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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI
Before: SHRI G. S. PANNU & SHRI AMIT SHUKLA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” NEW DELHI
BEFORE SHRI G. S. PANNU, VICE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER
I.T.A. No.6033/DEL/2016 Assessment Year: 2012-13
ACIT, Circle-27(1), vs. M/s. UV Realtors Pvt. Ltd., New Delhi. C-4, 2nd Floor, Soami Nagar, New Delhi. TAN/PAN: AAACU 7858B (Appellant) (Respondent)
CO No.11/DEL/2017 Assessment Year: 2012-13
M/s. UV Realtors Pvt. Ltd., vs. ACIT, Circle-27(1), C-4, 2nd Floor, Soami New Delhi. Nagar, New Delhi. TAN/PAN: AAACU 7858B (Appellant) (Respondent)
Appellant by: Shri S.S. Rana CIT-DR Respondent by: Shri D.C. Agarwal. Adv. Date of hearing: 11 03 2021 Date of pronouncement: 17 05 2021
O R D E R PER AMIT SHUKLA, JM
The aforesaid appeal has been filed by the Revenue and the Cross Objection by the assessee against the impugned order dated 19.07.2016, passed by Ld. Commissioner of Income Tax (Appeals)-IV, Kolkata for the quantum of assessment passed u/s.144 for the Assessment Year 2012-
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In the grounds of appeal, the Revenue has taken following grounds.
“On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the following additions
i) Addition Rs. 15,02,655/- on account of Rates and Taxes (House Tax).
ii) Addition Rs. 2,88,61,495/- on account of credits (total unsecured loans).
iii) Addition Rs. 2,88,61,495/- on account of credits (total unsecured loans).
iv) Addition Rs. 6,61,873/- on account of depreciation.
by admitting additional evidences filed by assessee without providing any opportunity to the AO in contravention of the Principal of Natural justice”.
Whereas the assessee in his Cross Objection has challenged the validity of the assessment on the ground that Assessing Officer did not had valid jurisdiction over the case. The grounds raised in the Cross Objection reads as under:
“1. That the Assessing Officer has not valid jurisdiction over the case of the appellant. The return was being filed year after year by the appellant in Delhi and consequently the assessment so framed in furtherance of such invalid assumption of jurisdiction is also bad in law.
That the Ld. CIT(A) is correct in law in allowing the relief to the assessee and consequently the objection as raised by the
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Revenue in its appeal is not maintainable and deserved to be dismissed.”
Since, the issue raised in the Cross objection goes to the very root of the validity of the assessment, therefore, same is being taken up first.
The brief facts apropos the issue raised in Cross Objection are that, assessee is a company which was registered on 04.11.2004 and since then it has registered office at New Delhi, which is evident from the copy of certificate of incorporation at page 36 of the paper book. The assessee-company derives rental income from the properties which are situated in Delhi and NCR ever since its inception. Since Assessment Year 2005-06 assessee-company has been filing the return of income in Delhi and even for the impugned Assessment Year 2012-13 also, it has filed its e-return on 26.09.2012 declaring total income of Rs.50,19,204/-. The case was selected for scrutiny and accordingly notice u/s.143(2) was issued by ITO, Ward-10(2), Kolkata. However, as per the Assessing Officer, no compliance was made by assessee despite the notices were issued and sent through registered post at the address given in the ITR of the assessee-company which was D-1108, New Friends Colony, New Delhi-110065’. Since there was no compliance as per the Assessing Officer despite repeated notices, the assessment was completed ex-parte u/s.144 by the Deputy Commissioner of Income Tax, Circle-10(2), Kolkata, who has made the following additions in the assessment order;
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(i) Unexplained cash credit on account of unexplained loan of Rs.2,88,61,495/-
(ii) Interest paid on borrowed funds of Rs.44,57,322/-
(iii) Disallowance of depreciation of Rs.6,61,873/-
(iv) Disallowance on account of rates and taxes of Rs.15,02,655/-
Apart from that, Assessing Officer has also disallowed the claim of deduction u/s.24(A) while assessing the income from house property on the ground that assessee has not produced any evidence.
Before the Ld. CIT(A), Kolkata, the assessee challenged that, ld. Assessing Officer has erred in law in passing ex-parte assessment order u/s.144 without having jurisdiction over the case on the assessee. It was submitted that the assessee was registered at New Delhi and has a registered office at New Delhi and it neither had any business nor any business connection in Kolkata, therefore, jurisdiction under the Income Tax Act lies with the Assessing Officer at New Delhi not at Kolkata. In this regard, the submissions made by the assessee before the CIT(A) was as under:
“The appellant was originally registered on 4tn November, 2004 with a CIN No. U70101DL2004PTC130419 having its registered office at New Delhi. A copy of the Certificate of Incorporation is attached herewith for your kind consideration and record please.
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b) The territorial jurisdiction being ex Delhi, the appellant continuously filed its return of income since inception at New Delhi Jurisdiction only as under-
i) For the Assessment year 2005-06 the return was prepared manually and filed with Additional Commissioner, Range 18, New Delhi. A stamp was obtained as receipt for filing the return.
ii) For the Assessment year 2006-07 to 2008-09 the returns were filed electronically + one hard copy of the were file physically acknowledgements at the relevant ward/circle/range 18 at New Delhi under a stamp of the relevant ward/circle/range at New Delhi.
iii) For the Assessment year 2009-10 to 2012-13 the returns were filed electronically, showing designation of the Assessing Officer as Range 18, New Delhi, under digital signatures and therefore there was no need to file hard copy of acknowledgements with the relevant ward/circle/range at New Delhi. A copy of the acknowledgements for the Assessment year 2005-06 to 2012-13 are being attached herewith for your kind consideration and record please.
c) The appellant has no business or any other connection at Kolkata.
d) The appellant is legally entitled to call in question the jurisdiction of the DCIT Circle 10(2), Kolkata within the provisions of Section 124(3) and the same was challenged vide appellant’s submission dated 29.08.2013.
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e) The appellant challenged the jurisdiction of Assessing Officer Ward 10(2), Kolkata within one month as provided in section 124(3) of the income tax act, 1961. The notice U/s 143(2) dated 06.08.2013 for the Assessment Year 2012-13 issued by the learned Assessing Officer Ward 10(2), Kolkata to present before him on 2nd September, 2013 was forthwith replied vide reply dated 29.08.2013' which was sent by the appellant through Speed Post under receipt No. ED245240050IN dated 29.08.2013 informing the Assessing Officer that the company has no connection with Kolkata and the Registered Office of the company is at New Delhi and therefore, the territorial jurisdiction of the company lies with Assessing Officer at New Delhi and not at Kolkata. Assessee also requested to either drop the proceedings or the case be transferred to New Delhi jurisdiction.
f) After the assessee called in question the jurisdiction of the Assessing Officer Ward 10(2), Kolkata, the assessing officer, if not satisfied with the correctness of the claim, the Assessing Officer Ward 10(2), Kolkata should have referred the matter for determination of jurisdiction under section 124(4) before the higher authorities referred in section 124(2) of the Income Tax Act. The Assessing Officer, Kolkata has completely failed in discharging his obligations under the provisions of Section 124(4) in this regard before the completion of assessment in this case.
g) The jurisdiction of the assessing officer at Delhi was never transferred by the Central Board of Direct Taxes because the appellant was never served a notice for giving reasonable opportunity of being heard as provided under section 127 of the
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income Tax Act before transferring the jurisdiction from New Delhi to Kolkata. The appellant also never applied for transferring the jurisdiction from New Delhi to Kolkata.
1.2 As a matter of fact, jurisdiction for assessment under the I.T. Act lies with Assessing authority at New Delhi and not at Kolkata.
1.3 Your kind attention is drawn to the Assessment Order in which the assessing officer has claimed to have served notices U/s 143(2) dated 06.08.2013 and U/s. 142(1) of the I.T. Act dt. 15.05.2014 and 20.01.2015. The Assessing Officer has also claimed that notices U/s 143(2) and U/s. 142(1) of the LT. Act remained un-complied with by the assessee and aiso that the questionnaires U/s 142(1) dt. 15.05.2014 and 20.01.2015 remained un-complied. According to the A.O. a final notice U/s. 142(1) presumably issued by the A.O. on 02.02.2015 also remained un-complied.
1.4 As a matter of fact, the claims/observations of the Assessing Officer in the Assessment Order are factually incorrect, The fact is that only one notice U/s 143(2) dated 06.08.2013 was received by the appellant on 22.08.2013 at the then address of the registered office which was complied with on 29.08.2013 which is well within one month as required under the provisions of Section 124(3) duly received by the Assessing Officer on 02.09.2013. in the said response, the appellant challenged the jurisdiction of the Assessing Officer because the Assessing Officer [D.C.I.T. Circle 10(2), Kolkata] was not empowered under law to have territorial jurisdiction over the case which have principal place of business at Delhi.
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1.5 That while issuing above said notice addressed at New Delhi, the Assessing Officer [D.C.I.T. Circle 10(2), Kolkata] was aware that the appellant’s principal business is at New Delhi which is a place out of his territorial jurisdiction. In spite of that knowledge, the assessing officer kept on completing the illegal assessment.
1.6 As such, it is established without doubt, that the assessment was made by the learned Assessing Officer without having any territorial jurisdiction and the Assessing Officer has grossly violated the provisions of Section 124(4) of the Income Tax Act. On the basis of foregoing submission, the assessment framed by DCIT ward 10(2), Kolkata may be declared null & void ab-initio and may kindly be annulled,
1.7 Your kind attention is also invited to the ratio laid down in the case of India Glycols Limited Vs. CIT (2005) 274 ITR 137 (Cal) which is a decision of the jurisdictional High Court. In appellant’s case, the registered office of the company, principle place of business and control office of the company is totally confined to the Union Territory of Delhi. All the returns of income from the inception of the company were filed with the Assessing Officer at Delhi. The return of income picked up by the Assessing Officer, Kolkata dearly reflects that the jurisdiction of the case lies with the Assessing Officer at New Delhi. Even the address of the company reflected in the Assessment Order framed by A.O., Kolkata is that of Delhi. In the absence of any order U/s. 127, the jurisdiction assumed by DCIT 10(2), Kolkata is totally illegal and accordingly the assessment made the Assessing Officer, Kolkata in furtherance
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of assumption of such illegal jurisdiction is also bad in law and illegal. Hence, it should be annulled.”
Ld. CIT(A) has called for remand report from the Assessing Officer on the submission made by the assessee who submitted his remand report dated 28.06.2016. Ld. CIT(A) on the basis of the said remand report has dismissed the assessee’s ground after observing and holding as under:
“4.2. I have considered the submissions of the AR of the appellant on the pertinent issue of the AO illegally assuming jurisdiction over the case of the appellant and consequently passing the impugned order. I have fully considered the contentions of the AR in this regard, which solely revolve around the fact that the appellant was incorporated with registered office in New Delhi. Its directors as well as its principal place of business always remained in New Delhi. The appellant has no business connection in Kolkata. It has filed its return of income manually as well as electronically for all previous years with the AO having jurisdiction on the appellant in New Delhi. It was further contended by the appellant that there was no order u/s 127 ever passed for transferring the jurisdiction from New Delhi and thus the order framed u/s 144 should be held to be void ab-initio. The AO in his report mentions that as per the record available with STD AST, the appellant had filed its return of income for AY 2006-07 vide acknowiedgemenTno.57000184 in the AO code WBG- D-805-1 on 25.12.2006, the same was processed u/s 143(1) on 20.02.2008. The AO mentions that the appellant has itself mentioned in the AO column in its return
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for AV 2006-07 as AO ward-10(2), Kolkata. Thereafter, the AO has given entire Pan History "of the appellant. The AO further states that in ail subsequent returns filed by the appellant from AY 2007-08 to 20012-13, all the returns were duly processed in Kolkata and the appellant never raised any objections to such processing. The statutory notice u/s. 143(2) was issued and duly served upon the appellant at its New Delhi address. The appellant requested the AO to transfer its case from Kolkata to New Delhi. However, the appellant never made a request to the concerned CIT for transferring its case from Kolkata to New Delhi u/s 127 of the act. I find that the appellant has not been able to rebut the factual aspect pointed out by the AO in its report and, therefore, I am unable to accept the contentions of the appellant that the assessment framed at Kolkata lacks jurisdiction and, therefore, the assessment should be annulled. I find that there was no legal ground for the appellant to seek transfer of its case from Kolkata charge to New Delhi charge without applying for transfer of its case u/s 127 of the Act. The fact that the returns were duly processed at Kolkata is also not in dispute, thus, I hold that the assessment framed by the AO is within his jurisdiction and there is no illegality in framing the order by the present AO. This ground is dismissed.”
Before us, ld. counsel for the assessee, Mr. D.C. Agarwal submitted that here in this case, all throughout assessee- company was not only registered at New Delhi but had its registered office right from the beginning at New Delhi. All the income derived including rental income was derived from the
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properties situated in Delhi. The assessee never had any business in Kolkata neither any establishment or property nor any residence of directors of the company in Kolkata. The return of income for the various years have been regularly filed at Delhi with Range-18, right from the Assessment Year 2005-06, when return was filed manually and from the Assessment Years 2006-07 to 2008-09, it was filed electronically along with copy of manual copy submitted before Assessing Officer, Range-18, New Delhi. Even while filing the return of income electronically from the Assessment Years 2009-10 to 2014-15, the designation of the Assessing Officer was always shown as Range-18, New Delhi. The details of filing of return of income and acknowledgment right from the Assessment Years 2005-06 to 2014-15 have been placed in the paper book from pages 37 to 46. He pointed out that none of the return were ever filed in Kolkata. He further submitted that the assessee never had any acknowledge as to how the Assessing Officer Kolkata was holding the jurisdiction of the assessee and no notice/order or acknowledgement was ever served on the assessee by the Assessing Officer, Kolkata. It was only in the Assessment Year 2012-13, assessee for the first time in February, 2016 came to know that assessee’s bank account has been attached by Assessing Officer, Kolkata and then it was discovered that ex- parte assessment order has been passed by the Assessing Officer, Circle-10, Kolkata against the demand raised. Thereafter, true copy of the assessment order was obtained
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from Assessing Officer, Circle -10, Kolkata and on that basis appeal was filed with Ld. CIT(A), Kolkata on 03.03.2016 which was admitted and decided by the impugned order dated 19.07.2016.
Ld. counsel further submitted that one of the notices sent u/s.143(2) at a New Delhi address by the Assessing Officer on 06.08.2013 signed by ITO, Ward-10, Kolkata for Assessment Year 2012-13 was received by the assessee and immediately thereafter, assessee has raised objection to the jurisdiction of ITO, Ward-10(2), Kolkata vide letter dated 29.02.2013 which was sent through speed post on the same date. The copy of which has been placed in the additional paper book page 2. The Assessing Officer in response to such letter intimated to the assessee vide letter dated 03.09.2013 that the jurisdiction on assessee would lie to him on account of PAN data base and the PAN of the assessee was allotted from Kolkata it was ‘AAACU7858B’. The Assessing Officer rejected the objection raised by the assessee at his own level without even invoking the provision of Section 124(4), wherein reference to PCIT has to be made mandatorily. Thereafter, ITO, Ward-10(2) transferred the case to DCIT-10(2), Kolkata who has passed an ex-parte order dated 18.03.2015 at an income of Rs.5,01,27,490/-. No notices sent by DCIT, Circle- 10 was received by the assessee. When the assessee has challenged the jurisdiction and transfer of jurisdiction from Kolkata to Delhi by way of an alternative plea vide letter dated 29.08.2013 to PCIT, he then communicated that issue of
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transfer will be considered after 31st March, 2015 after the completion of the assessment.
Ld. counsel further submitted that if ITO, Ward-10(2), Kolkata was processing the return of income for the Assessment Year 2012-13 and also for the earlier Assessment Year, then from the body of the return, he should have known that the assessee-company has been filing its return of income regularly within the jurisdiction of Range-18, New Delhi and whenever question of jurisdiction arises, then same has to be determined by PCCIT/PDGIT/PCIT/PDIT. The ITO, Ward-10(2) did not have the statutory authority or power to proceed for making the assessment. Because, in such case invoking of Section 124(2) is mandatory and any violation thereof will invalidate the assessment.
Without prejudice, he further submitted that assessee has raised objection to the jurisdiction of the ITO, Ward-10(2), Kolkata within one month of issuance of notice u/s.143(2) dated 06.08.2013 which was disposed of by him on 03.09.2013, and therefore, the requirement under a law for raising the objection within one month stands duly complied with. The Assessing Officer, Kolkata could not have any jurisdiction u/s.120 because in terms of Section 120(3) jurisdiction of the Assessing Officer is based on; firstly, territorial area; secondly, person or classes of person; thirdly, income or classes of income; and lastly, cases or classes of cases. Here, the case of the assessee does not file in either of
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the above categories and no case has been made out by the Assessing Officer or Ld. CIT(A) that the natural jurisdiction of the assessee falls in any of the four categories mentioned in Section 120(3). Further, PAN or allotment of PAN is not a criteria mentioned in Section 120(3) so as to provide jurisdiction to the Assessing Officer, Kolkata because the allotment of PAN is not under the control of the assessee. U/s.124(1) jurisdiction of the Assessing Officer over the assessee is decided by the CBDT on the basis of where assessee is either carrying the business in that area assigned to the Assessing Officer u/s.120 or the assessee residing within that area. In support of his contention, he strongly relied upon the judgment of Hon’ble Delhi High Court in the case of S.S. Ahluwalia (2014) 46 Taxmann.com 169. The relevant observation of the Hon’ble High Court reads as under:
“34. On analyzing the new Section 124, it is viewed that as per sub-section (1), Assessing Officer has jurisdiction in respect of persons carrying on business or profession where such business or profession was being carried out or situated within the area or where the business or profession was carried on in different areas, if the principal place of business or profession was situated within the area. Assessing Officer under sub-clause (b) also had jurisdiction in respect of any other person(s) residing within the area. Residence and place of business being the basis. Sub-section (2) stipulates that question/ dispute of jurisdiction among two or more Assessing Officers, if raised, shall be determined by the Director- General, Chief Commissioner or the Commissioner, or if the question relates to areas falling within the jurisdiction of different
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Directors-General, Chief Commissioners or Commissioners, then by the Directors-General, Chief Commissioners or Commissioners concerned, and if they are not in agreement, by the Board or by such Director-General, Chief Commissioner or Commissioner that the Board may by an Official Gazette specify. Sub-section (3) further stipulates that the objection to the jurisdiction could be questioned by an assessee or a person within one month from the date on which return of income under Section 139(1) was made or within one month from the date of issuance of notice under Section 142(1) or 143(2) or after completion of assessment, whichever was earlier. If no return of income was made, objection to the jurisdiction could be entertained, if made within the time allowed by way of notice under Section 115WD(2)/142(1)/115WH(1)/148 of the Act to make the return or by notice under first proviso to Sections 115WF or 144 to show cause why the assessment should not be completed by the best judgment of the Assessing Officer, whichever was earlier. Sub- section (4) lays down that when an assessee raises a dispute regarding jurisdiction of the Assessing Officer and the Assessing Officer if not satisfied with the correctness of the claim, he shall refer the matter for determination as per sub-section (2) of Section 124, however, this should be done before the assessment was made. The aforesaid Section, therefore, postulates waiver of objection to assumption of jurisdiction by the Assessing Officer. Time limit for raising the objection stands stipulated. Principle of deemed waiver applies. This could only happen when the authority does not lack or suffer from inherent lack of subject matter jurisdiction. When there is inherent lack of subject matter jurisdiction, principle of waiver does not apply. The principle being simple that by consent one cannot confer jurisdiction on authority which lacks inherent subject matter jurisdiction, "[emphasis supplied]”
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Thus, he submitted that in the present case there is inherent law of jurisdiction with the Assessing Officer, Kolkata u/s.124(1), secondly, objection u/s.124(3) raised within the statutory period has not been disposed of as per the requirement of Section 124(2)/124(4). Therefore, the entire assessment order is bad in law. In support of his contention, he relied upon the following judgment.
i. Sekhar Kumar Goenka vs. ACIT, (2014) 47 taxmann.com 236 (Cuttack-Trib).
ii. Joginder Singh v. CIT, (1981) 6 Taxman 245 (Punj. & Har.)
iii. Kunji Mal & Sons v. CIT (1982) 138 ITR 391 (Delhi)
iv. Abhishek Jain v. ITO (2018) 94 taxmann.com 355 (Delhi).
On the other hand, ld. CIT-DR submitted that, firstly, as per the PAN history of the assessee, PAN of the assessee was with Ward-10(2), Kolkata upto 01.07.2016. Since PAN of the assessee was in Kolkata, any e-return of income filed by the assessee and would automatically be linked with the jurisdiction of Ward-10(2), Kolkata. Secondly, the assessee has filed its return of income for the Assessment Year 2007- 08 with Ward-10(2), Kolkata. During the entire period of 2007-08 to 2012-13, no application was filed by the assessee u/s.127 to transfer the case from Kolkata to Delhi. He also referred to the provision of Section 139A(5)(d) and submitted
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that as per the requirement of the said provision, the assessee is required to intimate the Assessing Officer regarding change in address of the PAN which has not been done. He further submitted that all the returns right from the Assessment Years 2007-08 to 2012-13 was processed u/s.143(1) in the Assessing Officer code of ITO, Ward-10(2), Kolkata. When assessee filed a letter on 29.08.2017 requesting to transfer its case to New Delhi, the Assessing Officer vide letter dated 03.09.2013 informed the assessee that it was required to move an application u/s.127 for migration of PAN. Later on only the case transferred from ITO, Ward-10(2), Kolkata on 14.12.2014 to DCIT, Circle-10, Kolkata who referred the matter to PCIT-IV, Kolkata to transfer case to Delhi. On 16.01.2015 PCIT-IV, Kolkata directed that jurisdiction may be considered after 31st March, 2013. Thus, on these facts, the Assessing Officer Kolkata had correctly assumed the jurisdiction and passed the assessment order.
We have considered the rival submissions and also perused the relevant findings given in the impugned orders and the material placed on record qua the issue of validity of the jurisdiction of the Assessing Officer. Here, in this case, it is an undisputed fact that assessee was incorporated and has a registered office at New Delhi and all the activities from which Assessee company was deriving rental income from the properties situated in Delhi and NCR and there was never any business connection or establishment in Kolkata. Since inception, i.e., from the Assessment Year 2005-06, the
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assessee has been filing the return of income at the address mentioned at New Delhi which is evident from the return of income filed for the Assessment Year 2005-06 to Assessment Year 2014-15. From the perusal of the acknowledgement of return of income for Assessment Years 2005-06 and 2006-07, it is seen that acknowledgment seal bears a stamp of Additional Commissioner of Income Tax, Range-18, New Delhi. Even the return of income for the Assessment Year 2007-08 shows the address of New Delhi and the acknowledgment seal on the return of income bears the stamp of ITO, Ward-18, New Delhi and the stamp date is 3rd October, 2007. Even in the Assessment Year 2008-09, the acknowledgement bears the stamp of ITO, Ward-18(2), New Delhi dated 24th February, 2009. From Assessment Year 2009-10, the assessee has been filing the return of income electronically and designation of the Assessing Officer as per the Income Tax Department software where returns are uploaded, has mentioned the jurisdiction as Range-18, New Delhi. Thereafter all the returns of income have been filed electronically up till 2014-15 and the designation of the Assessing Officer has always been shown as Range-18, New Delhi.
The Department’s case before us is mainly that, the PAN data base shows that the PAN jurisdiction was with Ward- 10(2), Kolkata and it was only on 01.07.2016 the assessee’s case was transferred from Ward-10(2), Kolkata to Circle-27, Delhi. Thus, PAN jurisdiction all throughout these years lied
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with ITO, Ward-10, Kolkata only. Further, from the perusal of the document submitted by the ld. DR which contains the copy of return of income for the Assessment Year 2007-08, we find that the addressed mentioned in the return of income is ‘D-1108, New Friends Colony, New Delhi – 110065’. Even the manual copy filed before the Income Tax Department it bears the stamp of ITO, Ward-10(2), New Delhi. Thus, it cannot be held that at any point of time the assessee has filed return of income in Kolkata showing its jurisdiction at Kolkata. Not only that, in all the returns of income filed by the ld. CIT-DR in his paper book shows the designation of the Assessing Officer as Range-18, New Delhi. Now for the impugned Assessment Year 2012-13 when the assessee’s case was selected for scrutiny which notices u/s.143(2) was sent by ITO, Ward-10(2), Kolkata which was received by the assessee on 06.08.2013. Then within a month, i.e., on 29.08.2013, the assessee filed an objection to the jurisdiction of the ITO, Ward-10(2), Kolkata stating that assessee’s jurisdiction lies with Assessing Officer, Range-18, New Delhi. However, the Assessing Officer vide his letter dated 03.09.2013 intimated that jurisdiction would lie with him because of PAN.
In terms of Section 120, which prescribes that the criteria for the allotment of jurisdiction of Income Tax Authority shall be as per the directions of the CBDT; and four criteria have been laid down in sub section (3) namely, (a) territorial area, (b) persons of classes of persons, (c) income of
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classes of income, and (d) cases of classes of cases. Section 124 which governs the jurisdiction of the Assessing Officer allocates jurisdiction to the Assessing Officer as per the direction or order issued by the CBDT under Section 120(2) & (1); and sub Section (2) of 124 provides that, where a question arises whether an Assessing Officer has jurisdiction to assess any person then the question shall be determined by senior authorities like PDG, DG, PCC, CC or PC. These are the only authorities who can decide the jurisdiction when any question is raised. Here inthis case the ITO, Ward-10(2) Kolkata before whom the assessee has raised objection within time provided u/s.124(3) has himself rejected the objection without referring the matter as per the requirement of law enshrined in sub Section (4) of Section 124, which provides that where assessee raises the question of jurisdiction of Assessing Officer, then Assessing Officer shall if not satisfied with the correctness of the claim refer the matter for determining under sub Section (2) before the assessment is made, i.e., before the authorities mentioned in sub Section (2). Thus, ITO, Ward-10(2) could not have decided the jurisdiction on its own at that time and should have immediately referred the matter to the concerned higher authorities. As brought on record by the ld. CIT-DR, almost after 16 months from the date when assessee has filed its objection regarding jurisdiction of the Assessing Officer at Kolkata, Ld. DCIT, Circle-10 had referred the matter to ld. PCIT to decide the issue. As per the mandate of the law as provided u/s. 124(2),
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the ld. PCIT was required to adjudicate the issue of jurisdiction first before asking the Assessing Officer to proceed with the assessment. However, instead of deciding the issue of jurisdiction, Ld. PCIT merely opined that transfer of jurisdiction will be considered after the completion of the assessment. Such an instruction in our opinion was not in accordance with law. First of all, the question of jurisdiction which was raised by the assessee on 29.08.2013 before the ITO, Ward-10, Kolkata at the very first instance should have been referred to the ld. PCIT to decide the question of jurisdiction; and secondly even if the matter was referred to him by ld. DCIT, Circle-10 on 14.12.2014 then Ld. PCIT was bound to decide the issue of jurisdiction first, before directing the Assessing Officer to pass the assessment. The Assessing Officer cannot on its own asked the assessee to move an application u/s.127 for migration of PAN, because the power of transferring the case u/s.127, lies with higher authorities. Power u/s. 127 has been given to PDG/DG/PCC/CC/PCIT or CIT to transfer the case of an assessee from one jurisdiction to other under various circumstances. However, when assessee files and raised the question of jurisdiction before the Assessing Officer that he does not have the jurisdiction over his case, then Assessing Officer has no option but to comply with the mandate of law as provided in sub Section (2) of Section 124. If the Id. PC IT instead of deciding the issue of jurisdiction has simply instructed that transfer of jurisdiction will be considered after the completion of assessment, it
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means that he also understood that Assessing Officer Kolkata did not had the jurisdiction in the case of the assessee otherwise he would have decided the question of jurisdiction immediately in the month of December, 2014 as four months was still left for the limitation period, (i.e., 31st March, 2015). If the jurisdiction of the assessee had always been in Range- 18, New Delhi, then he has not required to move an application for jurisdiction of case u/s.127 from Kolkata to Delhi and it was PCIT alone who should have considered the matter in terms of Section 124(2) and 124(4). Thus, in our opinion, here in this case, we find that there has been a gross violation of the provision of Section 124(2) read with sub Section 4 of Section 124.
The entire case of the revenue hinges upon the interpretation that allotment of PAN is the criteria and foundation of deciding the jurisdiction of the Assessing Officer. However, nowhere in the statute it has been provided that PAN address will decide the territorial jurisdiction of the Assessing Officer. Section 139A merely provides who are the persons required to obtain PAN having regard to the nature of transaction of business and other conditions laid down that, Assessing Officer may allot a PAN and other procedure and mechanism of allotment of the PAN. The territorial jurisdiction is decided by the CBDT in terms of Section 120 only. Here, in this case, as discussed above, none of the parameters laid down for the territorial jurisdiction are applicable to the assessee. Even the Assessing Officer or the Ld. CIT(A) has not
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made out any case that assessee’s case falls in either of the given categories provided in sub Section (3) of Section 120. Allotment of a PAN from a particular place cannot provide jurisdiction to the Assessing Officer. The jurisdiction of the Assessing Officer over an assessee is decided by the CBDT on the basis of from where the assessee is either carrying the business in that area assigned to the Assessing Officer u/s.120 or the assessee is residing within that area. Admittedly, the assessee company does not only have registered office in New Delhi but also has been carrying out all its activities from which it has been earning income from New Delhi and has been filing the return of income from New Delhi. Even in the software of the Income Tax Department where return of income is uploaded online, the designation of the Assessing Officer as per the address has always been mentioned as Range-18, New Delhi. Had there been the allotment of jurisdiction by virtue of PAN, then the software of the Department would have assigned the jurisdiction as when assessee uploads the return of income electronically online. Be that as it may, nowhere in the statute it has been provided that allotment of a PAN would be the determinative factor for jurisdiction of the Assessing Officer. Thus, we hold that ITO, Ward-10(2)/DCIT, Circle-10(2), Kolkata did not have any jurisdiction over the assessee company and any order passed without jurisdiction is null and void. Accordingly, we hold that the impugned assessment order passed by Assessing Officer of Kolkata is without jurisdiction and hence the same
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deserved to be quashed as per the provisions of law. Accordingly, Cross Objection of the assessee is allowed.
Since, we have already quashed the assessment, the grounds raised in the Revenue’s appeal on merits stands dismissed.
In the result, the Revenue’s appeal is dismissed and the Cross Objection of the assessee is allowed.
Order pronounced in the open Court on 17th March, 2021.
Sd/- Sd/- [G. S. PANNU] [AMIT SHUKLA] [VICE PRESIDENT] JUDICIAL MEMBER DATED: 17th March, 2021 PKK: