be quashed." By relying on the decision of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC) and CIT vs. Sinhgad Technical Education Society 120171 84 taxmannn.com 290 (SC), ld. AR prayed that the issue raised by the assessee is legal issue which can be raised at any stage of the appellate proceedings. 9. On the other hand, ld. DR for the Revenue objected to the additional grounds and raised the same at this stage without raising the same before the lower authorities. Ld. DR for the Revenue submitted the comments of the Assessing Officer on the additional grounds raised by the assessee dated 27.11.2024. For the sake of clarity, the same ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved with the assumption of jurisdiction by the AO by issuing notice u/s 143(2) or 142(1) of the Act, the assessee has to raise this issue within one month from the date of service of such notice. Whereas in the instant case, it appears, that the assessee had not challenged the validity of such notices during the whole assessment proceedings or even at first appellate stage; in such a situation, it is not open to the assessee to raise such issue if the assessment resulted into raising of demand against the assessee. However, it appears that while raising this jurisdictional issue the assessee is relying on the following judgements: (i) Hon'ble ITAT, Delhi in the case of YKM holdings Pyt. Ltd. V. ACIT Circle - 4(1) in ITA No. 1020/Del/2019 (ii) Hon'ble ITAT, Delhi in the case of SapnaRastogi V. ITO, Ward - 1(2)(5) in ITA No. 617/Del/2024 (iii) Hon'ble ITAT, Mumbai in the case of M/s Monarch & Qureshi Builders v. ACIT,Circle - 33(2) in ITA No. 2026/ Mum/ 2023 In all these case, Hon'ble ITAT has taken a view that section 124(3)(a) of the Act deals with the issue of territorial jurisdiction and not the pecuniary jurisdiction. In this respect, it is humbly subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2017-18 - Assessee-company disclosed total income of more than Rs. 32 lakhs in relevant assessment year - Assessment was completed by Assistant Commissioner - Thereafter, a search was conducted at premises of one M by Investigation wing - On perusal of information from Investigation Wing, Assessing Officer observed that assessee had not shown purchase entry of substantial amount alleged to be an accommodation entry - He, thus, issued reopening notice under section 148 Assessee challenged said notice on ground that since monetary limit fixed for assessment by Assessing Officer for return was upto Rs. 15 lacs and it had disclosed income of Rs. 32 lakh and assessment order was passed by Assistant Commissioner in relevant assessment year, reopening notice should also have been issued by Assistant Commissioner - Whether since Assessing Officer was having territorial jurisdiction over assessee, pecuniary limit fixed for purpose of distribution of work between officers, would not mean that there shall be inherent lack of jurisdiction of Assessing Officer Held, yes - Whether thus, it could not be said that Assessing Officer lacked jurisdiction while issuing impugned reopening notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon'ble Supreme Court in the case of NTPC Limited (supra), we are inclined to admit the additional grounds and take up the same for adjudication herein below. 11. Ld. AR further submitted that return of income was filed declaring income of Rs. 59,68,220/-. He submitted that as per CBDT Instruction no. 01/2011, the jurisdiction over the case lied with Assistant/Deputy Commissioner of Income Tax since the income declared was above Rs. 20 Lakhs. He referred to the said CBDT Instruction no. 01/2011 which is reproduced as under: - "Order-Instruction - Income Tax References have been received by the Board from the large number of taxpayers especially from the mofussil areas, that the existing monetary limits for assigning cases to Deputy Commissioners / Assistant Commissioners and ITOs is causing hardship to the taxpayers. 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, as it results in transfer of their cases to a DC/AC who is located ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate 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 income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019. 5. The notice under section 148 of the Act is jurisdictional notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 13 of the impugned order specifically adverted to the above aspect and correctly held that "The ACIT, Circle 34(1), New Delhi has admittedly not recorded that he had reasons to believe that income chargeable to tax of the Assessee has escaped assessment. He continued reassessment proceedings initiated by the ITO, Ward 34(4) of the Act without independently recording reasons for reopening or issuing a fresh notice u/s 148 of the Act." Further the ITAT noted that "There is no order u/s 127 of the Act transferring the jurisdiction of the case from ITO, Ward 34(4) to ACIT, Ward 34(1). Thus this order of reassessment passed by the ACIT u/s 34(1) of the Act is without jurisdiction and hence is bad in law." 4. In the present memorandum of appeal no attempt has been made by the Revenue to aver whether in fact there was an order under Section 127 of the Act transferring the case to the ACIT, Circle 34(1). That being the position, the impugned order of the ITAT cannot be faulted. In view of the above conclusion, there is no occasion to examine the other questions urged by the Revenue in this appeal. 5. No substantial question of law arises. The appeal is dismissed." 11.5 Thus, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer) charge in the year 2020. Such merger of charges created huge burden of physical records of 7/8 charges to be handled by the Single Charge. Thus, Circle 10(1) was created by merger of all circle charges of Range- 10, with records as it is where it is basis, So it remained a big challenge for a single officer to handle, manage and search out old records relating to pre-restructuring period. However, a file relating to the assessee for AY 2014-15 could be traced out in the inventory of erstwhile charge Circle - 11(2), New Delhi with the official record-keeper of the Department who has delivered the record and on perusal of the same it is found that the said record pertains to penalty proceedings relating to assessee for AY 2014-15 only. Thus, no assessment records could be traced out till yet. In light of the above position, the Hon'ble ITAT may be prayed to not to entertain the additional grounds raised by the assessee." 13. On merit, she submitted that the scrip TTE is a penny stock and the ITAT Bench, Chennai has considered the similar issue and decided in favour of the Revenue and she submitted that she relied on the above decision. 14. Considered the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome for the A.Y. 2015- 16 was Rs. 37,78,510/- hence, the jurisdiction of the assessee should lie with ACIT/DCIT since the returned income had exceeded Rs. 30,00,000/-, in view of the CBDT Instruction No.1/2011 dated 31.01.2011. For the sake of convenience, the said Instruction No.1/2011 [F. No.187/12/2010-IT(A-I)] dated 31.01.2011 is hereby reproduced:- "SECTION 119 OF THE INCOME-TAX ACT, 1961-INCOME-TAX AUTHORITIESINSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-1)), 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, as it results in transfer of their cases to a DC/AC who is located in a different 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act could be taken shelter by the Revenue only when legal valid notice under section 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued under section 143(2) of the Act on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Hon'ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom). In this case, very same issue was addressed in the light of CBDT Instruction No.1/2011[F. No.187/12/2010-IT(A-I)] Dated 31.01.2011. For the sake of convenience, the entire order is reproduced hereunder: "1. Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitioner's objection to reopening on various grounds. 2. The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.Y. 2015-16. Consequently, assessment framed under section 143(3) of the Act is hereby quashed as void ab initio. The additional ground no.2 is hereby allowed." 15. Similar view was expressed by the ITAT, Mumbai in the case of Monarch & Quershi Builders vs. ACIT (supra) and by the coordinate Bench in the case of Sapna Rastogi vs. ITO (supra). 16. Further the Revenue has not brought on record an order u/s 127 of the Act passed in order to transfer the case to DCIT, Circle 11 (2), New Delhi except making the submissions that assessee should file the objection within one month u/s 124(3) of the Act. Since the issue of notice u/s 143(2) is the basis of initiation of the assessment u/s 143(3) and the jurisdictional officer should have issued the notice and also completed the assessment. The present Assessing Officer has completed the assessment without following the due process of law and we, respectfully following the decisions of the coordinate Bench and ITAT Mumbai, are inclined to hold that the jurisdictional notice u/s 143(2) was not issued by the DCIT before completing the assessment u/s 143(3) of the Act and that there is an unwarranted defect in this case which is not cur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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