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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: Shri Sanjay Garg & Shri Rajesh Kumar]
ORDER Per Sanjay Garg, Judicial Member:
The present appeal has been filed by the Revenue for the AY 2016-17 against the order of Commissioner of Income Tax (Appeal)-7, Kolkata dated 12.03.2020.
2. The Revenue in this appeal has taken the following grounds of appeal:
“1. That in law and on the facts of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 2,20,67,913/- made by the AO on grounds of bogus expenditure and also deleting the addition of Rs. 5,32,780/- made by the AO as unexplained expenditure.
That in law and on the facts of the case, the Ld. CIT(A) was not justified in accepting fresh evidences in violation to the provisions of Rule 46A of I.T.Rules.
That in law and on the facts of the case, the Ld. CIT(A) got himself misdirected by accepting the argument of the assessee that order u/s 127 of the Act required for transfer of jurisdiction from the ITO to the ACIT/DCIT.
That in law and on the facts of the case, the Ld. CIT(A) misconstrued transfer of records from the ITO to the ACIT/DCIT, which is done purely for distribution of workload among the AOs in a particular charge on the basis of administrative instruction of the CBDT.
5. That in law and on the facts of the case, the Ld. CIT(A) erred in acknowledging the issue of jurisdiction, while such was never raised before the AO as per relevant provisions of the Act.
Shri Debabrata Kayal AY: 2016-17 6. That the petitioner craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of appeal
.”
3. A perusal of the above grounds of appeal reveals that the Department, inter alia, has contested the action of the Ld. CIT(A) in accepting the argument of the assessee, that the assessment order passed by ACIT was without jurisdiction. Since this legal ground goes to the root of the case, hence we proceed to decide this legal ground first.
4. In this case, firstly the ITO, Ward-26(2), Kolkata had issued the notice u/s 143(2), however the case was subsequently transferred to the ACIT, Circle-26(1) as the income of the assessee had exceed the threshold limit of Rs. 20 Lakhs and accordingly the assessment u/s 143(3) was made by the ACIT, Circle-26(1), Kolkata.
The Ld. A.R. has contended that in this case notice u/s 143(2) issued by ITO, Ward- 26(2) had no valid sanction of law, because he had no pecuniary jurisdiction over the case. Further that no notice u/s 143(2) was issued by the ACIT, Circle-26(1), Kolkata to assume jurisdiction to frame assessment u/s 1434(3) of the Act. Besides that no order u/s 127 of the Act was passed to vest the jurisdiction from ITO to ACIT and hence, the assessment order passed by the ACIT was without jurisdiction.
The Ld. D.R has not disputed the aforesaid factual position. However, he has submitted that the concerned ACIT being the overall in charge of the concerned ward was competent to frame the assessment.
We have considered the rival contentions of both the Ld. Representatives of the parties. Before proceedings further, it will be appropriate to refer to Section 120 of the Act, which for sake of ready reference, is reproduced as under:
“Jurisdiction of income- tax authorities (1) Income- tax authorities shall exercise all or any of the powers and perform all or any of the functions Conferred on, or, as the case may be, assigned 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. [Explanation.- For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1)].
Shri Debabrata Kayal AY: 2016-17 (2) The directions of the Board under sub- section (1) may authorise any other income- tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income- tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub- sections (1) and (2), the Board or other income- tax authority authorised by it may have regard to any one or more of the following criteria, namely:- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases …… 8. A perusal of the aforesaid statutory provisions would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers. The ld. Counsel in this respect has relied upon the CBDT Instruction No.1/2011 [F.No.187/12/2010-IT(A-I), for the sake of convenience is reproduced as under: “Instruction No.1/2011 [F.No.187/12/2010-IT(A-I), DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Income Declared Declared (Mofussil areas) (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Above Upto Above Rs. 30 lacs Rs. Rs. 20 Rs. 20 lacs 30 lacs lacs Non-corporate Upto Above Upto Above Rs. 20 lacs returns Rs. Rs. 15 Rs. 15 lacs 20 lacs lacs
Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune.
Shri Debabrata Kayal AY: 2016-17 The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.”
Now, in this case, the assessment was initiated by issuing notice u/s 143(2) of the Act by ITO,Ward-26, Kolkata. However the assessment order has been passed by ACIT. At this stage, it will be appropriate to refer to the provisions of section 127 of the Act as under: Power to transfer cases (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ITO which was beyond his jurisdiction and the same was therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not issue any notice u/s 143(2) of the Act to assume jurisdiction to frame the assessment. The Ld. CIT(A), this respect has placed reliance on the decision of the Apex Court of the Country in the case of Hotel Blue Moon reported in 321 ITR 362 (SC) wherever the Hon’ble Supreme Court has held that issue of notice u/s 143(2) of the Act is sine-qua-non to assume jurisdiction to frame assessment. Further the Ld. CIT(A) has relied upon the decision of Hon’ble Calcutta High Court in the case of Kusum Goyal vs. ITO in W.P. No. 1229 of 2009 vide order dated 5.4.2010 to hold that a valid order u/s 127 of the I.T.Act is required to be passed to transfer the case from one Assessing Officer to other Assessing Officer.
No law laying any contrary proposition of law has been cited by the Ld. D.R. We therefore, do not find any reason to interfere with the order of Ld. CIT(A). The order of the Ld. CIT(A) is upheld. Shri Debabrata Kayal AY: 2016-17 12. In the result, the appeal of the revenue stands dismissed.
Order is pronounced in the open court on 11th February, 2022.