ACIT, CIRCLE-2(1), HYDERABAD vs. Y S JAGAN MOHAN REDDY, KADAPA

6. The CIT(A) ought to have considered the fact that the mention of ‘Jagan Reddy’ and ‘Vijaisaiji’ in the evidences found cannot be a mere coincidence, that no attempt was made by Dalmia group to identify the names as belonging to some other parties and that the payments to ‘Jagan Reddy’ started soon after the sale of shares of Bharathi Cement Corporation Pvt. Ltd.

8. The CIT(A) failed to appreciate the fact that as per the information obtained from Mauritius tax authorities, both the entities were pass through entities and details of ultimate investors were neither available nor furnished by the assessee, that mere compliance with RBI and FEMA regulations does not establish he genuineness of the transactions, hence, the Assessing Officer had rightly concluded that the funds were remitted to an unidentified person and determined the cost of acquisition as ‘Nil’.

10. The CIT(A) ought to have appreciated the fact that the shares were purchased at two different rates of Rs.3001/- per share and Rs.1000/- per share within a span of one year from two related parties and that the shares of M/s Kealwan Technologies Pvt.Ltd had no independent value and derived the value from investment in M/s Sandur Power Company Ltd., therefore, the Assessing Officer had rightly determined the price at Rs.800/- per share after taking into account the value of the shares of M/s Sandur Power Company Ltd.

11. The appellant craves leave to, add to, amend or modify the above grounds of appeal either before or at the time of hearing of he appeal, if it is considered necessary.

3. The brief facts of the case are that the assessee, an individual and Director in a company, filed his return of income for A.Y.2011-12 on 30.09.2011, declaring total income of Rs.413,36,00,420/-. The case was selected for scrutiny to examine “the reasons and genuineness for high claim of refund out of TDS” and accordingly notice u/s 143(2) of Income Tax Act, 1961 (“the Act”) dated 08.09.2012 was issued and served on the assessee on 13.09.2012 by the DCIT, Circle-2(3), Hyderabad. Subsequently, as per action plan of the Board, the case was picked up by the Additional Commissioner of Income Tax, Range- 2, Hyderabad for completion of scrutiny assessment, by virtue of powers of concurrent jurisdiction and accordingly notice u/s 143(2) and specific questionnaire u/s 142(1) of the Act were issued on 03.08.2013. In response, the authorised representative of the assessee appeared from time to time and filed relevant details as called for.

5. During the course of assessment proceedings, the Assessing Officer noticed that the search operation conducted by Directorate of Investigation, New Delhi on Dalmia group cases on 20.01.2012, 27.01.2012 and 28.01.2012 unearthed systematic activity of the group in the form of cash receipts and payments and the unaccounted cash was kept in the bank lockers, in the name of employees. It was further noticed that certain employees of the group were maintaining lockers in the bank. Statements u/s 132(4) of the Act were recorded from Shri Neel Kamal Berry and Shri Joydeep Basu on 20.01.2012 and they confirmed that they were maintaining lockers at the instructions of Shri Sanjay Mitra. Shri Neel Kamal Berry gave details of 17 such lockers and stated that he opened and operated the lockers as instructed by his boss. The statements of employees were confronted to Shri Puni Dalmia, MD of D/s Dalmia Bharat Enterprises Ltd and Director in other group companies. In response to a specific question, he denied that any lockers are maintained by the group in the name of employees. The Assessing Officer based on the investigation report of Directorate of Investigation, New Delhi, coupled with statements recorded from various employees, observed that during the search action on 27.01.2012 at the residence of Shri Joydeep Basu, Manager(Treasury) of M/s Dalmia Bharat Enterprises Ltd, one pen drive was found and seized. A cloned copy of pen drive was prepared and examined. Extracts of relevant portions of the seized records shown that one account, by name “RumCurrt” was found on pen dive and this file contained “J.Reddy” account, extract of which is reproduced on page 8 and 9 of assessment order. Further, a note on capital gains on shares of Bharati Cement Corporation Ltd. was also found at “Confidential Files” and the same has been reproduced on page 10 of the assessment order. The Assessing Officer had also considered certain e-mail and SMS extracts and the same has been reproduced on page 11 and 12 of the assessment order. A statement on oath was recorded from the employees, in respect of pen drive, where Shri Joydeep Basu admitted that the pen drive belongs to him and it contains data belonging to Dalmia Group. The statements of the employees were confronted to Shri Puneet Dalmia and a statement on oath was recorded u/s 131 of the Act on 17.02.2012 and a specific question was asked to clarify the details found in the pen drive. In response, he submitted that “it has been informed to me that the pen drive has been seized from the residence of employee, Shri Joydeep Basu. However, I would like to clarify that the pen drive has been seized from the residence of the employee. The records have been maintained by him without understanding the nature and purpose of the same. On cursory perusal of the transactions, it is observed that the data contains inflow and outflow of cash and other transactions. I further state that the transactions do not pertain to M/s DCBL. Further, a question was asked to clarify whether any person named J.Reddy is known to you? And in response, he submitted that “I do not know him and hence unable to comment on the nature of the transactions with him. The Assessing Officer on the basis of statements recorded by the Directorate of Investigation, during the course of search in the Dalmia Group was also sought to make an independent enquiry during the proceedings in the case of M/s Bharati Cement Corporation Pvt.Ltd and summons u/s 131 were issued to various employees of Dalmia group including Shri Puneet Dalmia, Managing Director of Dalmia group. However, none of them appeared and were deposed before the Assessing Officer. The Assessing Officer, after taking note of relevant investigation report from the Directorate of Investigation, coupled with statements recorded from various employees, observed that the analysis of the facts and findings during the search operations in the case of Dalmia group clearly shows that, the employees of Dalmia group were maintaining records of unaccounted cash receipts and payments, which include cash payment in the name of “J.Reddy”, amounting to Rs.139 crores on various dates. Further, on perusal of one more document in the pen drive, contained note on capital gains computation, in respect of Dalmia Bharat Enterprises Ltd. towards sale of equity shares of Bharati Cement Corporation Ltd. in the off market during F.Y.2010-11, relevant to the A.Y.2011-12. As per the said evidence, M/s Dalmia Bharat Enterprises Ltd sold equity shares of Bharati Cement Corporation Ltd. to M/s Parficim (Vicat group) for consideration of Rs.146.54 crores @Rs.671/- per share. The cost of acquisition of shares in the case of Dalmia group is Rs.95 crores leaving a gain of Rs.51.54 cr. For tax purposes, after considering indexed cost, the taxable gain (Long Term Capital Gain) arrived at Rs.30,99,68,666/-. On this amount, tax works out to Rs.6,86,42,561/- and the same has been rounded off to Rs.6.87 crores. As this cost has been met out of sale proceeds, the cash in hand after meeting tax liability would be Rs.139.67 cr., which apparently rounded off to Rs.139 cr. and the same has been paid to assessee group on various dates recorded in the unaccounted payments in the records of Dalmia group. The entry contained “J.Reddy” means, the amount paid to Mr.Jagan Reddy and this fact is further confirmed by e-mail and SMS correspondence between Dalmia group employees and Shri Vijay Sai Reddy. Therefore, he opined that the shares of Bharati Cement Corporation Ltd. held on paper in the name of Dalmia Bharat Enterprises Ltd. were held only for name’s sake and the real owner is the assessee group. As soon as the shares were sold and consideration received from M/s Parcifim SAS on 16.04.2010, the amount became a receipt in the hands of the assessee. The Assessing Officer, further noted that as per the collusive agreement, which naturally is not recorded in writing, nor disclosed to the department, Dalmia Group was delivering the cash tranches to the assessee as single delivery is difficult due to operational constraints. Therefore, the AO opined that the amount of Rs.139 crores was assessable in the hands of the assessee company, being the amount received on sale of shares held by his agent / benami, by name Dalmia Bharat Enterprise Ltd. as the legal owner for the purpose of record. Out of this amount, Rs.95 crores has been assessed in the hands of the assessee on “protective” basis as income from other sources u/s 56(1)(vii), being payment received without any consideration.

However, the gain on sales of shares of Rs.44.67 crores is taxable in the hands of the assessee on a substantive basis, as he is the beneficiary and recipient of the profit in the transaction. As the assessee is not the legal owner of the shares, the income is treated as income from other sources u/s 56 of the Act. Thus, the Assessing Officer made total addition of Rs.139.67 crores towards alleged amount received by the assessee, towards sale of shares of Bharati Cement Corporation Pvt. Ltd. by M/s Dalmia Bharat Enterprises to M/s Parficim SAS.

6. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee had filed detailed written submissions on 10.09.2021, which is reproduced on page 37 to 56 of the Ld.CIT(A) order. The assessee had also relied upon certain judicial precedents, in support of his contentions and argued that the documents in question have been found from the premises of third party and therefore, no adverse inference can be drawn, when there is no corroborative material available with regard to allegation of cash payment to the assessee. The assessee further contended that the nature of the seized material comprising of electronic data cannot be held to be admissible as evidence u/s 65B(4) of the Act, because the procedure provided for cloning the electronic data has not been followed and in this regard, he relied upon certain judicial precedents. The assessee further contended that the shares of Bharati Cement Corporation Ltd. were held by Dalmia Bharat Enterprises Ltd. and the shares were sold to third party, M/s Parcifim SAS. The assessee is neither the legal owner of the shares of Bharati Cement Corporation Ltd. nor the beneficial owner. Therefore, the transactions of sale of shares by third party cannot be regarded as transaction of assessee, only on the basis of some documents found from the third party’s possession, without any corroborative evidence to prove the allegation that the assessee is real beneficiary of the amount received by Dalmia Bharat Enterprises Ltd. The assessee further contended that the name of the assessee does not appear in the seized papers and neither does the name of Shri Vijay Sai Reddy appear in those documents, which refer to payments made. Further, during the course of assessment proceedings, it was clarified that Mr. Murli has no connection with the assessee and there is no statement of assessee recorded admitting such transactions. Further, even the employees / associates of Mr. Puneet Dalmia have never implicated the assessee, in any manner whatsoever. Although, the Assessing Officer alleged that the shares of Bharati Cement Corporation Ltd. were held in the name of Dalmia Bharat Enterprises Ltd. as a benami / agent, but real owner is the assessee, but, there is no evidence with the Assessing Officer to allege that there is any agreement between the parties and further either the evidence to the allegation of quid pro quo has been alleged by the Assessing Officer. Therefore, merely on the basis of findings in some other group of cases and statements recorded from employees of Dalmia group, it cannot be said that the assessee has received the sale consideration in cash for sale of shares and the same is assessable in the hands of the assessee.

7. The Ld.CIT(A), after considering relevant submissions of the assessee and also taking note of relevant facts, deleted the additions made by the Assessing Officer, towards amount received by Dalmia Bharat Enterprises Ltd., towards sale of equity shares of Bharati Cement Corporation Ltd. to M/s Parcifim SAS, amounting to Rs.139.67 crores, which consist of protective addition of Rs.95 crores and substantive addition of Rs.47 cores. The CIT(A) further, held that the Assessing Officer drawn presumption against the assessee, although the pen drive has not been found from his possession. Further, on the basis of the contents of the pen drive, inference has been drawn that Rs.139 crores was paid to the assessee, even though, the assessee denied any knowledge or connection with the said transaction. So far as material in the case of Dalmia Group does not show any regular transaction with the assessee. Thus, making additions on the basis of documents seized from the third party, with whom he does not have regular business transactions is not justified. The CIT(A) further held that the Assessing Officer has extended the scope of section 132(4A) of the Act, and drawn presumption against third party, which law does not permit. The presumption u/s 132(4A) only can be drawn against searched person and not any third party. Further, searched person in this case is Dalmia group and the transactions do not belong to the assessee. To summarise, the additions made by the Assessing Officer on the basis of certain entries in the pen drive seized from Dalmia group, without bringing any independent evidence on the record is not justified. Further, the Assessing Officer refers to one entry called J.Reddy or JR in the documents, but nowhere in the statement in the search proceedings in Dalmia group, there was any question about the contents of the said material and J.Reddy account. Although the statement recorded from the employees contained modus operandi of Dalmia group in handling unaccounted cash and also discussion about the papers contained in the pen drive, neither investigation carried out by the Directorate of Investigation, New Delhi, nor the Assessing Officer has ascertained the nature of entry contained in the said pen drive and also the person to whom the said amount is paid. Further, the papers relied upon by the Assessing Officer including investigation report from Delhi have not been given to the assessee and also no opportunity of cross examination is provided by the Assessing Officer. In the absence of any evidence to link the assessee to the documents found in the possession of Dalmia group and further in the absence of any identification of J.Reddy or JR account in the enquiry, merely on the basis of some documents, it cannot be alleged that the assessee has received sum of Rs.139 crores, as recorded in the pen drive found during the course of search in the case of Dalmia group. Therefore, directed the Assessing Officer to delete the addition of Rs.139.67 crores, comprising of Rs.95 crores on protective basis and Rs.44.67 crores on substantive basis.

8. Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before the Tribunal and the assessee has filed cross objection.

9. The Ld.CIT-DRs, Ms.M.Narmada and Ms.K.Haritha, submitted that the Ld.CIT(A) erred in deleting the addition of Rs.139.67 crores made u/s 56(1)(vii) of the Act, towards amount received on sale of shares held by Dalmia Bharat Enterprises Ltd as an agent / benamidar of the assessee. The Ld.CIT-DR, further submitted that the Ld.CIT(A) erred in stating that the Assessing Officer had erroneously drawn a presumption in respect of the third party, i.e. the assessee with regard to the evidence found during the search in Dalmia group, without appreciating the fact that the Assessing Officer analysed the evidences found during the search including data entries in the accounts, J.Reddy and JR account, e-mail and SMS communication between key persons of Dalmia group and of the assessee and a note on capital gain on sale of shares of Bharati Cement Corporation Pvt. Ltd. before coming to his conclusion. The Ld.CIT-DR, further, submitted that the Ld.CIT(A) erred in observing that there were no regular business transactions with Dalmia group, without appreciating the fact that regular business transactions is not mandatory and more particularly, when the payments were on “quid pro quo” basis, as discussed in the assessment order. The Assessing Officer has brought out clear facts to the effect that the assessee is beneficial owner of the shares of Bharati Cement Corporation Ltd. held in the name of Dalmia Bharat Enterprises Ltd. and the entire amount of sale consideration of Rs.139.67 crores, after expenses has been transferred to the assessee in cash on various dates, which is evident from the documents found on pen drive, seized during the course of search in the case of Dalmia group and its employees. The Ld.CIT-DR, further, referring to the decision of ITAT Hyderabad in the case of Bharathi Cement Corporation Pvt Ltd. for the A.Y.2009-10 in and 6967/Hyd/2014 order dated 10-08-2018 and more particularly, the findings of the Tribunal on the issue ‘quid pro quo’, submitted that the shares of Bharati Cement Corporation Pvt Ltd were held by Dalmia Bharat Enterprises Ltd. as agent/benamidar of assessee group for a favour from the Govt. of Andhra Pradesh and the subsequent sale of shares by Dalmia Bharat Enterprises Ltd. is nothing, but sale of shares of the assessee, as agent / benamidar and therefore, the Assessing Officer has rightly made additions towards profit derived from sale of shares on substantive basis in the hands of the assessee u/s 56(1)(vii) and further towards cost of acquisition on protective basis, because the substantive addition has been made in the name of Bharati Cement Corporation Ltd. The Ld.CIT(A),without considering the relevant facts, simply deleted the additions made by the Assessing Officer. She, therefore submitted that order of the CIT(A) should be reversed and addition made by the assessing officer should be upheld.

12 In light of above factual background, if we examine the reasons given by the Assessing Officer to make additions towards the amount received on sale of shares of Bharati Cement Corporation Ltd. by Dalmia Bharat Enterprises Ltd. in the hands of the assessee u/s 56(1)(vii), we ourselves do not subscribe to the reasons given by the Assessing Officer, for the simple reason that, although the Assessing Officer refers to contents of certain documents found in the pen drive, coupled with the statement recorded from Shri Joydeep Basu, Shri Neel Kamal Berry, Shri Sanjay S. Mitra and Shri Puneet Dalmia on various dates, in all the above statements, the modus operandi of maintaining parallel cash book is detailed. Further, the statements may provide insight into the cash dealing by the Dalmia group, however, all queries or question or reference in the statements to these people that are not subject matter of this appeal. A statement recorded before the Delhi Investigation Wing do not contain any question with respect to the identity of the person behind the accounts as J.Reddy or JR accounts. This person / entity, JR or J.Reddy was never identified by the employees of Dalmia group as recorded in the pen drive. Further, a direct question, in this regard was put forth to Puneet Dalmia, in the statement recorded u/s 131 of the Act on 17.01.2012, where he denied that he knows any person, J.Reddy and further, although subsequently, once again statements were recorded from various employees, but none of them identified the assessee as a person, J.Reddy, whose account is found in the pen drive consisting parallel cash book of Dalmia group. Therefore, based on the investigation report, coupled with statements recorded by the Investigation Wing, Delhi from various persons present during the search proceedings in the case of Dalmia group, nothing or no evidence was brought on record to implicate the transactions recorded in the so called pen drive to the assessee. Further, although the Assessing Officer has discussed a note on capital gains in respect of Dalmia Bharat Enterprises Ltd. towards sale of equity shares of Bharati Cement Corporation Ltd, but, the Assessing Officer never brought out any evidence which can be linked to the assessee, in respect of sale of shares of Bharati Cement Corporation Ltd. Further, the shares were purchased by the Dalmia Bharat Enterprises Ltd on preference allotment in the F.Y.2006-07, and 2007-08. The said shares were sold during F.Y.2010-11 relevant to A.Y.2011-12 to M/s Parcifim SAS and the resultant long term capital gains / short term capital gains has been offered to tax by Dalmia Bharat Enterprises Ltd. The shares were never held by the assessee at any point of time, nor the assessee is having any position in the said company. Although the Assessing Officer alleged that the shares of Bharati Cement Corporation Ltd. were held in the name of Dalmia Bharat Enterprises Ltd as agent / benamidar and for this purpose, the Assessing Officer has brought out the theory of quid pro quo, but no evidence was brought on record, what kind of favour has been given to Dalmia group by the assessee, to allege these transactions as ‘quid pro quo’. In this respect, it is relevant to refer to the arguments of the counsel for the assessee that the assesseenever held any position during the relevant point of time, when these shares were purchased by Dalmia group and sold to third party during the impugned assessment year. In the absence of any direct evidence to allege quid pro quo, in our considered view, merely on suspicions and surmises, tax liability cannot be fastened on the assessee on the basis of statements of some third party.

13. The provisions of section 132(4A), clearly says, that where, any books of accounts or other documents which is found in the possession or control of any person in the course of search, it may be presumed that such books of accounts or other documents belong to such persons and that the contents of such books of accounts and other contents or documents are true and further, signature and every other part of such books of accounts or other documents which are in the hand writing of any particular person which may reasonably be presumed to have been signed by or in the handwriting of any particular person. In the present case, the so-called pen drive was claimed to have been found in the possession of a person in the Dalmia group during the course of search and the contents have been cloned during the search proceedings. The Assessing Officer could not link the said documents to the assessee either by way of any corroborative evidence or from the statement of the employees recorded during the course of search. Therefore, merely on the basis of suspicion or surmises, the presumption as contained in section 132(4A) cannot be drawn against the assessee, when such documents were not found in the possession of the assessee or seized from the assessee during the course of search. In our considered view, a cardinal principle of taxation that suspicion, however, strong cannot take the place of evidence and this principle is supported by the decision of Hon'ble Supreme Court in the case of CIT Vs.Daulatram Rawatmull (1964) 53 ITR 574 (SC). It is a well settled law that loose papers and documents cannot possibly be construed as books of accounts regularly kept in the course of business and this principle is supported by the Hon'ble Supreme Court in the case of Central Bureau of Investigation Vs. V.C.Shukla (1988) 8 SSC 410. A similar view has been taken in the case of Chauharmal Vs. Commissioner of Income Tax (1988) 172 250 (1) 38 Taxmann 190 (SC), where it has held that such evidence would therefore be outside the purview of section 34 of the Evidence Act, 1972. A similar view has been taken by the Hon’ble Supreme Court in the case of Common Cause (A registered Society Vs. UOI (2017) 394 ITR 220 (SC), where, it has been held that search material found in any search do not have any evidentiary value and the transactions recorded in such papers etc. would have to be corroborated by independent evidence to proceed against the person, whose names appear as beneficiaries in such documents. In the present case, the entire addition hinges on evidence gathered from third party document, without any corroborative evidence to suggest that in the so-called documents that have been found and account by name Shri J Reddy or JR as the assessee and the assessee is beneficiary of whatever amount recorded therein. It is also pertinent to note that although the Assessing Officer claimed that the pen drive was found in the possession of an employee,subsequently those employees have denied allegation of the Assessing Officer and stated that no such pen drive was found during the course of search. Even Mr. Puneet Dalmia, Managing Director of Dalmia group also denied having knowledge of any pen drive found in the possession of employee and contents recorded therein. Therefore, the presumption with regard to contents of documents has been drawn against the assessee, without there being any corroborative evidence to link such documents to the assessee. In our considered view, if at all any presumption can be drawn on such documents, then the same can be drawn against Dalmia group and the onus shall be on the Dalmia group to produce cogent material to rebut presumption u/s 132(4A). The Dalmia group never alleged that the transactions belong to the assessee. As discussed earlier, even in the statements recorded from the employees at different stages and different period before different authorities did not implicate the assessee by any manner whatsoever. Therefore, we are of the considered view that the additions made by the Assessing Officer on the basis of third-party evidence, without providing this evidence to the assessee and allowing cross examination is contrary to law and settled position. Since the Assessing Officer failed to bring on record any evidence in contrary to allege that the assessee is beneficiary of contents recorded in the documents found in the pen drive seized from the employees of Dalmia group, in our considered view, no additions can be made merely on the basis of presumption that the assessee may be beneficiary of the said document by bringing the theory of ‘quid pro quo’, without any evidence to support the allegation of ‘quid pro quo’ theory . As noted in earlier paragraphs, the assessee was not holding any official position at relevant point of time, to influence any person for favoring or benefit to the Dalmia group and therefore, in the absence of any evidence to the contrary, it cannot be alleged that these transaction is part of quid pro quo and whatever consideration received by third party for sale of shares of a company can be assessed in the hands of the assessee as income u/s 56(1)(vii) of the Act.

14. At this stage, it is relevant to refer to various decisions relied upon by the learned counsel for the assessee. The assessee has relied upon the decision of Hon'bleHigh Court of Delhi in the case of CIT Vs. Sant Lal [2020] 118 taxmann.com 432 (Delhi), where, Hon'ble High Court, in light of provisions of section 132(4A) and documents found during the course of search held that where in search of premises of third party, diary was seized allegedly containing entries of hundi transactions on behalf of parties including assessee whose names were written in abbreviated / code words, since diary was neither found from premises of assessee nor was it in the hand writing of assessee and Revenue failed to produce cogent material to link assessee to diary, no addition could be made. The relevant findings of the Court are as under:

16. The assessee had also relied upon the decision of the ITAT Mumbai bench in the case of Shri Anand Jaikumar Jain in 3821, 3822 & 3823/Mum/2019 dated 22.04.2022. The coordinate Bench on identical set of facts held as under:

“16. Considered the rival submissions and material placed on record. We observe from the record submitted before us that there was a search at the premises of Dalmia Group and certain incriminating documents were found, it revealed alleged unaccounted cash transactions between Dalmia Group and Jain Group. The revenue considered the fact that the assessee is the main person in Jain Group, the DDIT (Inv), New Delhi referred the issues to the assessing officer, accordingly reassessment proceedings were initiated in the case of the assessee. When the above findings were confronted with the assessee during the assessment proceedings, we observe from the record that the assessee has consistently denied having any transactions with the Dalmias. From the record submitted before us, such stand of the assessee was communicated to the Assessing Officer vide letter dated 04.03.2014 (Para no. 3.1 of assessment order). Further communication to this effect was made vide letter dated 20.03.2014 addressed to the Assessing Officer (Para no. 3.2 of assessment order). Further, we observe that the Assessee's statement was recorded u/s.131(1) of the Act on 11.05.2012 by ADIT (Inv), New Delhi, who had carried out a search in the case of Dalmia group, which has been reproduced by the Assessing Officer on Para 11.8 of his order. In the said statement also, the assessee has denied having any transactions or business dealings with the Dalmias.

17. We also observe that the assessee also filed an affidavit before the CIT(A) (Para 7.7 of the CIT(A) order) wherein the assessee has reiterated that he does not have any business dealings or transactions with the Dalmias. It is also a fact on record that the said affidavit has not been disproved by the Assessing Officer in his remand report dated 05.04.2018. Thus, the case of the assessee stands on a different footing from a case where assessee may have made admission at any stage of the proceedings.

18. Coming to the nature of seized material found during search, we observe that the seized data was maintained by Shri Joydeep Basu but he is stated to be only recording the entries. He is stated to be doing as per the inputs provided by Shri Neel Kamal Berry. Shri Neel Kamal Berry is stated to be receiving instructions from Sanjay Mitra and Puneet Dalmia. (Para 4.3, 4.4 of the assessment order). It is evident from the above that, even as per Department, the person carrying out the transactions, person recording the transactions and person giving instructions are different. This is to be seen in the light of the fact that Dalmia Group have disown the seized data while filing the application before Settlement Commission. The relevant portion of the order of Income Tax Settlement Commission, containing the averments of Dalmias, is reproduced as under: - “ …….. 4.1 During the course of search, a Pen drive as seized ......... In this connection, the applicants have made the made the following narration in the SOF which is reproduced hereunder: A Pen Drive was alleged to have been seized from the residence............The department claims that print out of 125 pages was taken from the cloned copy of pen drive……… 5. It is submitted by…..Shri Gautam Dalmia, the modus operandi and background of the cases, the nature of income offered, etc. have been discussed in the SOF and other submissions, which are briefly summarized as hereunder :

As stated supra, a Pen Drive was also allegedly found from the residence of an employee. No copy of the said Pen Drive has been made available to the applicants by the department…..”

19. Further we observe that in reply to Rule 9 report reproduced on Page no 18 of the order, Dalmias have stated that 'the employees who were recording/executing the transactions were not actually aware of the whole/correct import of the transaction. They have further observed at page 21 of the order that none of the Dalmia family member was present at the time when the pen drive was seized or cloned. It is their claim that 'hence, the ownership and authenticity of the contents of the pen drive per se is not clear'. We observe that the amount of addition admitted before the Settlement Commission by the Dalmias is way too small than the addition made in the case of the assessee. Although the Department has strongly objected this before the Settlement Commission (Pg no 13 of ITSC order), the application has been accepted and nothing has been brought on record to show that the order of the Settlement Commission has been reversed or even challenged. In any case, even if the person from whom the documents have been found out have accepted the Correctness of transaction before the Settlement Commission, in our considered view, the same is not binding on the assessee. The similar view was expressed in the decision of Jaipur Bench of the Tribunal in the case of Moti Developers v. ACIT in dated 07.07.2017. Further, it is brought to our notice that the seized MOUs relied upon by the Department are undated, unsigned (by either party) and titled as 'draft'. It is the duty of the AO to bring on record that the same was acted upon, at the same time, the Dalmia Group has gone to ITSC to settle the issue, this itself does not prove that unsigned MOUs were actually acted upon and how it is linked to the assessee.

20. Further, the seized material relied upon by the Assessing Officer for making addition in the hands of assessee does not have any reference to the name of assessee. The addition of Rs. 47 crores in the year under consideration has been made on the basis of seized documents page no. 21 (page no. 14 of paper book). We observe that no statement has been recorded in respect of this page and Seized material has not been corroborated by bringing on record any of the transactions of assessee in respect of purchase of shares, sale of shares, receipt of dividend etc. The statement and affidavit of the assessee, on the contrary, disproves the seized documents. In our view, such statement and affidavit have not been disproved. 17. The assessee also relied upon the decision of ITAT Ahmedabad in the case of Prarthana Construction (P) Ltd. vs Deputy Commissioner of Income Tax (2001) 70 TTJ 122. The coordinate Bench of ITAT under identical set of facts held as under :

“We have given our thoughtful consideration to the facts and circumstances of the case and also considered the rival submissions made before us. It appears that the main stay of the Department’s case for making the impugned addition of Rs.45 lakhs is the documents appearing at Sl. No.22 of Annexure A-1 of the Panchnama found from the residence of Sureshbhai. A Patel who is a partner of Gokul Corpn. As well as other documents found during the search on 21.9.1995. The first issue which falls for consideration before us is whether these documents ad loose papers constitute admissible and relevant evidence in support of the Department’s case or not. IT is a settled proposition, as held by various judicial authorities, that rigours of the rules of evidence contained in the Evidence Act are not applicable to the Income tax proceedings. However, the principles contained I the Evidence Act, incorporated from Rules of natural justice forming part of the common law would naturally be applicable of income-tax proceedings. Reference in this connection may be made to the decision of Supreme Court in the case of Chuharmal V.CIT [1988] 70 CTR (SC) 88 (1988) 172 ITR 250 (SC). Now if we consider the evidentiary value of these documents as per section 34 of the Evidence ct, 1872, it is amply clear that these loose papers and documents cannot possible be construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of section 34 of the Evidence Act, 1972. The ratio of the landmark decision of Apex court in the case of Central Bureau of Investigation v V.c.Shukla& Ors (supra) relied upon by the learned counsel would apply. We are, therefore, of the considered opinion that the Revenue would not be justified in resting its case on the loose papers and documents found from the residence of a third party even if such documents contain narrations of transactions with the assessee-company. At this stage we may also refer to the provisions of section 132(4A). The presumption under the provisions of section 132(4A) would in any case not be applicable to a third party from whose possession such papers and documents have not been found by the Revenue. The Revenue has further relied upon the statements of Shri Sureshbhai and Shri Deepak Mehta partners of M/s Gokul Corporation. We find merit in the contention of the learned counsel that such statements recorded at the back of the assessee could not ipso facto include the case against the assessee particularly when the maker of the statements have not been allowed to be interrogated by the assessee-company.’ 18. In view of this matter and considering the facts of the present case and also following the decisions of various courts and Tribunals discussed hereinabove, we are of the considered view that the Assessing Officer is erred in making additions towards consideration received by Dalmia Bharat Enterprises Ltd. towards sale of shares of Bharati Cement Corporation Ltd to M/s Parcifim SAS, amounting to Rs.139.67 crores as income of the assessee u/s 56(1)(vii) of the Act. The Ld.CIT(A), after considering the relevant facts has rightly deleted the additions made by the Assessing Officer towards cost of acquisition of Rs.95 crores on ‘protective basis’ and substantive addition of 44 crore in the hands of the assessee. Thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue.

Cross Objection No.1/Hyd/2023

1(a). The Assessing Officer has erred in making addition / disallowances which are beyond the issue of CASS and hence the same are illegal and bad in law. 1(b) The Assessing Officer has exceeded his jurisdiction by making addition on issues which are not forming part of CASS reasons for selection of case for limited scrutiny i.e. “the reasons & genuineness for high claim of refund out of TDS “ 2. The learned Commissioner of Income Tax(Appeals) NFAC, Delhi is justified in allowing the appeal of the Assessee on merits.

21. The assessee had also filed a petition for admission of additional grounds of cross objection on 05.04.2024 and relevant additional grounds of cross objection filed by the assessee are reproduced as under :

The Ld.Addl.CIT erred in assuming jurisdiction over the assessee and completing the assessment under the pretext of concurrent jurisdiction without any specific instructions entrusting him jurisdiction over the case of assessee from the CBDT or any other authority authorised in this regard. The assessment order passed by the Addl.CIT is illegal and bad in law.

22. The Ld. AR for the assessee Shri. Vijay N Mehta, CA, at the time of hearing submitted that additional ground filed by the assessee challenging jurisdiction of the A.O who had passed the assessment order is a preliminary issue which goes to question with authority of the officer in assumption of jurisdiction u/s 120 of the Income Tax Act, 1961. Therefore, the same may be admitted and adjudicated on merits. In this regard, he relied upon the decision of the Hon’ble Supreme Court in the case of CIT Vs. NTPC 229 ITR 383 (SC).

23. Ld. CIT-DRs, Ms. Narmada and Ms. Harita, on the other hand, strongly opposing admission of additional ground submitted that the assessee has taken additional ground for the first time before the Tribunal and questioned the authority and jurisdiction of the Addl. Commissioner of Income Tax (Addl.CIT) who passed the assessment order on the ground that unless the Addl. CIT possess valid jurisdiction and authority u/s 120(4)(b) of the Income Tax Act, 1961, he cannot act as A.O to pass the assessment order. But, fact remains that, as per provisions of Sec. 124(3) of the Act, the issue of jurisdiction can only be questioned within the prescribed time allowed under the Act. In this case, the assessee had taken additional ground, for the first time before the Tribunal without raising any objection either before the A.O or the Ld. CIT(A) and hence, additional ground raised by the assessee required fresh investigation into facts which are not on record, therefore she argued that additional ground raised by the assessee should not be admitted.

25. The solitary issue that came up for our consideration from additional round raised by the assessee is that, whether the Ld. Addl. CIT who passed the assessment order dated 24.03.2014 is vested with jurisdiction and authority to pass such order in absence of proper order u/s 120(4)(b) of the Act. The Ld. AR for the assessee submitted that the assessment order passed by the Addl. CIT, Range-2, Hyderabad is bad in law and liable to be quashed, because the A.O who passed the assessment order does not have authority and jurisdiction in the absence of a proper order passed u/s 120(4)(b) of the Act. The Ld. AR for the assessee further submitted that as per the provisions of Sec. 2(7A) of the Act, as it stood at that relevant period, the A.O means the Asst. Commissioner of Income Tax (in short ‘ACIT’) or Dy. Commissioner of Income Tax (in short ‘Dy. CIT) or Asst. Director of Income Tax (in short ‘ADIT’) or Income Tax Officer (in short ‘ITO’) vested with the jurisdiction by virtue of orders issued u/s 120(1) or (2) or any other provisions of the Act. The AR further submitted that the JCIT or Addl. CIT can exercise or perform any of the powers and functions of the A.O, if he is directed at u/s 120(4)(b) of the Act. Unless he was directed by a specific order under said section, he cannot perform any of the powers and functions of the A.O. The Ld. AR further submitted that the JCIT / Addl. CIT were not an A.O as per the definition of Assessing Officer as defined u/s 2(7A), until the deification was amended by the Finance Act, 2007 with retrospective effect from 01.06.1994. Further, even after the amendment, the Addl. CIT / JCIT can exercise or perform the power of an A.O, only if he is directed under clause (b) of sub-Sec. (4) of Sec. 120 of the Act. Further, by virtue of amendment brought to Sec. 2, sub sec. 7A by Finance Act, 2007 corresponding amendment was also made to Sec. 120(4)(b) of the Act, with retrospective effect from 01.06.1994 by vesting jurisdiction of A.O on the JCIT / Addl. CIT, if the board by virtue of general or special order authorizes / empowers the Director General of Income Tax (in short ‘DGIT) or Chief Commissioner of Income Tax (in short ‘CCIT’) or Pr. Commissioner of Income Tax (in short ‘Pr. CIT) to issue orders u/s 120(4)(b) of the Act, vesting the powers of A.O to the Addl. CIT / JCIT. The Ld. AR further submitted that in the present case, the revenue has failed to produce any order passed u/s 120(4)(b) of the Act, by virtue of which the Addl. CIT could vest with jurisdiction and authority to act an A.O. The Ld. AR further submitted that although the department has filed a copy of notification issued by the CBDT No. 64/2014 dated 13.11.2014 which authorizes the Addl. CIT to exercise the powers and perform the functions of A.O, but failed to file order passed by any of the authorities including Pr. CIT / CIT u/s 120(4)(b) of the Act. Further, although the Revenue has filed, order of Pr. CIT- 17, Hyderabad dated 15.11.2014 passed u/s 120(1) and ((2) of the Act, by virtue of notification of the CBDT 22.10.2014, but such notification is a general notification appointing or authorizing Jt. CIT / Addl. CIT to act as an A.O in class of persons or classes of persons. However, there is no specific order was passed u/s 120(4)(b) of the Act, to authorize and empower the Addl. CIT to act as an A.O. Therefore, the order passed by the Addl. CIT, Range-2, Hyderabad is void-ab-initio and liable to be quashed. In this regard relied upon the following judicial precedents:

“1. Tata Sons Ltd., Vs. ACIT, [2017] 162 ITD 450. 2. Microfin Securities (P.) Ltd., Vs. ADIT, [2005] 3 SOT 302.

4. DCIT Vs. Ganesh Reality & Mall Pvt. Ltd., ITA No. 581/Lok/2017.

26. The Ld. CIT-DR, Ms. M. Narmada and Ms. Harita, on the other hand, referring to the provisions of Sec. 2 Sub Sec. (7A), Sec. 2 Sub Sec. 2(28C), 2(1C), 116, 117,118, 119, 120, 124 & 127 of the Act, and other provisions of the Act, submitted that the term A.O would include JCIT after the amendment of Sec. 2 Sub Sec. 7A by the Finance Act 2007 with retrospective effect from 01.06.1994 which is evident from the notification issued by the CBDT u/s 120(1) & (2) of the Act, and also the order passed by the CCIT, Hyderabad u/s 120 (1) & (2) of the Act. The DR further submitted that the provisions of Sec. 120(1)&(2) of the Act, are very clear as per which, the Income Tax authority shall exercise all or any of the powers and perform all or any of the functions conferred on or as the case may be assign to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. The DR further submitted that the directions of the Board under Sub Sec. 120(1) may authorize any other Income Tax Authority to issue order in writing for the exercise of the powers and performance of the functions by all or any of the other income tax authorities are subordinate to it. She, further, referring to the provisions of Sec 120(6) of the Act, submitted that notwithstanding anything contained, any directions or order issued under this Section, or in Sec. 120 (4) of the Act, the Board may by notification in the official gazette direct that for the purpose of this Act, by income tax authority exercising and performing the functions, in relation to the said person or clause of persons shall be such authority as may be specified in the notification. She further submitted that, if we go through the provisions of the Act, it is very clear that once there is specific order passed u/s 120 (1) & (2) of the Act, empowering the JCIT / Addl. CIT to Act as an A.O, then there is no need of separate order u/s 120(4)b of the Act, to act as an A.O, because the CBDT has issued a general notification and empowered JCIT / Addl. CIT to act as an A.O under this Act by way of notification 267/2001/F.No187/5/2001 DATED 17-0- 2001. The DR further submitted that as per the Board circular No. 64/2014 dated 13.11.2014, the Board has directed that the Add. CIT or JCIT as the case may shall exercise the powers and performs the function of the A.O in respect of territorial area, persons or class of persons or income or class of income or cases or classes of cases in respect of which such Addl. CIT or JCIT are authorized by the Pr. CCIT or CCIT or Pr. CIT. In this case, the CCIT Hyderabad has passed an order dated 01-08-2001 u/s 120 (1)& (2) of the Act, and empowered the JCIT/Addl. CIT Range 2, Hyderabad to Act as an A.O in respect of the assessee. Therefore, it is not correct on the part of the assessee to argue that the A.O who passed the order does not have valid jurisdiction or authority to pass said order. The Ld. DR further submitted that as per Sec. 124(3) of the Act, no person shall be entitled to call in question the jurisdiction upon A.O after expiry of one month from the date on which he was served with a notice under Sec. 142(1) of the Act, or Sec. 143(2) of the Act, or after completion of the assessment whichever is earlier. In this case, the assessee has taken additional grounds challenging authority / jurisdiction of A.O after a period of 6 years from the date completion of assessment which clearly shows that there is no reason for the assessee to take plea to challenge the jurisdiction of the A.O.

27. The Ld. DR had also attempted to distinguish the decision relied upon by the Ld. AR for the assessee and submitted that in the case of TATA Sons Ltd., (supra), the Tribunal came to its conclusion, because the revenue was not able to bring on record the notification issued by the Board and order passed by the CCIT / CIT u/s 120(1)& (2) of the Act, authorizing Addl. CIT to act as an A.O. She further submitted that the Tribunal while deciding the issue of jurisdiction in the case of TATA sons Ltd., (supra) has basically relied upon the decision of the ITAT Delhi Bench in the case of Mega Corporation Limited Vs. ACIT, 62 Taxmann.com 351, however said order has been reversed by the Hon’ble Delhi High Court in Income tax appeal No. 128/2018 vide order dated 20.03.2017, where the Hon’ble High Court clearly held that the assessee’s logic appears to be incorrect in view of amendment to Sec. 2(7A) and jurisdiction conferred u/s 120 (1) & (2) of the Act, because the A.O includes the Dy. CIT. The court further observed that once the officer is authorized u/s 120 of the Act, then there is no need of separate order u/s 120(4)(b) of the Act. Therefore, it is incorrect to argue that the Addl. CIT does not have valid jurisdiction to pass reassessment order.

29. The Ld. Counsel for the assessee further submitted that, in any case, assuming for moment but not accepting, there is no requirement of separate order u/s 120(4)(b) of the Act, when there is general order of the CBDT authorizing Addl. CIT/JCIT to act as an assessing Officer, but facts remain that in order to transfer a case to one Assessing Officer to another Assessing Officer, there should be an order u/s 127 of the Act. However, in the present case, there is no such order u/s 127 of the Act, transferring the case of the assessee from DCIT –Circle 2(1), Hyderabad to Addl. CIT-Range-2 and thus, in absence of specific order u/s 127 of the Act, the Addl. CIT cannot assume jurisdiction to pass the assessment order of the assessee.

31. In this legal background, if we examine the case of the assessee, we find that the Revenue has failed to file any order passed by the Pr.CCIT/CCIT/Pr.CIT, u/s 120(4)(b), authorising the Addl. CIT to act as an Assessing Officer in case of the assessee. We further noted that although the Revenue filed copy of Board general notification, authorising JCIT/Addl.CIT to act as an Assessing Officer, but failed to file order of the Pr.CIT u/s 120(4)(b) of the Act, empowering the Addl. CIT to act as an Assessing Officer. We further noted that although the Revenue has filed order of the CCIT- Hyderabad passed u/s 120(1) & (2) of the Act, but said order is not under section 120(4)(b) of the Act. Therefore, we are of the considered view that the assessment order passed by the Addl. CIT-Range-2, Hyderabad is void ab- initio and liable to be quashed, because, the Assessing Officer who had passed assessment order does not had valid jurisdiction and authority to pass such order, in absence of proper order in writing u/s 120(4)(b) of the Income Tax Act, 1961.

Therefore, we are of the considered view that assessment order passed by the Addl. CIT, Range-2, Hyderabad is without any jurisdiction and void-ab-initio and liable to be quashed.

“7. We are also in agreement with the contention of the Counsel for the petitioner that the petitioners objection to the jurisdiction of the A.O on the ground that if no search was initiated, notice under Section 153A of the Act could not have been issued, cannot be curtailed on the ground that such objection was raised beyond the period referred to in sub section (3) of the Sec. 124 of the Act. Section 124 of the Act pertains to jurisdiction of A.O Sub Section (2) of Section 124 provides that where the question arises under said section, as to whether on A.O has jurisdiction to assessee any person, such question shall be determined by the authority prescribed under the said sub-section. Sub Section (3) of section 124 provides time limits for a person to call in question jurisdiction of an A.O. Clause (c) of sub-section (3) of section 124 provides that no person shall be entitled to call in question jurisdiction of an A.O where an action has been taken under section 132 or section 132A, after the expiry of one months from the date on which he was served with a notice under sub section (1) of Sec. 153A or sub-section (2) of Sec. 153C of the Act or after the completion of the assessment, whichever is earlier. In clear terms, the time limit for raising objection to the jurisdiction of the A.O prescribed under sub-section (3) of section 124 has a relation to the A.Os territorial jurisdiction. The time limit prescribed would not apply to a case where the assessee contends that the action of the A.O is without authority of law and, therefore, wholly without jurisdiction.

In any way, the issue before Hon’ble High Court of Delhi in the case of Abhishek Jain Vs. CIT is that when the assessee himself sought for transfer of case from ITO, Noida to ITO, Ward-36(1), Delhi, the question of transfer of the case by order u/s 127 of the Act is not applicable. Further, when both the officers have concurrent jurisdiction over the assessee, and further the case has been transferred at the request of the assessee, the assessee cannot call in question, the jurisdiction of the Assessing Officer at subsequent stage. Therefore, we are of the considered view that the case law relied upon by the Ld.DR is not applicable to the facts of the present case, and therefore, rejected.

36. We further noted that this issue is squarely covered in favour of the assessee by the decision of Coordinate Bench of the ITAT, Mumbai in the case of TATA Communications Ltd., Vs ACIT in for A.Y 2003-04 in order dated 16.08.2019, where the Tribunal after considering arguments of both sides, including the case laws cited by the Ld. AR for the assessee as well as the Ld. DR, came to the conclusions that unless the Add. CIT who passed the assessment order possesses valid jurisdiction and authority by virtue of order u/s 120(4)b of the Act, he cannot act as an A.O and pass assessment order consequently, the assessment order passed by the A.O is null and void-ab-initio and liable to be quashed. We further noted that the Tribunal while deciding the issue has considered plethora of judicial decisions including the decision of Coordinate Bench of ITAT, Mumbai in the case of TATA Sons Ltd., in & 7071/Mum/2005, where the Tribunal had elaborately discussed the issue in light of arguments advanced by both sides and also notification issued by CBDT u/s 120(4)b of the Act, in notification No. 64/2014, dated 13.11.2014 and held that if assessment order passed by the officer above rank of JCIT and Addl. CIT, then such A.O should have valid jurisdiction / authority by virtue of an order passed u/s 120(4)b of the Act. In absence of specific order u/s 120(4)b of the Act, as well as Sec. 127(1) of the Act, the Addl. CIT cannot have valid jurisdiction and authority to perform functions and powers of an A.O, consequently the assessment order passed by the A.O is bad in law and liable to be quashed.

14. A plain reading of the aforesaid provision makes it clear that it is in two parts. First limb of the provision says, the Assessing Officer would include ACIT or DCJT or Asstt. Director or Dy. Director or the Income Tax Officer who is vested with the relevant jurisdiction by virtue of direction or orders issued under sub-section (1) or (2) of Section 120 or any other provision of the Act. The second limb of the provision says, the KIT or JDIT if directed under clause (b) of sub-section (4) of section 120, can perform powers and functions of an Assessing Officer. It is relevan t to observe, the provisions of section 2(7A) underwent a change by v irtue of amendment brought by Finance Act, 2007. As per the said amendment in the second limb of section 2(74) along with the JCIT and JDIT, Addl. CIT /Addl. DIT were also to be treated as an Assessing Officer if they were directed to act as an Assessing Officer in terms of section. 120(4)(b). This amendment brought to section 2(7A) was with retrospective effect from 1st June 1994. Corresponding to the amendment made to section 2(7A), the Finance Act, 2007, amended the provisions of section 120(4)(b), providing that the Board in writing can empower the CCIT/CIT to issue orders directing an Addl. CIT/ADIT to act as an Assessing Officer in respect of any specified area or persons or classes of persons or classes of income or cases of classes of cases which earlier would only be vested with JCIT or JDIT. This amendment to section 120(4)(b) brought by Finance Act, 2007 was also with retrospective effect from 1st June 1994. Thus, as could be seen, for assigning the work of an Assessing Officer to the Addl. CIT, the Board has to empower the concerned CCIT/CIT to issue order in writing in terms of section 120(4)(b) in respect of a particular assessee. Keeping in view the aforesaid statutory provisions, we have to decide the issue raised before us. The specific contention of the assessee is, as per the provisions of section 2(7A), as it existed at the relevant period, Addl CIT was not an Assessing Officer. It is further submitted, even otherwise also, there is no notification / order empowering the Addl. CIT to act as an Assessing Officer in terms of section 121)(4)(b). To counter the aforesaid contention of the assessee, the 'earned Departmental Representative has relied upon the following notifications.

i) Notification no.228 of 2001 date 31.072001 ii) Notification no. MIC/HQ- 1/Jurisdiction/2001 -02 dt 01.08.2001; iii) Notification no. ACIT, Range- 1(3)/Jurisdiction/2001-02 dated 08.08.2001; and iv) Notification no.267/2001 dated 17.09.2001 15. At this stage, we propose to deal with each of the aforesaid notification relied upon by the Department to establish the valid exercise of jurisdiction as an Assessing Officer by the Addl. CIT. The first notification being notification no.228 of 2001 dated 31st July 2001, corresponding to notification no. S.O. 732(E) dated 31 July 2001, is a notification issued under sub-section (1) and (2) of section 120 of the Act and obviously is not a notification issued under clause (b) of sub-section (4) of section 120. As observed earlier by us, the Addl. CIT was not included as an Assessing Officer either under section 2(7A) or under section 120(4)(b) earlier. Only by virtue of Finance Act, 2007, the aforesaid provisions were amended by including Addl. CF as an Assessing Officer. However, even after such inclusion of Addl. CIT as Assessing Officer with retrospective effect from 1 st April 1994, Section 2(7A) made it clear, Asstt. CIT, DCIT, ADIT, DDIT, ITO, can act as an Assessing Officer if they are vested with relevant jurisdiction by virtue of directions and orders issued under sub-section (1) or sub-section (2) of section 120. Whereas, as far as Addl. CIT, Addl. DIT, JCIT, JDIT are concerned, they can exercise powers and functions of an Assessing Officer, only, if they are directed to do so under clause (b) of sub-section (4) of section120. Thus, vesting of power of Assessing Officer on different income tax authorities have been specifically demarcated under section 120 of the Act. A conjoint reading of Section 2(7A) an Section 120 would make it clear, as far as ACIT, ADIT, DCIT, ADIT; DDIT and ITO are concerned, they have to be vested with the power of Assessing Officer under section 120(1) or (2), whereas, AddI. CIT, Addl. DIT, KIT, MIT can be vested with the power of Assessing Officer under Section 120(4)(b). In a notification issued under section 120(1) and 120(2), Addl. CIT cannot be vested with power to act as an Assessing Officer. Therefore, notification no.228 of 2001 dated 31" July 2001, cannot be said to be vesting power of Assessing Officer with the Addl. CIT. Similar is the situation with notification doted 1st August 2001, issued by the CIT, Mumbai, as it is a notification issued under section 120(1) and 120(2) and not under sub-section (4)(b). The third notification dated 8th August 2001, has been issued by the Addl. CIT, Range-.1(3), Mumbai, vesting jurisdiction upon himself to act as an Assessing Officer. Certainly, this notification is not in conformity with the provisions contained under section 120(4)(b), inasmuch as, this notification has been issued under section 120(1) and 120(2) and not u/s.(4)(b) of section 120. The last notification relied upon by the Department is notification no.267/2001 dated 17th September 2001. A perusal of the aforesaid notification, a copy of which has been placed in the Departmental paper book shows that this notification has been issued by the Board under section 120.(b) directing JCIT/IDIT to exercise powers and functions of the Assessing Officer. It does not mention Addl. CIT / Addl. Director of Income Tax in any case of the matter at the time of issuance of this notification, Addl. CIT was not treated as an Assessing Officer either under section 2(7A) or under section 120(4)(b) as the amendment including Addl.. CIT, as an Assessing Officer was brought to the statute by Finance Act, 2007, though, with retrospective effect from 1st April 1994. Therefore, under no circumstances, the Board notification dated 17th September 2001, can be said to have conferred the jurisdiction of assessing officer on Addl. CIT. In this context, it is necessary to deal with the argument of the Department that as per the definition of JCIT under section 2(28C), it includes Addl. CIT, therefore, the notification dated 17th September 2001, issued under Section 120(4)(b) also covers the Addl. CIT. We are not convinced with the aforesaid submissions of the Department. Had it been the intention of the legislature to treat the Addl. CIT as JCIT and, in turn, as Assessing Officer under section 2(7A) r/w section 120(4)(b), there was no necessity to amend the provisions of section 2(7A) and 120(4)(b) specifically including the Addl. CIT and Addl. DIT, since JCIT and JDIT were already included as Assessing Officer under both the provisions. This clarifies the intention of legislature in not treating JCIT and Addl. CIT as one. Thus, the Department has failed to bring to our notice any notification issued in conformity with section 120(4)(b) empowering the Add!. CIT, Range-1(3), to act as an Assessing Officer in respect of present assessee. The notifications relied upon by the learned Departmental Representative are not under section 120(4)(b). As far as notification dated 17th September 2001 of the Board Is concerned, though, it is issued under section 120(4)(b) of the Act, however, it authorizes only the JCIT and JDIT to exercise the powers and function of the Assessing Officer and it is not in respect of Addl. CIT or Addl. DIT. Thus, none of these notifications can validly authorize or empower the Addl. CIT, Range-1(3) to act as an Assessing Officer in the present case. In case of Mega Corporation Ltd. vs. ACIT, [2015] 155 ITD 1019, the Tribunal while deciding identical issue of exercise of powers and functions of Assessing Officer by Addl. CIT dealt with the aforesaid notifications relied upon by the learned Departmental Representative and following the decision of the Hon'ble Delhi High Court in Valvoline Cummins v/s DCIT, [2008] 307 FUR 103 (Del) held that without a notification under section 120(4)(b) authorizing the Addl. CIT to exercise the powers and functions of the Assessing Officer, assessment order passed by the Addl. CIT is without jurisdiction, hence, invalid. Moreover, it was held that once a proceeding has been initiated by an officer having valid jurisdiction, without any order of transfer under section 127 of the Act, the Addl CIT cannot be vested with power to function as Assessing Officer. The Tribunal negated the contention of the Department regarding exercise of concurrent jurisdiction by both the officers. It was held by the Bench that there is a distinction between concurrent exercise of power and joint exercise of power. The Bench held when power has been conferred upon two authorities concurrently, either one of them can exercise such power and once a decision is taken to exercise the power by any one of those authorities that exercise must be terminated by that authority only. In fact on a careful perusal of the orders passed by the Tribunal in case of Mega Corporation Ltd. (supra) and Tata Sons Ltd. (supra) we are of the view that the arguments/contentions raised by the Department in the present appeal relying upon certain notifications have been exhaustively dealt with by the Tribunal in these decisions and the issue has been decided in favour of Though, the learned Departmental Representative has submitted that the decisions of Mega Corporation Ltd. (supra) and Tata Sons Ltd (supra) should not be relied upon, however, we are of the considered view that these decisions of the Tribunal have been rendered more or less on identical facts and issues and after considering the very same notifications relied upon by the learned Departmental Representative in the present case and the Tribunal has ultimately concluded that in absence of a valid notification under section 120(4)(b) the Addl. CIT cannot exercise power of an Assessing Officer. In this context, it is necessary to reproduce the observations of the Bench in the case of Tab Sons Ltd. (supra) hereunder:-. 3.11. Admission of Additional Grounds: The assessee has challenged legal competence of the Additional Commissioner of Income Tax to act as an Assessing Officer of the assessee and to pass the impugned assessment order by way of additional grounds. The issue raised by the assessee goes to the root of the matter and seeks to shake the very sustainability of the impugned assessment order in the eyes of law. During the course of hearing, it was shown by the Ld. Senior Counsel of the assessee that law in this regard has been developed recently. Moreover, this fact was not in the knowledge of the assessee that the Additional Commissioner of Income Tax had assumed jurisdiction to frame the impugned assessment order without the authority of law and without there being any order from the Commissioner of Income Tax authorizing him to act as Assessing Officer of the assessee. Under these circumstances, it is' bounden duty of the Revenue to establish legal competence and authority of the officer passing the assessment order, if so challenged by an assessee at any stage. 3.12. We have examined this issue. it is well accepted position that the Tribunal is a final fact finding body. Requisite documents required for establishing legal authority of the Assessing Officer who had passed the assessment order are expected to be available in the assessment records. Thus, the legal issue raised by the assessee falls in the category of cases which can be decided on the basis of material held on record. 3.13 Further, it is noted by us that the aforesaid grounds are purely legal grounds and do not require any investigation of fresh facts and can be decided on the basis of records held on record. It has been, held by the Hon'ble Supreme Court in the case of National Thermal Power Corporation 229 ITR 383 as well as ' the other judgments as have been relied Upon by the Ld. Counsel in its petition that assessee should be permitted to raise legal grounds at any stage, if they go to the root of the matter. 3.14. Revenue's argument to reject the additional grounds due to acquiescence and participation of the assessee in assessment proceedings: It was contended by the Ld. CIT-DR that during the course of assessment proceedings, assessee had made participation in the proceedings. Therefore, assessee cannot he allowed to challenge jurisdictional defect in the assessment order at this stage. We have considered this aspect very carefully. The assessee has challenged before us authority of the Officer to pass the impugned assessment order. It is bounden duty of the Revenue to establish the authority and legal competence of, its officer to pass the assessment order, as and when it is called upon to do so. No order can be sustained in the eyes of law if its author does not have requisite sanction of the law. If an Order does not possess requisite strength in the eyes of law and is void ab-initio then it will remain so even if there is acquiescence or participation by the assessee in the proceedings carried out by the AO to frame the assessment order. it is well settled law that consent of the assessee cannot confer jurisdiction to an assessing officer who lacked jurisdiction under the law. Similarly, vice versa is also true i.e. absence of consent of the assessee shall not take away jurisdiction from an Assessing Officer who actually possessed a valid jurisdiction in the eyes of law. Thus, legal competence of the officer who passed the assessment order as well as validity of the assessment order must be examined on the basis of factual analysis and provisions of law and not on the basis of conduct of the assessee. This issue is not res- integra. Immediate reference in this regard can be made on the judgment of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Limited Vs. CIT 194 ITR 548 (Bombay). Similar view was taken by Hon'ble Gujarat High Court in the case of P.V. Doshi Vs. CIT 113 ITR 22 (Gui). Recently Hon'ble Delhi High Court handled a similar situation in the case of Valvoline Cummins Ltd 307 ITR 103 (Del) wherein challenge was made to the jurisdiction of Additional Commissioner of Income Tax who had passed the assessment order. It was contended on behalf of the Revenue that challenge of jurisdiction must be made within the stipulated time during the course of assessment proceedings in view of restrictions imposed by the provisions contained in section 124 of the Act Hon'ble Delhi High Court in the aforesaid case held as under: - "This is well settled that mere acquiescence in the exercise of powers by a person who does not have jurisdiction to exercise that power cannot work as an estoppel against him." 3.15. It is further noted by us that in the case before us, a challenge has been made about the legal competence of the Additional Commissioner of Income tax and his jurisdiction to exercise the powers and perform the functions of the Assessing Officer of the assessee and to carry out the assessment proceedings and frame the assessment order in accordance with the provisions of the Income tax Act, 1961. Thus, reliance, upon the provisions contained in Section 124 of the Act would be of no help to the Revenue as the assessee has not challenged either territorial jurisdiction or irregular exercise of jurisdiction by the Additional Commissioner of Income Tax but challenge was made to the authority and legal competence itself of the Additional Commissioner of Income tax to pass the impugned assessment order upon the assessee. Similar view has been taken by the Delhi Bench of ITAT in the case of Mega Corporation Ltd Vs. Additional CIT 155 lTD1019 (Delhi) following the judgment of Hon'ble Delhi High Court in the case of Valvolines Cummins Ltd, supra. 3.16. In view of the facts and circumstances, of this case and the judgments of Hon'ble Supreme Court and Hon'ble Bombay High Court relied upon by the Ld. Counsel in its petition as• mentioned above, we find that these additional grounds deserve to be an admitted and therefore, these are admitted for our adjudication. 3.17. Since the additional grounds go to the root of the matter and challenge jurisdictional validity of the order, therefore, we find it appropriate to first deal with the same before deciding the appeal on merits. It has been argued at length by the Ld. Senior Counsel of the assessee that in this case first notice of assessment proceedings intimating change of jurisdiction was issued by ACIT circle 2(3) Mumbai, dated 5th September 2001 wherein it was claimed that the jurisdiction of assessment was with the said officer. Subsequently, notice u/s 143(2) was issued by the DCIT dated 01.12.2003. Thereafter a questionnaire was issued by the Additional Commissioner of Income Tax Range -2(3), Mumbai dated 10th February 2004 and finally the Additional Commissioner of Income Tax framed the assessment order. He took us through the various provisions of Income Tax Act to impress upon the point that Additional Commissioner of Income tax was not legally competent to act as Assessing Officer and to pass assessment orders. He referred to provisions of section2(7A) which provide definition of the term 'Assessing Officer'. He also referred to the provisions of section 2(28C) which defines Joint Commissioner of Income Tax. It was argued that in the definition of Assessing Officer earlier only Joint Commissioner was provided and Additional Commissioner was inserted subsequently. It was further submitted that only those Joint Commissioners/Additional Commissioners were competent to pass the assessment order who were authorized to act an Assessment Officer as per clause (b) of sub-section 4 of section 120. It was vehemently argued that the Additional Commissioner who passed the impugned assessment order was not having any authority issued from the Board or the jurisdictional Commissioner of Income Tax to act as an Assessing Officer and to pass an assessment order in the case of the assessee. He also took us through provisions of section 120 to argue that Additional Commissioner or Joint Commissioner could have exercised the power of an Assessing Officer only if they were so authorized specifically by their jurisdictional Commissioner. In support of his proposition, he relied upon following judgments: 1. Mega Corporation v: Add!; CIT (62 taxmann.com351 (Del. ITAT) 2. Bindal Apparels Ltd. ACIT 104 TTJ 950(Del) 3. City Garden vs. ITO (21 taxmann.com 373 (Jodhpur ITAT) 4. Micro fin Securities (P) Ltd. vs Add!. CIT i SOT 302 (Luk.) 5. Prachi Leathers Ltd. 26L/Luk/201 0 in order dat. 29.03.2010 6. 1-farvinder Singh Jaggi vs. ACIT 67 Taxmann.com 109(DeL ITAT) 7. Dr. Nalini Mahafan vs. OfT (Inv.) 257 ITR 123(Del. HC)

30. In the facts of the present case, since the Additional Commissioner had exercised the power of an Assessing Officer, he was required to continue to exercise that power till his jurisdiction in the matter was over. His jurisdiction in the matter was not over merely on the passing of the assessment order but it continued in terms of section 220(6) of the Act in dealing with the petition for stay. What has happened in the present case is that after having passed the assessment order, the Additional Commissioner seems to have washed his hands of the matter and left it to the Deputy Commissioner to decide the stay petition filed Under section 220(5) of the Act. We are of the opinion that this was not permissible in law." 9.1 We therefore hold that applying the above judicial position that assessment has to be completed by the authority who has initiated the proceedings for making assessment and any other authority can take over the proceedings only after a proper order of transfer u/s 127(1) or 12 7(2) of the proceedings. The revenue has not brought any order for transfer of the proceedings from DCIT, Circle- 6(1), New Delhi to the Additional CIT, Range-6, New Delhi and therefore it is quite evident that the Additional CIT, Range-6 took over the assessment proceedings without there being an order u/s 127(1). In the case of Prachi Leathers Pvt. Ltd. (supra), it has been held as under: 19. We are further of the opinion that the notice under section 143(2) of the Act having been issued by the Income-tax Officer, Range 6(2), Kanpur on 16.8.2002, it was Income-tax Officer alone who could frame the assessment subject however to the fact that that the assessment could be framed by any other officer also provided there was an order of transfer of jurisdiction over assessee's case from Income-tax Officer, Range-6(2), Kanpur to that officer under section 127(4) of the Act, but so far as present case is concerned, the Revenue has not brought to our notice any order under section 127 passed after 6.8.2002 transferring jurisdiction over the assessee's case from the income-tax Officer, Range 6(2), Kanpur to .the Addl. CIT, Range-6,Kanpur and therefore, the assessment framed by the Addl CIT, Range-,Kanpur irrespective of the fact as to whether he was authorized to perform the functions of an AO or not, is illegal and void ab initio for want of jurisdiction. Consequently, we are of the opinion that the assessment order in the present case dated 31.3.2003 passed by the Addl. CIT, Range (6), Kanpur was illegal and void ab initio for want of jurisdiction. Consequently, the assessment order is quashed." 9.2 Consequently on this count also, the assessment made on 29.12.2008 by the Additional Commissioner is illegal and bad in law for want of jurisdiction. 10. for the reasons aforesaid we hold that the order of assessment dated 29.12.2008 was without jurisdiction and therefore is quashed as such. In result, ground Nos. 1 and 2 are al/owed." 3.23. In the case before us, the facts are 'identical. it is noted that Ld. CIT-op as well as the Assessing Officer (present incumbent) who was personally present during the course of hearing before us, jointly stated that no such order (as prescribed under section 127(1) required to be passed by the jurisdictional Commissioner of Income tax) is available in the records. Thus, it is clear that there was no valid transfer of jurisdiction to the Additional commissioner of income Tax who had passed the impugned assessment order. Thus, impugned assessment order had been passed without assuming jurisdiction as per law. 3-24. Next issue raised by the Ld. Senior Counsel was that the Additional Commissioner who had passed the impugned assessment order was not authorized to act as assessing officer of the assessee and pass the impugned assessment order. We analyzed the provisions of law in this regard and find that section 2(7A) defines the term of Assessing Officer as under: "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub- section (1) or subsection (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-Section (4) of that section to exercise or perform all or any f the powers and functions conferred on, 'or assigned to, an Assessing Officer under this Act." Subsequently, the word 'Additional Commissioner' was also added in the said definition by Finance Act, 2007, with retrospective effect from day 01.06.1994. Thus, from the above, it is clear that when the impugned assessment order was passed, definition of the word 'Assessing Officer' did not include 'Additional Commissioner of Income Tax. It is further noted that section 2(28C) defines Joint Commissioner. Section 2(28C) was available on statute since 01.10.1998 and provide as under: "2(28C) Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under sub-section (1) of section 117. On the other. hand, section 2(1C) defines 'Additional Commissioner' as under: "Additional Commissioner means a person 35 appointed to be an Additional Commissioner of Income Tax under subsection (1) of section 117." Thus, combined reading of all the above sections makes it clear that prior to amendment mode by Finance Act, 2007, the legislature treated 'Additional Commissioner' and 'Joint Commissioner' differently for the purposes of performing the role as an Assessing Officer, despite the fact that for all the other purposes 'Joint Commissioner' meant Additional Commissioner as well., as per section 2(25C). It is clear from the facts that by way of subsequent amendment by Finance Ad, 2007, words 'Additional Commissioner' have also been inserted along with words 'Joint commissioner', in section 2(7A) which defines the term for 'Assessment Officer' In case, the legislature would have intended and meant that for the purpose of acting as Assessing Officer, 'Joint Commissioner' and 'Additional Commissioner' means one and the same, then there was no need to come out with an amendment made by Finance Act, 2007, wherein the word 'Additional Commissioner' was also inserted in the definition of 'Assessing Officer' as contained in section 2(7A). Thus, it is clear as per the plain reading of the statute that when the assessment order was passed, the 'Additional Commissioner was not authorized to act as Assessing Officer.

53 It will be seen that the said provision provides that Board may by general or special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on or as the case may be, assigned to, Assessing Officer by or under this Act in respect of any spec/fled area or persons or classes of persons or incomes or classes of income or cases or classes of cases shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner Or a Joint Director and where any order is made under this clause, reference in any other provision of this Act or in any rule made there under to the Assessing Officer shall be deemed to be references to such Additional Commissioner, or Additional Director or Joint Commissioner or a Joint Director by whom, the powers and functions are to be exercised or performed under such order and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply. 54 The position which emerges thus is that an Additional under the Act. He can perform the functions and, exercise the powers of an Assessing Officer only if he is specifically directed under section 120(4)(b) of the Act." 3.33. Similar issue has been decided by the Lucknovv bench of ITAT in the case of Prachi Leather Put. Ltd Vs. Additional CIT in dated 8.12.2010 relying upon its earlier for assessment year 2001-02 decided this issue on the similar lines after considering and following the decision of Hon'ble Delhi High Court in the case of Nalini Mahajan Vs. DIT 257 ITR 123 (Delhi). It is also noted Is decision has also been considered by Delhi Bench in the of Mega Corporations Ltd, supra and relevant portion of the order as discussed therein is reproduced below: - "16.2 From the contents of. the aforesaid provisions, it is quite clear that so far as Addl. Commissioner is concerned firstly he has been included in the definition of Assessing Officer" given under section 2(7A) of the Act with effect from 1.6.1994 as a result of retrospective amendment made by the Finance Act, 2007 but at the same time, it/s also clear that the Add/. Commissioner will be Assessing Officer as envisaged in section 2(7A) so amended only if he is directed under clause (b)of cub-section (4) of section 120 to exercise or perform all or any of the powers and functions concerned on or assigned to an Assessing Officer; meaning thereby that the Addl. CIT can function or can exercise the powers and perform the functions of an Assessing Officer if he is empowered by the CBDT as required under clause (b) of sub-section (4) of section 120. 18.1 So far as the issue before us in the present appeal is concerned, it is now clear from the provisions as discussed hereinbefore that the Additional CIT could act and exercise the powers of an AO only in consequence upon delegation of such authority by the Board, Chief Commissioner of Income-tax or Commissioner of Income-tax as envisaged in the provisions of section 120(4)(b) of the Act. However; the power given to the Chief Commissioner of Income-tax or Commissioner of Income-tax being in consequence upon the delegation of power duly authorized by the Legislature, the Chief Commissioner of Income-tax or Commissioner of Income-tax were duty bound, if at all they were to exercise -such delegated power to act accord/hg to the provisions of, law; meaning thereby that it was incumbent upon the Chief Commissioner of Income-tax or the Commissioner of Income-tax, as the case maybe, if at all they wanted to authorize the Additional CIT to act and perform the functions of an AO to pass a proper order delegating such functions/ powers upon him This view of ours is fully supported by the decision of the Hon'ble Delhi High Court in t case of Dr. Nalini Mahajan vs DIE 257 ITR 123,wherein the Hon'ble High Court, while discussing the powers of Additional Director Investigation, held as under:

It is now well-settled that when a power is given to do a certain thing in a certain manner, the same must be done in that manner or not at alt A delegation of power is essentially a legislative function. Such a power of delegation must be provided by the statute. The director himself for certain matters is the delegating authority. He, unless the statute expressly states; cannot sub-delegate his power to any other authority. In any event, if an authority, which had no jurisdiction to issue such an authorization, did so, the same would be liable to be quashed as ultra vires. Thus, unless and until an amendment is carried out, by reason of the redesignation itself, read with the provisions of the General Clauses Act, the Addl. Director does not get any statutory power to issue authorization to issue warrant. Therefore, the Addl. Director (Investigation) cannot be said to have any power to issue any authorization or warrant to Joint Director. Consequently, notification dt. 6th Sep. 1989 is not valid in law to the said extent 18.2 So far as the present case is concerned, though we are concerned with the powers of Additional CIT but the proposition of law laid down by the Hon'ble High Court which was, though in relation S to powers of Additional Director (Investigation), is fully applicable to the present 18.3 In view of the aforesaid facts, circumstances and the discussion and following the law laid down by the Hon'ble De/hi High Court in the case of Dr. Na/ii Mahajan (supra), first of all we are of the opinion that the Addl. CIT, Range-6, Kanpur having not been empowered to exercise or perform the powers or functions of an Assessing Officer, the assessment framed by him was illegal and void ab initio. " .....

3.34. It is further noted that similar view has been expressed by Jodhpur Bench of ETA in the case City Garden Vs. ITO 21 taxman.com 373 (Jodhpur) wherein it has been held that in the absence of a specific order issued in pursuance to Section 120(4)(b) specifically authorizing Joint Commissioner of Income Tax to exercise the powers and perform the function as conferred on or assigned to an Assessing Officer by or under the Act or a notification under section 120 of the Act, he is not competent to act as an Assessing Officer and pass an assessment order.

3.35. Similar view has been taken by Lucknow Bench of ITAT in case of Micro fin Security Pvt. Ltd vs. Additional CIT 94 TTJ 767 wherein it was held that in absence of any allocation being made in favour of Additional Commissioner to make an assessment, he cannot assume for himself such an authority so as to pass an assessment order.

of the assessee is allowed. 3.37. In the case of Bindal Apparels Ltd vs. ACIT, Delhi Bench of ITAT took a similar view and held that in view of definition of Assessing Officer contained u/s 2(7A), an Additional Commissioner cannot be an authority to exercise and perform all or any of the powers of the functions of the Assessing Officer to make assessment of Income. The Bench analysed the provisions of Sect/on 2(7A) as it existed prior to amendment made by Finance Act, 2007. 3.38. During the course of hearing, it was also submitted by id. CIT-DR to defend the impugned assessment order that in any case the assessment order has been passed by an officer of the rank of Additional Commissioner which is much superior to the rank of Assistant Commissioner and thus no prejudice-can be presumed to have been done to the assessee. We find that reasoning given by the Ld. CIT-DR to defend the impugned assessment order does not have any legal force. It is well settled that jurisdictional conditions required to be fulfilled by the assessing officer must be performed strictly in the manner as have been as prescribed and if it has not been done in the manner under the law. then it becomes nullity in the eyes Hon'ble Supreme Court in the case of CIT Vs. M. H. Ghaswala observed that it is a normal rule of construction that when a statue vests certain powers in an authority to be exercised in a particular manner, then that authority is bound to exercise it only in the manner provided in the statue only. 3.39 Hon’ble Bombay High court dealt with a similar situation in the case of Ghansham K.Khabrani Vs. ACIT 346 ITR 443 wherein the said assessee raised an issue that requisite sanction prescribed u/s 151 for reopening of an assessment was required to be obtained by the AO from Joint Commissioner of Income tax whereas the same was granted by Commissioner* of Income tax and therefore the same was nullity in the eyes of law. Revenue took a stand mat sanction was granted by an officer superior in rank and therefore, no prejudice was caused to the assessee ButHon'blè High. Court did not agree with the contention of the Revenue and observed that:- ..........The expression "Joint Commissioner" is defined in section 2(28C) to mean a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income-tax under section 117(1). Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. The expression has a distinct meaning by virtue of the definition in 'section 2(28C). The Commissioner of Income tax 15 not a Joint Commissioner within the meaning of section 2(28C). There is no statutory provision under which power to be exercised by an officer can be exercised by a superior officer, When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority.. Where a statute, requires something to be done in a particular manner, it has to be done in that manner only............ 3.40. Thug, in view of the legal discuss/op made above and facts of the case, it is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed without authority of law,

16. The ratio laid down in the decision of Tata Sons Ltd (supra) and other decisions relied upon by the Bench therein, clearly applies to the facts of the present case. Therefore, adhering to the, principle of judicial discipline we follow the decisions of the Tribunal referred to the above and hold that in the facts of the present case, the Addl. CIT in the absence of a valid order under section 120(4)(b) as well as section 127(1) of the Act could not have exercised powers of on Assessing Officer to pass the impugned assessment order. Accordingly, the impugned assessment order passed being wholly without jurisdiction is void ab initio, hence, deserves to be annulled] quashed. Accordingly, we do so.

17. At this stage, we must deal with the contention of the learned Departmental Representative to restore the matter back to the file of the learned Commissioner (Appeals) for adjudicating the jurisdictional issue. We do not find any valid reason to accept the contention of the learned Departmental Representative. As stated earlier by us, exercise of jurisdiction by the Addl. CIT has to be examined on the basis of notification / orders passed under section 120(4)(b), inasmuch as, n 127(1) of the Act. In this context, learned Departmental representative has relied upon certain notifications to justify the validity of the assessment order passed by the Addl. CIT. As far as existence of any order under section 127(1) is concerned, the learned Departmental Representative has fairly submitted that no such order exist on record. At least, nothing was brought to our notice in spite of specific query bang raised by the Bench. Therefore, when the issues are to be decided on the basis of facts already available on record and keeping in view the relevant notifications placed on record as well as the decisions cited, there is no necessity of restoring the matter back to the file o the learned Commissioner (Appeals). As far as the contention of the learned Departmental Representative regarding maintainability of the additional ground on the plea that the assessee can only challenge the jurisdiction& issue under section 124(3) of the Act, we do not find any merit in such submissions. A plain reading of section 124 would show that it refers to an order issued under subsection (1) or (2) of section 120, whereas, we are concerned with an order purported to be passed under section 120(4)(b) empowering the Add). CIT to act as an Assessing Officer. Therefore, in our view, the provisions of section 124 are not applicable to the present case. For that reason we do not feel it expedient to deal with the decisions relied upon by the 'earned Departmental Representative in that regard. Thus, in view of the aforesaid the additional ground and supplementary additional grounds are allowed.”' 6.1. Respectfully following the aforesaid decision, we allow the additional grounds raised by the assessee challenging the validity of assessment framed by the ld Addl. CIT and accordingly quash the assessment so framed. Since we have quashed the assessment order on legal / jurisdictional issue, the grounds raised on merits have become infructuous and hence not adjudicated.

15. Coming back to the arguments of the Ld. DR in light of notification No. 64/2014 dated 13.11.2014 issued by the CBDT and subsequent order passed by the Pr. CIT, Range-17, Mumbai dated 15.11.2014. The Ld. DR submitted that the facts of the present case are entirely different form the case considered by the Tribunal in the case of TATA Sons Ltd., (supra), because in the case before the Tribunal the Revenue has failed to file any notification or order issued by the CBDT or CCIT / CIT empowering the Addl.CIT to perform and exercise powers of an A.O and the Revenue is only relying upon the order passed u/s 127(1) of the Act. In those facts, the Tribunal came to the conclusion that the A.O who passed the assessment order does not possess valid jurisdiction and authority to pass such order. But,facts of the present case are entirely different. In this case, the Board has issued a notification in 2014 and authorized and empowered the DGIT / Pr. CIT / CIT to directs that the Addl. CIT or JCIT as the case may be shall exercise the powers and perform the functions of the A.O in respect of territorial areas or persons or clause of persons. Further, the Pr. CIT, Range- 17, Mumbai has passed a separate order u/s 120 (1) & (2) of the Act, dated 15.11.2014 by virtue of notification No. SO2752(E) dated 22/Oct/2014 and empowered the Addl. CIT / JCIT, Range -17(2), Mumbai to act as an A.O in cases of person or clause of persons as mentioned in the said notification and said order covers to alphabet of the assessee name. Therefore, when the Board has authorized Pr. CIT to authorize the JCIT / Addl. CIT to act an A.O and also the Pr. CIT has passed separate order authorizing the JCIT to act as an A.O to discharge the functions and powers of A.O, then the separate order u/s 120(4)b of the Act, does not required. We find that the board has issued a notification u/s 120(4)b of the Act, vide notification No. 64/2014 dated 13.11.2014 and authorized the DGIT / Pr. CCIT / CCIT / Pr. CIT to authorize and empower JCIT and ACIT to Act as an A.O and also to perform functions and powers of A.O in respect of persons or clause of persons. But, there is no order from the Pr. CIT or any other authority u/s 120(4)b of the Act, authorizing the JCIT to act as an A.O and also to perform functions and power of A.O in the case of the assessee. Although, the Revenue has relied upon the order passed by the Pr. CIT dated 15.11.2014 u/s 120 (1) & (2) of the Act, but such order does not conferred the authority and jurisdiction to the JCIT to Act as an A.O, because as per the provisions of Sec. 2(7A) of the Act, the definition of A.O includes Addl. CIT / JCIT who is directed under clause (b) of Sub Sec. (4) of Sec. 120 of Act, but not under Sec. 120(1) & (2) of the Act. We further noted that the provision of Sec. 120 of the Act, was also simultaneously amended with retrospective effect from 01.06.1994 to include JCIT in the definition of A.O, but such powers can be conferred on the ACIT / JCIT only by virtue of separate order u/s 120(4)(b) of the Act. In absence of any order u/s 120(4)b of the Act, the JCIT / ACIT cannot act as an A.O and also perform functions and powers of the A.O. In this case, no doubt the Revenue has filed notification issued by the CBDT u/s 120(4)(b) of the Act, but failed to file separate order passed by the Pr. CIT u/s 120(4)(b) of the Act. Therefore, we are of the considered view that reassessment order passed by the JCIT, Range-17, Mumbai is void- ab-initio and liable to be quashed.

“20. We shall now deal with the sustainability of the assessment order passed by the Jt. CIT, Range-1, Bilaspur u/s.143(3) dated 29.01.2014 in absence of any order u/s.120(4)(b) of the Act conferring upon him the jurisdiction to exercise or perform the powers and functions as that of an A.O over the case of the assessee company before us.

3.27. During the course of hearing, Ld. CIT-DR had drawn our attention upon Board's Notification No.267/2001 dated 1.7-9-2001, Notification No.228/2001 dated 31.7.2001 and Notification No,335/2001 dated 29-10- 2001 with a view to argue that the jurisdiction was assigned to all the officers including 'Additional Commissioner' for exercise of powers as Assessing Officer, and thus the 'Additional Commissioner of Income Tax' who had passed the impugned assessment order had inherent powers under the law to act as assessing officer of the assessee and pass the impugned assessment order. 3.28. We have gone through all these Notifications, but do not find any substance in the contention of the Ld. C1T-DR. It is noted. that Notification No.335 is issued merely for assigning jurisdiction to various Commissioners and it is thus of no use to Revenue as far as issue before us is concerned. So far as Notification No.267/2001 is concerned, it reads as follows:— "In exercise of the powers conferred by clause (b) of sub- section (4) of section 120 of the income -tax Act,1961(43 of 1961), the Central Board of Direct Taxes, hereby directs that the Joint Commissioners of Income Tax or the Joint Directors of Income tax, shall exercise the powers and functions of the Assessing Officers, in respect of territorial area or persons or classes of persons or incomes or classes of income or cases, or classes of cases, in respect of which such Joint Commissioners of Income tax. are authorised by the Commissioner of Income tax, vide Government of India, Central Board of Direct Taxes notification number S.0.732(E) dated 31.07.2001, S.0.880(E) dated 14.09.2001, 8.0.881(E) dated 14.09.2001, S.O. 882(E) dated 14.09.2001 and S.O. 883(E) dated 14.09.2001 published in the Gazette of India, Part II, Section 3, subsection (ii), Extraordinary. (Emphasis supplied) 24. Also, we find that a similar view had been arrived at by the ITAT, Lucknow in the case of Prachi Leather (P). Ltd. Vs. Addl. CIT, dated 08.12.2010, wherein, after drawing support from the judgment of the Hon'ble High Court of Delhi in the case of Dr. Nalini Mahajan Vs. DCIT, (2002) 257 ITR 123 (Del.), it was held as under:

"16.2 From the contents of the aforesaid provisions, it is quite clear that so far as Addl. Commissioner is concerned, firstly he has been included in the definition of "Assessing Officer" given under section 2(7A) of the Act With effect from 1.6.1994 as a result of retrospective amendment made by the Finance Act, 2007 but at the same time, it is also clear that the Addl. Commissioner will be Assessing Officer as envisaged in section 2(7A) so amended only if he is directed under clause (b)of sub- section (4) of section 120 to exercise or perform all or any of the powers and functions concerned on or assigned to an Assessing Officer; meaning thereby that the Addl. CIT can function or can exercise the powers and perform the functions of an Assessing Officer if he is empowered by the CBDT as required under clause (h) of sub-section (4) of section 120. .... 18.1 So far as the issue before us in the present appeal is concerned, it is now clear from the provisions as discussed hereinbefore that the Additional CIT could act and exercise the powers of an AO only in consequence upon delegation of such authority by the Board, Chief Commissioner of Income-tax or Commissioner of Income- tax as envisaged in the provisions of section 120(4)(b) of the Act, However, the power given to the Chief Commissioner of Income-tax or Commissioner of Income- tax being in consequence upon the delegation of power duly authorized by the Legislature, the Chief Commissioner of Income-tax or Commissioner of Income- tax were duly bound, if at all they were to exercise such delegated power to act according to the provisions of law; meaning thereby that it was incumbent upon the Chief Commissioner of Income-tax or the Commissioner of Income-tax, as the case maybe, if at all they wanted to authorize the Additional CIT to act and perform the functions of an AO, to pass a proper order delegating such functions/powers upon him. This view of ours is fully supported by the decision of the Hon'ble Delhi High Court in the case of Dr, Nalini Mahajan v. DIT (2001) 252 ITR 123/[2002) 122 taxman 897 wherein the Hon'ble High Court, while discussing the powers of Additional Director Investigation, held as under: "It is now well- settled that when a power is given to do a certain thing in a certain manner, the same must be done in that manner or not at all. A delegation of power is essentially a legislative function. Such a power of delegation must be provided by the statute. The director himself for certain matters is the delegating authority. He, unless the statute expressly states, cannot sub-delegate his power to any other authority. In any event, if an authority, which had no jurisdiction to issue such an authorization did so, the same would be liable to be quashed as ultra vires. Thus, unless and until an amendment is carried out, by reason of the redesignation itself, read with the provisions of the General Clauses Act, the Addl. Director does not get any statutory power to issue authorization to issue a warrant. Therefore, the Addl. Director (Investigation) cannot be said to have any power to issue any authorization or warrant to Joint Director. Consequently, notification dt. 6th Sep. 1989 is not valid in law to the said extent. 18.2 So far as the present case is concerned, though we are concerned with the powers of Additional CIT but the proposition of law laid down by the Hon'ble High Court which was, though in relation to powers' of Additional Director (Investigation), is fully applicable to the present case. 18.3 In view of the aforesaid facts, circumstances and the discussion and following the law laid down by the Hon'ble Delhi High Court in the case of Dr. Nalini Mahajan (supra), first of all we are of the opinion that the Addl. CIT, Range-6, Kanpur having not been empowered to exercise or perform the powers or functions of an Assessing Officer, the assessment framed, by him was illegal and void ab initio. "

37. Considering the totality of the facts and circumstances of the case, we are of the view that JCIT, Hisar Range, do not have jurisdiction over the case of assessee and since he did not assume the jurisdiction legally and validly, therefore, the Impugned assessment order framed by him is vitiated and illegal and without jurisdiction. In view of the above discussion, we set aside the order of the authorities below and quash the impugned order."

28. Before proceeding any further, it would be relevant to cull out Section 124(3) of the Act which reads as under:

"124 (1) xxxxxxxx (2) xxxxxxx (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer— (a) where he has made a return under sub- section (1) of section 115WD or under subsection (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WE or sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier; (c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub- section (2) of section 153C or after the completion of the assessment, whichever is earlier.

30. In fact, we find that the Hon'ble High Court of Bombay in the case of Bansilal B. Raisoni& Sons Vs. ACIT, Central Circle- 1, Nashik &Anr, WP No.13391 of 2018 had, inter alia observed that the time limit for raising objection to the jurisdiction of the Assessing Officer prescribed under sub section (3) of Section 124 has a relation to the Assessing Officer's territorial jurisdiction. It was further observed that the time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without jurisdiction. Also, we find that the Hon'ble High Court of Bombay in the case of CIT-1, Nagpur Vs. Lalitkumar Bardia, (2017) 84 taxmann.com 213 (Bom) had addressed the contention of the department that where the assessee had not objected to the jurisdiction within the time prescribed under sub-section (3) of Section 124 of the Act, then, having waived its said right, it was barred from raising the issue of jurisdiction after having participated in the assessment proceedings. The Hon'ble High Court had observed that the waiver can only be of one's right/privilege but non-exercise of the same will not bestow jurisdiction on a person who inherently lacks jurisdiction. Therefore, the principle of waiver cannot be invoked so as to confer jurisdiction on an Officer who is acting under the Act when he does not have jurisdiction. The Hon'ble High Court while concluding as hereinabove had relied on the judgment of the Hon'ble Supreme Court in the case of Kanwar Singh Saini Vs. High Court of Delhi, 2012 (4) SCC 307. The Hon'ble Apex Court in its aforesaid judgment had held that it is the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court. The Hon'ble Apex Court further observed that if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Also, the Hon'ble Apex Court clarified that an issue can be raised at any belated stage of the proceedings including in appeal or execution. Elaborating further, it was observed by the Hon'ble Apex Court that the finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. It was further observed by the Hon'ble Apex Court that acquiescence of a party equally should not be permitted to defeat the legislative animation and the court cannot derive jurisdiction apart from the statute. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Kanwar Singh Saini Vs. High Court of Delhi (supra) are culled out as under: "22. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. (Vide United Commercial Bank Ltd v. Workmen, Nai Bahu v. Lala Ramnarayan, Natraj Studios (P) Ltd. v. Navrang Studios, Sardar Hasan Siddiqui v. STAT, A.R. Antulay v. R.S. Nayak, Union of India v. Deoki Nandan Aggarwal, Karnal Improvement Trust v. Parkash Wanti, U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., State of Gujarat v. Rajesh Kumar Chimanlal Barot, Kesar Singh v. Sadhu, KondibaDagadu Kadam v. Savitribai Sopan Gujar and CCE v. Flock (India) (P) Ltd.)"

Order pronounced in the Open Courton 12th February, 2025.