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TMI Blog2004 (4) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... Jewellers, constituted w.e.f. 4th Sept., 1997 by way of a deed of partnership executed on the same day, was carrying on the business of manufacturing and sale of gold and silver ornaments at Chawk Bazar, Chatarpur (MP). The firm was constituted of five partners, who were HUFs represented by their respective Kartas, namely Shri Vijay Kumar Agarwal. Shri Ajay Kumar Agarwal and Shri Anand Kumar Agarwal. These three partners were existing asses sees in their individual capacity as well as separately existing asses sees in the capacity of HUFs (being represented by them) as partners of the firm. M/s New Alankar Jewellers. The firm was also regular assessee. 4.1 On 19th Jan., 2000, the IT Department carried out a search action at the business premises of the partnership firm as well as at the residential premises at Sarrafa Mohalla, Chatarpur, which, as per the Revenue, was the residence of Shri Ajay Kumar Sarat, Vijay Kumar Saraf and Anand Kumar Saraf. Since the copy of search warrant is not on record, it is gathered from the copies of Panchnama placed at pp. 19 and 36 of the assessee's paper book, volume (0) that the same would have been in the name of Shri Ashok Saraf, Vijay Saraf, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by sub-s. (1) and sub-s. (3) of s. 127 of the IT Act, 1961 (43 of 1961) and all the other powers enabling him in this behalf, the CIT, Jabalpur, hereby directs that the cases, particulars of which are mentioned in Col. 2 of the Schedule below shall stand transferred from the AO mentioned in Col. 3 of the Schedule to the AO mentioned in Col. 4 of the following: 2. The transfer of records has been considered essential for administrative convenience and co-ordinated investigation. Schedule -------------------------------------------------------- Sl. Name of the assessee Assessed To be centralised No. with with -------------------------------------------------------- (1) (2) (3) (4) -------------------------------------------------------- 1. M/s Alankar Jewellers ITO, Ward Dy. CIT (Inv.) (BF), Chatarpur Chatarpur Chatarpur Circle 2(1), Jabalpur. 2 to 7 not relevant 8. Shri Vijay Kumar " " Agarwal S/o Late Shri Chhotelal, P/o M/s New Alankar Jewellers, Chatarpur. 9. not relevant 10. Shri Anand Kumar " " Agarwal S/o Late Shri Chhotelal, P/o M/s New Alankar Jewellers, Chatarpur. 11. not relevant 12. Shri Ajay Kumar " " Agarwal S/o Late Shri Chhotelal, P/o M/s New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block period in case of Vijay Kumar, Ajay Kumar and Anand Kumar Agarwal in their 'individual capacity' as per assessment orders for block period dt. 30th Jan., 2002. 9. The details of undisclosed income and source thereof, as assessed by the AO in all the three individual cases, are as under: Undisclosed income computed by AO On account of undisclosed investment ------------------------------------------------- In In Agrl. In Shop Jewellery land ------------------------------------------------- 1. Vijay Kumar 1,98,330 1,14,500 1,00,000 2. Ajay Kumar -- -- 1,00,000 3. Anand Kumar -- -- 1,00,000 ------------------------------------------------- ------------------------------------------------- Undisc- In shares Total Total income losed After order cash of CIT ------------------------------------------------- -- -- 4,12,830 33,000 -- 30,000 1,30,000 Nil 30,000 -- 1,30,000 Nil ------------------------------------------------- 10. On appeal, the CIT(A) as per orders dt. 4th April, 2003 deleted the whole of undisclosed income in the case of Ajay Kumar, Anand Kumar (individuals). 10.1 So far as the case of Vijay Kumar (individual) is concerned, the CIT(A) deleted the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under s. 263 of the Act in all these cases on 4th June, 2003 whereby he had proposed to direct the AO to charge interest under s. 158BFA(1) and to initiate penalty proceedings under s. 158BFA(2) of the Act. All these three persons objected to the initiation of proceedings under s. 263 of the Act by CIT, Gwalior, on the point of jurisdiction as well as on merits and have relied on various decisions listed in the written arguments furnished before the CIT. 12.2 The learned CIT, Gwalior, however, rejected the assessees' all the objections both on law as well as on merits and after relying on the order of Hon'ble Supreme Court in the case of CIT vs. Anjum M.H. Ghaswala & Ors. (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC), wherein it has been held that levy of interest under s. 234A, s. 234B and s. 234C is mandatory, came to the conclusion that the failure on the part of the AO to charge interest under s. 158BFA(1) in the assessment order for block period, had rendered the assessment orders erroneous so as to prejudice to the interest of the Revenue and consequently, he set aside the said assessment orders in case of all the three persons and directed the AO to charge interest un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee was that the CIT having mentioned the name of the assessee as Vijay Kumar Agarwal, P/o of M/s New Alankar Jewellers, one is led to think that he was going to revise the assessments for block period in the cases of partners of M/s New Alankar Jewellers, but there being no order of assessment for block period in the case of partners of M/s New Alankar Jewellers (partners were HUFs and not individuals); the CIT was not justified in revising the assessment orders of block period of individuals, who were not the partners of M/s New Alankar Jewellers. (ii) The second objection of the counsel was that the jurisdiction over the income-tax cases of individuals was never transferred from ITO, Chatarpur, i.e., jurisdiction over the individual cases of the present appellants, was never transferred either to AO, Jabalpur, or to AO, Gwalior, and therefore, the individuals were within the territorial jurisdiction of CIT, Jabalpur,-meaning thereby the jurisdiction under s. 263 of the Act, if it at all was to be exercised, be exercised only by the CIT, Jabalpur and not by CIT, Gwalior. (iii) On merits, the learned counsel raised the following objections: (a) The first objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders in the cases of Ajay Kumar Agarwal and Anand Kumar Agarwal and at least there was no assessed income and since the interest is leviable only if there is assessed income and tax on it is more than the tax paid by the assessee, no interest was leviable under any section of the Act. Consequently, the orders under s. 263 in the cases of these two persons were illegal and bad in law. 17. On the point of reliance by the CIT on the decision of (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC), the learned counsel submitted that in this decision the Hon'ble Supreme Court has simply held that levy of interest under ss. 234A, 234B and 234C is mandatory and has nowhere said that failure of the AO to charge interest under any of these sections will render the assessment orders erroneous so as to prejudice to the interest of Revenue. The counsel further submitted that inspite of the order of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala, the law laid down by Hon'ble Supreme Court in the case of CIT vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 : (2001) 247 ITR 209 (SC), still holds good-meaning thereby that any interest can be recovered only if there is specific order for levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground also. 20. So far as second objection raised by the counsel of the assessee that jurisdiction over the individual cases of these three appellants was never transferred either to Jabalpur or Gwalior, is concerned, I, after having considered the facts and circumstances as well as documents of record, have no hesitation to hold that the jurisdiction over the individual cases of these present three appellants was with the AO, Chatarpur, who was within the territorial jurisdiction of CIT, Jabalpur and consequently it was CIT, Jabalpur, who had jurisdiction over the appellants' cases for the purpose of s. 263 of the Act,-meaning thereby that the CIT, Gwalior, had no jurisdiction over the individual cases of the appellants and since the assessments of block period, admittedly, had been passed in the cases of individual, the CIT, Gwalior, had no jurisdiction to revise the said assessments. The orders of CIT are, therefore, declared void ab initio for want of jurisdiction. 21. So far as the merits are concerned, first of all, I am of the opinion that in view of the decision of Hon'ble Supreme Court in the case of Ranchi Club Ltd., one is led to believe that an order of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustainable in law. Consequently, the same are set aside. 25. Without prejudice to the above, I am further of the opinion that the language of the provision of s. 263, its purpose and scope, goes to show that before exercising jurisdiction under s. 263 by the CIT, existence of order is prerequisite condition; so in case the CIT requires the revision relating to charging of interest, existence of an order by the AO, either charging or waiving the interest is a must-meaning thereby, in case there is no order either for charging or waiving the interest, there cannot be said to be any order, so far as issue relating to interest, which is quite independent of the assessment of income, in existence and if there exists no order, there is nothing which could be revised by the CIT in exercise of his powers under s. 263 of the Act. This view of mine is fortified by the decisions in the following cases: (i) CIT vs. Executors of the Estate of Late H.H. Rajkuverba Dowager Maharani Saheb of Gondal 1978 CTR (Kar) 347 : (1978) 115 ITR 301 (Kar). (ii) CIT vs. Narpat Singh Malkhan Singh (1980) 19 CTR (MP) 302 : (1981) 128 ITR 77 (MP) (iii) P.P Dinwala vs. CIT (1995) 78 Taxman 421 (Cal) In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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