OJASVI MOTOR FINANCE PVT. LTD., ,HOWRAH vs. ITO, WARD - 1(4), KOLKATA , KOLKATA

The captioned appeal filed by the assessee, pertaining to Assessment Year 2008-09, is directed against the order passed by Commissioner of Income Tax (Appeals)-6, Kolkata, in Appeal No.11111/CIT(A)-6/Kol/2014-15, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3)/147/263/144 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), dated 24.03.2014.

However, in this appeal the assessee has raised a multiple grounds of appeal but at the time of hearing the solitary grievance of the assessee has been confined to ground No.2, which reads as follows:

On the other hand, ld DR for the Revenue submitted before the Bench that for administrative convenience the assessment was framed by Income Tax officer Kolkata . The ld DR for the Revenue filed written submissions before the Bench, the important part of the written submission is reproduced below:

We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that order under section 127 of the Income Tax Act was issued by the Commissioner of Income Tax, Kolkata-1, on 15.03.2013 whereby the Commissioner transferred the jurisdiction from ITO,Wd-1(4), Kolkata to ACIT Central Circle-II(3), Chennai. The order was passed by the assessing officer Ward-1(4) Kolkata on 24.03.2014, which is without jurisdiction. For that we rely on the Judgment of the Hon`ble High Court of Calcutta in the case of RAMSHILA ENTERPRISES PRIVATE LTD, 383 ITR 546 (Cal-HC), wherein it was held as follows:

He drew our attention to a judgment of the Apex Court in the case of Pandurang and Others Vs. State of Maharashtra reported in (1986) 4 SCC 436 for the proposition that even a right order by a wrong forum is a nullity. In the aforesaid judgment their Lordship held as follows:- “4. When a matter required to be decided by a Division Bench of the High Court is decided by a learned Single Judge, the judgment would be a nullity, the matter having been heard by a court which had no competence to hear the matter, it being a matter of total lack of jurisdiction. The accused was entitled to be heard by at least two learned Judges constituting a Division Bench and had a right to claim a verdict as regards his guilt or innocence at the hands of the two learned Judges. This right cannot be taken away except by amending the rules. So long as the rules are in operation it would be arbitrary and discriminatory to deny him this right regardless of whether it is done by reason of negligence or otherwise. Deliberately, it cannot be done. Negligence can neither be invoked as an alibi, nor can cure the infirmity or illegality, so as to rob the accused of his right under the rules. What can be done only by at least two learned Judges cannot be done by one

He also relied upon a Division Bench judgement of this Court in the case of ITO, ‘A’ Ward, District Howrah And Others Vs. Ashoke Glass Works reported in (1980) 125 ITR 491 (Cal) wherein the following view was expressed:- “So when the jurisdiction is validly removed by a competent authority under the provisions of a statute, the original court or any Tribunal or authority in such event will be incompetent, as having ceased to have jurisdiction, to proceed further with the pending proceeding or proceeding which may be instituted after such removal of jurisdiction.”

Mr. Ghosal, learned senior advocate appearing for the revenue submitted that the transfer order itself indicates that jurisdiction of ITO, WD-4(1), Kolkata was transferred to SCIT/DCIT Central Circle XIX, Kolkata, which is at page 584.

The jurisdiction of the CIT remained unchanged. In other words, it is the jurisdiction of the Trial Court, which was changed. The jurisdiction of the appellate authority remained unchanged. Therefore, the order under challenge was validly passed by the CIT.

Mr. Poddar, in reply, drew our attention to the explanation appended to section 127 of the Income-tax Act which reads as follows:- “In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date or such order or direction in respect of any year.”

He submitted that the transfer of a case would mean all pending and future proceedings. He submitted that even the learned Tribunal has conceded that “CIT, Central Circle, Kolkata had jurisdiction over cases with ACIT/DCIT, Central Circle- XIX, Kolkata”.

He submitted that having held that the learned Tribunal was wrong in point of law, in holding as follows:-

We have considered the rival submissions. It is not necessary for us to consider whether the Commissioner had jurisdiction to restrict the order of transfer, for the simple reason that the order of transfer in this case was not a restricted one. Reading the order dated 3rd September, 2012 as a whole, it does not appear that any restricted transfer was sought to be made for any particular year or years or otherwise. The order of transfer, as we have already indicated, was passed in the interest of revenue for better coordination, effective investigative and meaningful assessment.

The actual transfer of files may have taken place on 29th July, 2013 but admitted position is that a notice under Section 143(2) by the transferee-assessing officer was issued on 18th March, 2013. The existence of files does not confer the jurisdiction when the same has validly been transferred and also acted upon. The jurisdiction over the subject-matter has to be conferred by law. The jurisdiction in this case had been transferred by the order dated 3rd September, 2012 by no other than the CIT Kolkata- II, Kolkata himself. Once that was done CIT Kolkata – II, Kolkata lost the seisin over the matter. He became ‘functus officio’.

Reference in this regard may be made to the Stroud’s Judicial Dictionary of Words and Phrases, 7th Edition, Page 1085 wherein the following meaning has been expressed:- “FUNCTUS OFFICIO. An arbitrator or referee cannot be said to be functus officio when he has given a decision which is held to be no decision at all (Davies v Howe Spinning Co Ltd, 27 B.W.C.C. 207).

Reference may also be made to the judgement in the case of Re V.G.M. Holdings, Ltd. reported in 1941 (3) All England Law Reports, 417 wherein the following views were expressed:- “I think that it would be a strange position if a judge were at liberty to reconsider his decision and grant a stay of execution after he had made an order refusing it. I think that, when a judge has made an order such as that in the present case, the only remedy for the respondent, if he is dissatisfied with the order, is to go to the Court of Appeal…”

A special bench in the case of Komal Chand –Vs- The State of Madhya Pradesh, reported in AIR 1966 Madhya Pradesh 20 opined in this regard as follows:- “Section 35 of the Stamp Act, inter alia, says that no instrument chargeable with duty shall be registered by any public officer unless such instrument is duly stamped. This provision thus casts a duty on the registering officer to examine whether an instrument presented for registration is duly stamped. If, as section 36 says, an instrument chargeable with duty shall not be registered unless such instrument is duly stamped, then it follows that the registering officer must perform the duty of seeing whether an instrument presented for registration is or is not duly stamped before admitting it to registration and not afterwards. If he finds that the document is not duly stamped, then he must impound it under Section 33 of the Act. Neither in the Registration Act nor in the Stamp Act is there any provision giving to the registering officer any power to examine whether an instrument already registered was or was not duly stamped and to impound it. As soon as the registering officer registers a document presented to him for registration, the function in the performance of which the document was produced before him is over and thereafter becomes functus officio having no power under section 33 to impound the instrument. The matter is really concluded by the decision of the Supreme Court in Govt. of Uttar Pradesh v. Mohammad Amir Ahmad Khan, AIR 1961 SC 787. That was a case where the question arose whether the Collector has any power to impound an instrument sent to him for adjudication under section 31 of the Stamp Act. The Supreme Court held that under that section the Collector had no such power, as the provision gave him the power only to give his opinion as regards the duty with which in his judgment the instrument was chargeable and when that function was performed by the Collector he became functus officio.

In the case of SBI –vs- S. N. Goyal reported in 2009 (8) SCC 92 the following views were expressed:- “It is true that once an authority exercising quasi-judicial power takes a final decision, it cannot review its decision unless the relevant statute or rules permit such review. But the question is as to at what stage an authority becomes functus officio in regard to an order made by him. P. Ramanatha Aiyar's Advanced Law Lexicon (3rd Edn., Vol. 2, pp. 1946-47) gives the following illustrative definition of the term “functus officio”: Thus a judge, when he has decided a question brought before him, is functus officio, and cannot review his own decision.” Black's Law Dictionary (6th Edn., p. 673) gives its meaning as follows: “Having fulfilled the function, discharged the office, or accomplished the purpose, and therefore of no further force or authority.” We may first refer to the position with reference to civil courts. Order 20 of the Code of Civil Procedure deals with judgment and decree. Rule 1 explains when a judgment is pronounced. Sub-rule (1) provides that the court, after the case has been heard, shall pronounce judgment in an open court either at once, or as soon thereafter as may be practicable, and when

Applying the law laid down in S. N. Goyal’s (supra) case we are reinforced, in our opinion that the CIT Kolkata – II, Kolkata had become functus officio prior to 18th March, 2013 because the transferee – assessing officer had assumed jurisdiction without which the notice dated 18th March, 2013 under Section 143(2) could not have been issued. Therefore, the order of transfer was duly published/ notified and/or communicated and thereafter acted upon by the transferee-assessing officer.

We are, as such of the opinion that the issuance of the notice dated 18th March, 2013 under Section 263 and the consequent order dated 26th March, 2013 passed under Section 263 of the Income Tax Act were acts without jurisdiction and therefore a nullity.”

In assessee`s case under consideration, the order under section 127 of the Income Tax Act was issued by the Commissioner of Income Tax, Kolkata-1, on 15.03.2013 whereby the Commissioner transferred the jurisdiction from ITO,Wd- 1(4), Kolkata to ACIT Central Circle-II(3), Chennai. Whereas, the assessment order was passed by the assessing officer Ward-1(4) Kolkata on 24.03.2014, which is without jurisdiction. Even a ‘right’ decision by a ‘wrong’ forum is no decision. It is non-existent in the eye of law. And hence a nullity. The assessment order under appeal is therefore no order in the eye of law, hence we quash the assessment order.

In the result, the appeal of the assessee is allowed.