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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
These appeals by assessee are arising out of different orders of the Commissioner of Income Tax (Appeals)]-I, Thane, [in short CIT(A)], in Appeals No. 210/11-12, 31/13-14 vide even dated 18.08.2014. The Assessments were framed by the Asst. Commissioner of Income Tax, Panvel Circle (in short ACIT/ ITO/ AO) for the A.Ys. 2009-10, 2010-11
2 | P a g e ITAs No.7049 & 7050 /Mum/2014 vide different orders dated 30.11.2011, 22.03.2013 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal in is as regards to the validity of assessment and challenging the notice issued under section 143(2) of the Act as without jurisdiction and void ab-initio. In AY 2009-10, the assessee has raised the following ground: -
“1. Because, ld. CIT(A) has erred in upholding the validity of the assessment order which is wholly jurisdiction and void ab initio.”
Briefly stated facts relating to the above issue are that the assessee filed e-return of income on 26.08.2009. During the course of assessment proceedings, the assessee filed copies of return income along with audit report under section 44AB, profit and loss account, balance sheet along with the schedules with the Assessing Officer. The AO noted that the assessee filed e-return income on 26.08.2009 with the ITO, Ward 2 Panvel. Accordingly, the return of income was selected for scrutiny and notice under section 143(2) of the Act was issued and served on the assessee vide ITO Ward-2, Panvel on 20.08.2010 and 27.09.2010. The same was served by registered post AD on 27.08.2010 upon the assessee. Once again, a notice under section 143(2) of the Act dated 27.09.2010 was served on the assessee by ITO Ward-2 Panvel through notice server, which were served on 29.09.2010. Accordingly, the assessee raised objection regarding jurisdiction stating that the assessee’s jurisdiction lies with ACIT, DCIT Central Circle, Thane consequent to search carried out on the assessee by the Income Tax Department.
3 | P a g e ITAs No.7049 & 7050 /Mum/2014 4. The assessee objected before the AO but AO after considering the provisions of Section 292BB of the Act rejected the objection stating that the objections were raised after one month and in view of the provisions of section 124(3) of the Act, the objection regarding jurisdiction should have been taken before the expiry of one month from the date on which the assessee firm has been served with the notice under section 143(2) of the Act or before the completion of the assessment, whichever is earlier. The CIT(A) rejected the ground raised regarding assessment framed by non-jurisdictional AO. The assessee before CIT(A) argued that the jurisdiction of the assessee till 20.05.2011 was with the DCIT, Central Circle
1. Thane and the same was transferred by the CIT(A) Circle Pune to the charge of ITO ward Panvel, vide order dated 09.05.2011. As such notice under section 143(2) of the Act initiating the assessment proceedings by the ITO Ward-2, Panvel and consequent assessment framed is bad in law. The CIT(A) rejected the ground raised against jurisdiction of the AO on the basis that the same is time barred under section 124(3) of the Act and decided the issues on merits also. Aggrieved, now assessee is in appeal before Tribunal.
Before us, the learned Counsel for the assessee filed the details of events, which read as under: - Date Particulars 26/08/2009 Return of income filed for AY 2009-10 before ITO ward 2, Panvel 20/08/2010 Notice under section 143(2) from ITO ward 2, Panvel 27/09/2010 Notice under section 143(2) from ITO Ward 2, Panvel 08/10/2010 Our objection regarding jurisdiction, i.e. presently jurisdiction with Thane 10/09/2009 Notice under section 143(2) issued by DCIT, Central Circle 1, Thane for AY 2008-09 Order under section 143(3) passed by DCIT, CC-1, Thane for AY 2008- 28/12/2010 09 Therefore, at the same point of time, appellant received notices under section 143(2) from two different charge for AY 2008-09 & AY 20099-10 respectively. The notice for AY 2008-09 was issued in accordance with 4 | P a g e ITAs No.7049 & 7050 /Mum/2014 jurisdiction vested under section 120 of the Act. The notice for AY 2009- 10 was therefore invalid and therefore objected to 31/01/2011 Notification effective from 01.04.2011 that jurisdiction transferred to ACIT Order under section 127 transferring jurisdiction from Thane to ITO ward 09/05/2011 2, Panvel. Decentralization Wef 20/05/2011 Effect On a combined reading of notice _+ order under section 127 it is clear that ACIT, Panvel acquired jurisdiction over appellant wef 20/05.2011, therefore, notices under section 143(2) issued by ITO, Panvel Prior to said date were invalid, leading to the impugned assessment order becoming null & void ab initio. 26.09.2011 Notices under section 143(2) issued by ACIT Panvel, which was time barred. Case laws on 1. Kie infrastructure & projects vs. Income TAx Officer (2015) 154 ITD jurisdiction 280 (Delhi _Trib) 2. Capstone Securities Analysis Pvt. Ltd vs. DY Commissioner of Income Tax, Circle -1 (1), Pune 2017 (10) TMI 48 – ITAT Pune (para 11 & 13) 3. As per case law of synopsis submitted Date Events AY 2008-09 Order u/s 143(3) passed by DCIT, CC-1, Thane dt 28.12.2010 (PB-113) 26.09.2009 Return of income filed 20.08.2010 Notice u/s 143(2) from ITO Ward 2 Panvel 27.09.2010 Notice under section 143(2) from ITO Ward 2 Pavel, 08.10.2010 Our objection regarding jurisdiction, i.e. presently jurisdiction with Thane. 31.01.2011 Notification effective from 01/04.2011 that jurisdiction transferred to ACIT (Refer Exhibit A) 09.05.2011 Order U/s 127 transferring jurisdiction from Thane to ITO Ward 2 Panvel Effective from 20/05.2011 Effect : order under section 127 dated 09/05/2011 effective from 20.05.2011 prevails upon notification dated 31/1/2011 effective rom 1/4/2011 i.e. jurisdiction lay with ITO Ward 2, Panvel with effect from 20/5/2011. 26.09.2011 Notice under section 143(2) Passed by ACIT, Panvel Circle, Panvel. 30.11.2011 Order under section 143(3) passed by ACIT, Panvel Circle, Panvel.
Before us, the learned Counsel for the assessee Ms. Ritika Aggarwal, advocate argued extensively on AO’s jurisdiction during the course of hearing on 21.08.2019 and 22.08.2019 that the AO lacked jurisdiction. We noted the arguments of Ld Counsel and are of the view that at the time of issuance of notice under section 143(2) by AO, the jurisdiction over the assessee lay with Central Circle, Thane. An order u/s 127(2) of the Act was passed on 09.05.2011 by office of Commissioner of 5 | P a g e ITAs No.7049 & 7050 /Mum/2014 Income Tax-(Central), Pune Transferring jurisdiction of the assessee’s case from DCIT, CC-1, Thane to ITO ward 2, Panvel, whereas the ITO ward 2, Panvel had issued notice under section 143(2) much earlier on 20.08.2010 and 27.09.2010 i.e. even before the transfer order is passed. Therefore, said notices were without jurisdiction. Further, We also noted that at the same point of time, assessee received notice under section 143(2) from the Central Circle, Thane for AY 2008-09. The notice for AY 2008-09 were issued in accordance with jurisdiction vested due to centralization of the assessee’ case. This tantamount to concurrent jurisdiction which is impressible under law. Thus, the notice for AY 2009- 10 were invalid. Hence, we are of the view that on a combined reading of notice and order under section 127 of the Act it is clear that ACIT, Panvel acquired jurisdiction over assessee w.e.f. 20.05.2011, therefore, notices under section 143(2) of the Act issued by ITO, Panvel were invalid, leading to the assessment order becoming null & void.
On the issue of applicability of section 124(3) of the Act, we noted that the said section applies where jurisdiction is to be decided by virtue of section 120 of the Act. As per section 124(1) of the Act the jurisdiction on basis of section 120 of the Act is to he challenged within 30 days. However, the instant ease is under section 127 of the Act. In this case the Jurisdiction as transferred u/s 127 of Act before CIT-Central Circle- Thane. In accordance with said transfer order, the DCIT-CC- Thane initiated assessment proceedings for AY 2008-09. However, subsequently ITO Ward-2, Panvel initiated assessment proceedings for AY 2009-10 before obtaining an order u/s 127 of the Act decentralizing the change of the assessee. The Ld Counsel relied on decision of Delhi High Court in the case of Valvoline Cuminus Ltd vs DCIT (2008) 307 ITR 103 (Del.) to submit that once the proper officer exercised the jurisdiction,
6 | P a g e ITAs No.7049 & 7050 /Mum/2014 the subsequent notice by an officer not so authorized is invalid. In view of this discussion, we are of the view that notice issued under section 143(2) of the Act is without jurisdiction. As regards to the one argument of the DR that the returned filed by the assessee was with ITO Ward-2, Panvel is of no consequence because under e-filing system for filing of return, the automatic return will go to the territorial ITO of the assessee and not to the proper jurisdiction where the case is transferred under section 127 of the Act. Hence, this argument will not stand. This issue of the assessee’s appeal is allowed. Once, the issue on jurisdiction is decided in favour of assessee and notice under section 143(2) is quashed, consequential assessment will not stand. Hence, we quash the assessment order and allow the appeal of the assessee.
The next issue in for AY 2010-11 is as regards to the validity of assessment and challenging the notice issued under section 143(2) of the Act as without jurisdiction and void ab-initio. In AY 2010-11, the assessee has raised the following ground: -
“1. Because, ld. CIT(A) has erred in upholding the validity of the assessment order which is wholly jurisdiction and void ab initio.”
The issue in this year is almost identical but little facts are different which we will discuss now.
Briefly stated facts are that the assessee field its return of income on 29.09.2010. The assessee’s case was selected for scrutiny assessment under CASS system and notice under section 143(2) of the Act was issued by ITO, Ward-2, Panvel on 24.08.2011. Subsequently, the asessee’s case was transferred to ACIT Panvel Circle and notice under section 143(2) and 142(1) of the Act was issued on 17.01.2012
7 | P a g e ITAs No.7049 & 7050 /Mum/2014 after the expiry of the time limit for issuance of notice under section 143(2) of the Act. The assessee raised objection regarding assumption of jurisdiction by the AO but the AO dismissed the objections raised by the assessee on the ground that the same is beyond the specified time limit under section 124(3) of the Act and accordingly the assessment was framed. The CIT(A) also confirmed the action of the AO by holding that the ground raised on jurisdiction of the AO is time barred under section 124(3) of the Act and hence, rejected the contention. Aggrieved, now assessee is in appeal before Tribunal.
Before us, the learned Counsel for the assessee narrated the facts which are detailed as under: - Date Particulars 29/09.2010 Return of Income filed 31/01/2011 Notification with effect from 01.04.2011 matter assigned to ACIT 09.05.2011 Wef Order under section 127 – Jurisdiction transferred from Thane to Panvel 20/05/2011 Effect On a combined reading of above notification and order it is clear that ACIT Panvel acquired jurisdiction on the appellant on 20/05.2011 24/08/2011 Notice under section 143(2) issued by ITO ward 2, Panvel instead of ACIT which was without jurisdiction. 30/09/2011 Expiry of time limit for issuance of notice under section 143(2) 17/01/2012 Notice under section 143(2) issued by ACIT Circle Panvel which was time barred 04/01/2013 Case assigned to JCIT by CIT-II Thane by letter No. THN/ CIT-II/ 127(20/ 2012-13/2440 22/03/2013 Order under section 143(3) passed by JCIT Pavel. Conclusion For AY 2010-11, original notice under section 143(2) was without jurisdiction, rendering the impugned assessment null & Void. Notice dated 17.02.2012 issued by ACIT was time barred, so no cognizance can be taken of the same 11. Before us, the learned Counsel for the assessee argued that on a combined reading of the notification and order it is clear that ACIT Panvel acquired jurisdiction on the assessee’s case with effect from 20.05.2011. Thus the original notice u/s 143(2) of the Act was without jurisdiction, rendering the assessment order null & void. The notice dated I 7.01.2012
8 | P a g e ITAs No.7049 & 7050 /Mum/2014 issued by ACIT was time barred, so no cognizance can he taken of the same. She further argued that regarding departments contention that objection was not taken within a month as per section 124(3) of the Act, it is stated that the jurisdiction was vested in the ACIT w.e.f. 20.05.2011 vide the order u/s 127 of the Act and notification, the ITO had no role to play. Thus, section 124 of the Act is not attracted in this case. In case the department argues that the jurisdiction lay with ITO, then also its case fails since there is no order under section 127 of the Act transferring jurisdiction from ITO to ACIT, from whom it was further transferred to JCIT vide order under section 127 of the Act, who finally passed the assessment order.
We noted that she argued on the issue of AO’s lack of jurisdiction. We noted from the argument of the learned Counsel that at the time of issuance of notice under section 143(2) of the Act by AO, the jurisdiction over the assessee lay with Central Circle, Thane. An order under section 127(2) of the Act was passed on 09/05/2011 by office of Commissioner of Income Tax-(Central), Pune Transferring jurisdiction of the appellant’s case from DCIT, CC-1, Thane to ITO ward 2, Panvel, whereas the ITO ward 2, Panvel had issued notice under section 143(2) of the Act much earlier on 20.08.2010 and 27.09.2010 i.e. even before the transfer order is passed. Therefore, said notices were without jurisdiction. Further, it was pointed out that at the same point of time, assessee received notice under section 143(2) of the Act from the Central Circle, Thane for AY 2008-09. The notice for AY 2008-09 were issued in accordance with jurisdiction vested due to centralization of the assessee’s case. This tantamount to concurrent jurisdiction which is impressible under law. Thus, the notice for AY 2009-10 were invalid. We noted the facts that on a combined reading of notice and order under section 127 of the Act it is