9911796707
TMI Blog2025 (2) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, in other words the third limb of the categories of jurisdiction contained in section 120(3) of the Act, indicating pecuniary jurisdiction. Catena of judgments relied upon in the earlier part of the discussion, especially in the case of Kalinga Institute of Industrial Technology [2023 (6) TMI 1076 - SC ORDER] and Mantoo Sarkar [2008 (12) TMI 719 - SUPREME COURT] it is held that the pecuniary jurisdiction challenged at this stage is unjustified and is at best, a curable defect, if at all it can be called a defect, considering the facts of the case. Ground No.3 and 4 of the assessee's appeal are accordingly dismissed. CIT(A) treated the entire quantum of sundry creditors as on 31.03.2015 as a discharged liability and used the provisions of section 41(1) of the Act to enhance the income - It is felt that there is an inherent error in this action, in as much as the credits added contain entries belonging to earlier years and in case it can be shown that the impugned sums represent bogus entries, then also they have to be added back in the appropriate year. Therefore, we deem it fit to remand the matter back to the file of the AO to determine the genuineness, or otherwise, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act Rs. 1,88,60,982/-, representing transactions during the period from 01.04.2014 to 31.03.2015, mainly on account of non-satisfactory verification of the said transactions. 1.3 This matter was carried to the ld. CIT(A), where, the assessee filed some new documentation in support of his claim that the said creditors were genuine. Thereafter, a remand report was submitted by the Assessing Officer in which it was mentioned that one Mr. Toko Tei, proprietor of Tagam Enterprise, was available for verification and questioning. However, the remaining three creditors could not be available for verification. Interestingly, this creditor (Tagam Enterprises) claimed the status of a tribal person and hence denied the liability of filing any return of income or maintaining any books of account etc. In fact, it was claimed that this creditor had only maintained receivables' details in a diary only. This lack of records and the fact that there appeared to be no payment made by the assessee inspite of huge amounts outstanding, led to an adverse view being recommended by the Ld. AO in the remand report. The ld. CIT(A) proceeded ahead to not only confirm the addition made by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it may be mentioned that Ground Nos.6,7 & 8 are not proposed to be specifically adjudicated as they would be consequential to the decision rendered for Ground Nos.1 to 5 (supra). However, since the Ground Nos.3 and 4 challenge the assumption of jurisdiction, it would be appropriate to deal with this issue first before proceeding any further in this matter. 3. On the issue of assumption of jurisdiction, both the ld. AR & DR have filed written submissions in support of their respective stand points. These will be extensively referred to in adjudicating this issue. 3.1 The facts regarding this contention are that the initial notice u/s 143(2) of the Act was issued by ITO, Ward-3(2), Guwahati on 19.09.2016. Later, this case was transferred to ACIT, Circle-1, Guwahati since the income was above Rs. 20 lacs. Further, notices were issued by the said ACIT, Circle and the assessment was also completed by him. It is the contention of the assessee that not only was the income in the present year but also in the immediately preceding year more than Rs. 20 lacs and thus the initial notice u/s 143(2) of the Act should have been issued by the ACIT and not the ITO, Ward-3(2), Guwahati. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Technology reported in 454 ITR 582 (SC) order dated 01.05.2023. Since all the the case laws relied upon by the ld. AR, i.e. PCIT vs. Nopany and Sons (supra), S. K. Industries vs. ACIT (supra) & PCIT vs. Cosmat Traders (P) Ltd. (supra) have been pronounced earlier than 01.05.2023 [being the date of judgment of Kalinga DCIT vs. Kalinga Institute of Industrial Technology (supra)], it would be in the fitness of things to analyze the issue of jurisdiction of an Assessing Officer with a view to determining when its inappropriate application would render proceedings as null and void. 4.1 To begin with, we need to advert to the facts of the Kaling Case (supra). In that case, the assessee filed a writ petition for challenging the notice u/s 143(2) of the Act, issued by the ACIT, Corporate Circle-1(2), Bhubaneshwar, as being without jurisdiction. The High Court allowed the said writ petition and set aside the notice issued u/s 143(2) on the ground that the jurisdictional officer had not adjudicated upon returns as jurisdiction has been changed after returns had been filed. The Hon'ble Apex Court's order may be reproduced in full on this issue: "1. The impugned order set asides the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised by it may have regard to any one or more of the following criteria, namely :- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; (emphasis added) and (d) cases or classes of cases. (4) Without prejudice to the provisions of sub-sections (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein,- (a) authorise any [Principal Director General or] Director General or [Principal Director or] Director to perform such functions of any other income-tax authority as may be assigned to him by the Board; (b) empower the [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner to issue orders in writing that the powers and fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the [Principal Director General or] Director General or the [Principal Chief Commissioner or] Chief Commissioner or the [Principal Commissioner or] Commissioner; or where the question is one relating to areas within the jurisdiction of different [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, pertaining to the challenging of jurisdiction, would be available in this Chapter XIII and its Part 'B' ("Jurisdiction"). At this stage, it needs to be recapitulated that the assessee has, admittedly, never raised this issue, either before the ld. Assessing Officer or the ld. CIT(A). In fact, this point is canvassed for the first time before the ITAT only. For arriving at a definite conclusion regarding the maintainability of this issue before us, we may refer to some authorities, other than the Kalinga Institute case (supra), on this subject. 4.4 (a) In the case of Shivaaditiya Jems And Jewellery (P) Ltd. vs. ITO reported in 450 ITR 483 (All), it has been observed as under: "10. Thus, sub-section (1) of section 120 of the Act, 1961 confers powers on the Board to issue directions to the Income-tax authorities for exercise of powers and performance of the functions by all or any of those authorities. Sub-section (2) of section 120 permits directions of the Board made under sub-section (1) for authorising any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income tax authorities who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hstanding 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. It is undisputed that ITO Ward-2(1), Moradabad who issued the impugned notice dated 31-3-2021 under section 148 of the Act, 1961 for the Assessment Year 2017-18 and passed the impugned order dated 10- 9-2021/13-9-2021 under section 148A(d) rejecting the objections, is the Assessing Officer within the meaning of Section 2 (7A) of the Act, 1961. 12. The contention of the learned counsel for the petitioner is that since on account of the mandated monetary limit, the impugned order was passed by the ACIT-2, Moradabad, therefore, only ACIT-2, Moradabad could have issued notice under section 148 of the Act and not the ITO Ward-2(1). We do not find any substance in the submission. 13. Section 120(1) of the Act, 1961 confers powers upon the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 1 is admitted by the petitioner, there existed no occasion for the Assessing Officer to refer the matter for determination under sub-section (2) of section 124 before the assessment was made. 20. The facts and legal position as discussed above leave no manner of doubt that the respondent no. 1 is the Assessing Officer having territorial jurisdiction over the petitioner. Merely because some pecuniary limit has been fixed for purpose of distribution of work between officers, it would not mean that there shall be inherent lack of jurisdiction of respondent no. 1. Therefore, it cannot be said that respondent no. 1 lacked inherent jurisdiction while issuing the impugned notice under section 148 of the Act, 1961." (b) In the case of Suresh vs. ACIT reported in 385 ITR 1 (Bom), it has been observed as under: "8. In our view the order passed by the Deputy Commissioner of Income- tax is a speaking and well reasoned order. As soon as respondent No. 3 noted from the copy of income-tax return, the return for income filed for the year 2010-11 are more than one crore and the assessment was made by the Joint Commissioner, he transferred the file to the Deputy Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 142(1), respondent No. 3 called upon the petitioner to submit his return on July 11, 2015. The objection as to the jurisdiction was first time raised on September 7, 2015. As provided under sub-section (3) of section 124 of the said Act, no person is entitled to call in question the jurisdiction of an Assessing Officer after the expiry of the time allowed by the notice issued under section 148. Section 124 of the Income-tax Act reads as under : ....... "11. As discussed in the foregoing paras, respondent No. 3 had issued the notice under section 148 of the said Act after seeking necessary approval under section 151 of the said Act. The proceeding is already transferred by respondent No. 3 to the Deputy Commissioner of Income- tax, who is vested with the jurisdiction to deal with the matters having valuation more than 10.00 lakhs. The objections raised by the petitioner also decided by the Deputy Commissioner of Income-tax, who holds the territorial and pecuniary jurisdiction to make the reassessment of the case of the petitioner. The case is still under consideration of the Deputy Commissioner of Income-tax. The Joint Commissioner, who has assessed income for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Supreme Court in Greenworld Corpn. Referring to an earlier judgment in Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, in para 63, (emphasis added) it was observed:- "63. In Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2008 (16) SCC 197], this Court held: "17. The Tribunal is a court subordinate to the High Court. An appeal against the Tribunal lies before the High Court. The High Court, while exercising its appellate power, would follow the provisions contained in the Code of Civil Procedure or akin thereto. In view of sub-section (1) of Section 21 of the Code of Civil Procedure, it was, therefore, obligatory on the part of the appellate court to pose unto itself the right question, viz., whether the first respondent has been able to show sufferance of any prejudice. If it has not suffered any prejudice or otherwise no failure of justice had occurred, the High Court should not have entertained the appeal on that ground alone. 18. We, however, while taking that factor into consideration must place on record that we are not oblivious of the fact that a decision rendered without jurisdiction would be coram non juris. Objection in regard to j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Authorities and while doing so in terms of sub-section (3), the Board can take into consideration and have regard to the four-fold criteria namely, territorial area; persons or classes of persons; incomes or classes of income; and cases or classes of cases. Thus, the act does not authoritatively confer exclusive jurisdiction to specific Income Tax Authority. It is left to the Board to issue directions for exercise of power and functions taking into consideration territorial area, class/types of persons, income and case, and Board have been given wide power and latitude. The said section by necessary implication postulates and acknowledges that multiple or more than one Assessing officer could exercise jurisdiction over particular assessee. Concurrent jurisdictions are therefore not an anathema but an accepted position under the Act. The term 'jurisdiction' in section 120 has been used loosely and not in strict sense to confer jurisdiction exclusively to a specified and single Assessing Officer, to the exclusion of others with concurrent jurisdiction. It would refer to 'place of assessment', a term used in the Income-tax Act, 1922. Sub-section (5) to section 120 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board, as the case may be. An appeal to an appellate authority under the Act lies on the grounds as enumerated in section 246 of the Act. None of its clauses shows that an appeal on the question of jurisdiction of the assessing authority is maintainable. *** 25. In Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, the apex court in relation to the question of jurisdiction of the Tribunal under the Motor Vehicles Act has made the following observations, vide paragraph 20, which is reproduced below (page 249) : "A distinction, however, must be made between a jurisdiction with regard to the subject-matter of the suit and that of territorial and pecuniary jurisdiction. Whereas in the case falling within the former category the judgment would be a nullity, in the latter it would not be. It is not a case where the Tribunal had no jurisdiction in relation to the subject-matter of claim. As a matter of fact the civil court had no jurisdiction to entertain the suit. If the Tribunal had the jurisdiction to entertain a claim petition under the Motor Vehicles Act, in our opinion, the court should not have, in the absence of any finding of sufferance of any prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Furthermore, the facts do not indicate that either of the two AOs: ITO and ACIT, did not have territorial jurisdiction, the absence of which might have brought in a legal fatality. It is just that a division of work was affected on account of division on the basis of returned income limits of an assessee, in other words the third limb of the categories of jurisdiction contained in section 120(3) of the Act, indicating pecuniary jurisdiction. Catena of judgments relied upon in the earlier part of the discussion, especially in the case of Kalinga Institute of Industrial Technology (supra) and Mantoo Sarkar (supra), it is held that the pecuniary jurisdiction challenged at this stage is unjustified and is at best, a curable defect, if at all it can be called a defect, considering the facts of the case. Ground No.3 and 4 of the assessee's appeal are accordingly dismissed. 5. Before parting with this issue, it needs to be mentioned that the cases relied upon by the ld. DR bear no similarity to the facts of the present case. The cases relied upon by the ld. AR are seen, as has already been recorded at the start of this discussion, that they predate the case of Kalinga Institute of Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
