RAVINDRA MATADIN MODI,MUMBAI vs. INCOME TAX OFFICER, WARD 42(1)(4), MUMBAI

At the very outset, I notice that the assessee has raised ground numbers 1, 2, 3 and 6 for the first time before the Tribunal, as the same were not raised before any of the revenue authorities below. However, in this regard, no separate application seeking permission to raise the additional grounds has been moved. Nevertheless, in ground number 7, the assessee has mentioned that grounds number 1, 2, 3 and 6 are being raised for the first time and has requested that the same may be admitted for adjudication.

Since additional grounds, being grounds number 1, 2, 3 and 6 in the grounds of appeal, have been raised for the first time and the same have now been admitted for hearing, and since these grounds are legal in nature and go to the root of the matter, I have decided to adjudicate these grounds firstly.

Ground number 1 raised by the assessee relates to challenging the order of assessment passed under section 147 read with section 144B of the Income-tax Act pursuant to notice issued under section 148 of the Act, as according to the assessee, the AO who issued the notice under section 148 was not having pecuniary jurisdiction over the assessee.

I have heard the counsels for both the parties, perused the material placed on record before me, and also gone through the orders passed by the authorities below. From the records, I notice that, according to the assessee, the notice under section 148 of the Act was issued by the AO who was not having pecuniary jurisdiction over the assessee, inasmuch as the return filed by the assessee had declared total income of Rs. 40,75,210/-, for which, according to the assessee, the jurisdiction vested with the ACIT/DCIT. It was further submitted that jurisdiction, in terms of CBDT Instruction No. 1/2011 dated 31.01.2011, rested with the ACIT, whereas, in the present case, the notice was issued by the ITO who was not having pecuniary jurisdiction over the assessee, and thus the entire assessment order passed by the AO on the basis of the said notice was claimed to be null and void.

I notice that section 120 of the Income-tax Act empowers the CBDT to issue directions for the exercise of powers by income-tax authorities having regard to their territorial area, or class of persons, or income or class of income, or cases or classes of cases.

This section itself does not confer jurisdiction on any particular officer; rather, jurisdiction flows from the directions or orders issued by the Board or by the authorities authorised by the Board. In this way, sub-section (5) of section 120 3 further recognises that two or more Assessing Officers may concurrently exercise jurisdiction over the same person or class of persons. Therefore, the Act itself contemplates concurrent jurisdiction and does not treat the allocation of work on the basis of monetary limits as conferring exclusive jurisdiction on a particular officer.

Although CBDT Instruction No. 1/2011 merely prescribes the administrative norms for distribution of work between the ITOs and ACIT/DCIT, such instructions facilitate internal administration and workload management; they do not, by themselves, create or extinguish statutory jurisdiction.

Moreover, section 127 of the Income-tax Act overrides ordinary jurisdictional allocation and empowers the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner to transfer “any case” from one Assessing Officer to another Assessing Officer.

Thus, in my view, the expression employed by Parliament in “any case” indicates that the provision does not qualify the power of transfer by reference to monetary limits, territorial limits, class of income, or status of assessee. Consequently, once an order under section 127 is passed, the transferee Assessing Officer acquires complete jurisdiction over the transferred cases, notwithstanding the administrative allocation contained in CBDT instructions.

Therefore, in this case, as per the provisions of section 127, even if under the normal administrative arrangement, a case involving returned income above Rs. 20 lakh or Rs. 30 lakh would ordinarily fall within the jurisdiction of ACIT/DCIT, nothing in the Act prohibits the competent authority from transferring such case to an ITO by exercising powers under section 127.

Since nothing has been placed on record before me by the learned DR as to whether any order for transfer under section 127 of the Income-tax Act has been passed in this case or not, and the learned DR is not even aware of that, therefore, in the fitness of things, it is necessary to restore the matter back to the file of the AO for verifying as to whether any order under section 127 of the Income-tax Act has been passed in this case or not.

Thus, I am of the view that for adjudicating this ground, consultation/verification of the assessment records is necessary. Therefore, I restore this issue back to the file of the AO to verify and adjudicate the same afresh.

Ground numbers 2 and 3 are also legal issues, which have been raised for the first time. Ground number 2 relates to the limitation of the notice issued under section 148 of the Act, whereas ground number 3 relates to the validity of the approval granted by the PCIT under section 151 of the Act. These grounds also require examination and verification of the relevant assessment records. Therefore, in view of my finding on ground number 1, I also restore ground numbers 2 and 3 back to the file of the AO for verification of the relevant records and adjudication thereof in accordance with law.

Now coming to ground numbers 4, 5 and 6. Ground number 4 relates to the validity of assumption of jurisdiction under section 148 of the Act on the basis of the information received, ground number 5 relates to the disallowance of deduction claimed under section 80GGC of Rs. 2,00,000/-, and ground number 6 relates to the levy of interest under sections 234B and 234C of the Act through the computation sheet without any direction in the assessment order.

Since I have already restored ground numbers 1, 2 and 3 to the AO and the adjudication of these legal grounds may have a bearing on the validity of the consequential assessment proceedings, Therefore Ground Nos. 4 to 6 are also directed to be restored back to the file of the AO for adjudication afresh in accordance with law, in case required after adjudication of Ground Nos. 1 to 3. 5

Thus, all the ground nos. 1 to 6 of appeal are restored back to the file of the AO for adjudication afresh in accordance with law. The order passed by the Ld. CIT(A) is accordingly set aside.

In the result, appeal filed by the Assessee stands allowed for statistical purposes.