SAIDEEP AUTOMOBILES PVT. LTD.,,AHMEDNAGAR vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

आयकर अपीलीय अिधकरण, पुणे �यायपीठ “ए” पुणे म� IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE सु�ी सुषमा चावला, �याियक सद�य एवं �ी डी. क�णाकरा राव, लेखा सद�य के सम� BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM आयकर अपील सं. / ITA No.1735/PUN/2016 िनधा�रण वष� / Assessment Year : 2012-13 Saideep Automobiles Pvt. Ltd., Sarjepura, Near Sablok Petrol Pump, Ahmednagar. अपीलाथ�/Appellant PAN : AAHCS4834Q …. Vs. DCIT, Circle- 1(3)(1), …. ��यथ� / Respondent Mumbai. अपीलाथ� क� ओर से / Appellant by : None (Written Submission) ��थ� की ओर से / Respondent by : Ms. Sahbana Parveen सुनवाई क� तारीख / घोषणा क� तारीख / Date of Hearing : 26.11.2018 Date of Pronouncement: 17.12.2018 आदेश / ORDER PER D. KARUNAKARA RAO, AM : This appeal is filed by the assessee against the order of CIT(A)-2, Pune dated 03.05.2016 for the Assessment Year 2012-13. 2. The grounds raised by the assessee are as under :- “1. Commissioner of Income tax (Appeals)- 2 has erred in confirming that the Order passed u/s 143(3) by Dy. CIT 1(3)(1) Mumbai is not bad-in- law. Appellant prays to declare that Assessment Order u/s 143(3) is “abinitio” bad-in-law and without jurisdiction. 2. Without prejudice to Ground no.1, Notice issued u/s 143(2) by Dy. CIT 1(2) Mumbai is without jurisdiction and bad-in-law. 3. CIT(A) has erred in law in confirming jurisdiction of Assessing Officer on the basis of ward/Circle mentioned on the PAN/ PAN allotment Letter. Appellant prays to declare that Assessment Order passed by Assessing Officer Mumbai is without jurisdiction. 4. Without Prejudice to above grounds, and without accepting, if CIT(A)-2, Pune is correct in confirming jurisdiction of Assessing Officer Mumbai, then CIT(A)-2, Pune’s Order is without jurisdiction and bad-in-law. 5. Without Prejudice to above grounds, CIT(A) has erred both in Law and on facts in confirming the disallowance of Rs.30,83,444/- out of Claim of Rs.39,68,180/- towards Pre-delivery and Inspection Expenses.

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Appellant prays to cancel the Disallowance made. 6. Appellant prays for just and equitable relief. 7. Appellant prays for cancellation of Interest charged u/s 234B. 8. Appellant prays to add, alter, amend and/or withdraw the ground, submit evidence/additional evidence during appeal proceedings.” 3. Briefly stated the relevant facts include that the assessee is engaged in the business of trading of Two Wheelers. Assessee filed the return of income on 28.09.2012 declaring total income at Rs.25,73,374/-. In the scrutiny assessment made u/s 143(3) of the Act, the Assessing Officer/DCIT- 1(3)(1), Mumbai determined the total income at Rs.60,99,190/-. However, the Assessing Officer, Mumbai made addition on account of inflated Pre-Delivery and Inspection (PDI) expenses of Rs.35,25,812/-. During the assessment proceedings, assessee questioned the jurisdiction of the Assessing Officer and stated that ACIT, Ahmednagar is the correct Assessing Officer of the assessee. Assessee requested for transfer of file to Ahmednagar. Assessing Officer dismissed the assessee’s request for transfer and made the assessment. 4. Aggrieved with the same, the assessee filed the appeal before the CIT(A), Mumbai on 31.08.2015. Assessee raised the jurisdictional issue too along with other issues. Before the CIT(A), the assessee reiterated the said preliminary issue with regard to the validity of the assessment made by the Assessing Officer, Mumbai on the ground of issuing notice u/s 143(2) of the Act without jurisdiction. Simultaneously, the assessee also raised the issues on merit of the addition of Rs.35,25,812/-. Subsequently, the CIT(A), Mumbai transferred the appeal to the CIT(A), Pune. The CIT(A), Pune dealt with the said preliminarily issue in para 4 of his order and dismissed the said ground stating that the PAN jurisdiction lies with DCIT- 1(3)(1), Mumbai. However, CIT(A) did not refer to the reasons behind

3 ITA No.1735/PUN/2016 migration of PAN from Ahmednagar to Mumbai. As per the assessee the Registered Office/Corporate Office is at Ahmednagar and assessee never asked for migration or transfer of PAN to Mumbai or Pune. However, Revenue did not entertain this argument. Further, relating to the addition on merits, the CIT(A) partly confirmed the addition. 5. Aggrieved with the above decision of the CIT(A), the assessee is in appeal before us with the above extracted grounds. 6. Grounds no.1, 2, 3 and 4 relate to the validity of the assessment on the ground of issuing notice u/s 143(2) of the Act by the Assessing Officer, Mumbai without having valid jurisdiction on the assessee. Ground no.5 relates to the merit of addition. Grounds no.6, 7 and 8 are general in nature which do not require any separate adjudication. 7. Before us, at the outset, the assessee furnished the written submissions and informed the Bench of his decision to not to attend the proceedings before the Tribunal. 8. On the other hand, ld. DR for the Revenue was present and made her argument apart from the procedure laid down. Legal/Jurisdictional Issue – DCIT, Mumbai has no Jurisdiction. 9. First, we shall take up the jurisdictional issue laid down in grounds no.1 to 4 of the appeal. On this legal issue, in the written submission, the assessee argued that he is assessed to tax in Ahmednagar consistently over the years. Assessee has both Registered and Corporate Office in

4 ITA No.1735/PUN/2016 Ahmednagar only. However, for some unknown reasons, the notice u/s 143(2) dated 24.09.2013 was issued by the DCIT-1(3)(1), Mumbai. Based on the said notice, the assessment was completed by the DCIT, Mumbai against the assessee’s wishes and written request. Assessing Officer, Mumbai did not transfer both the PAN and the file to Ahmednagar where the original jurisdiction lies. 10. Aggrieved with the same, the assessee filed an appeal before the CIT(A)-3, Mumbai challenging the assessment order on the ground of jurisdiction as well as on merits. Without adjudicating the same, the CIT(A)-3, Mumbai transferred the pending appeal to the CIT(A)-2, Pune holding that the jurisdiction over the said assessee lies with CIT(A)-2, Pune. At the end of the first appellate proceedings, the CIT(A) disposed the grounds dismissing the preliminarily issue relates to the jurisdiction holding that the assessee’s PAN lies with the DCIT-1(3)(1), Mumbai only. Hence, CIT(A) upheld the validity of issue of notice u/s 143(2) of the Act and the assessment. The CIT(A) also granted part relief to the assessee on the addition on merits.. 11. Aggrieved with the same, the assessee raised the said preliminarily grounds no.1 to 4. In this regard, narrating the various evidences supporting the allotment of PAN at Ahmednagar, argued through written submission that the DCIT-1(3)(1), Mumbai has no jurisdiction on the assessee. The assessee argued in the written submissions that the entire assessment proceedings before the Assessing Officer i.e. DCIT-1(3)(1) are invalid and without jurisdiction. Hence, as per the assessee the same constitutes null and void or illegal and liable to be quashed. The assessee

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relied on series of judgements highlighting the erroneous jurisdiction held by the Assessing Officer on the assessee. For the sake of completeness, the relevant portion of the written submissions are extracted hereunder :- “.......... Being aggrieved by the Order of Ld. CIT(A)-2, Pune, the assessee has filed the present appeal. The contents of the Statement of Facts and Grounds of Appeal filed along with the appeal memorandum may please be read along- with these submissions as the same have been discussed in fair detail in the Memo of Appeal and are not being fully repeated for the sake of brevity. Ii. Without prejudice to each of the contentions herein or in the appeal memo, the Appellant states his submissions/contentions in support of each of the Grounds of Appeal as below: 1. Ground No.1 & 3: Page No. Para No. AO's Order -- Issue through raised not dealt with CIT(A) Order Page 3 Para 4 1.1 Jurisdiction of Appellant Company Lies with Income Tax Officer/ Dy.CIT Ahmednagar u/s 124(1)(a). (a) Registered office of the company is at Ahmednagar. (copy of extract from website of Registrar of Companies placed at page 41 of the paper book) (b) Address on PAN allotment letter is Ahmednagar. (page 40 of the paper book) (c) Principal and only one Place of Business of the Company is only at Ahmednagar, having No Branches or offices anywhere, much less in Mumbai. (copies of Registration under MVAT Act, Central Sales Tax Act and Service Tax placed at page 42 to 44 of paper book) (d) None of Directors and Shareholders is assessed in Mumbai. The Residential addresses of the Directors is at Ahmednagar. (copy placed at page 45 to 48 of paper book) (e) As early as on 29.11.2012 requested for correction for wrong jurisdiction mentioned on PAN allotment letter as Dy.CIT 15(2) Mumbain instead of ACIT Ahmednagar. (copy placed at page 12 of paper book) (f) Address on E-return filed is Ahmednagar. (copy at page 19 of paper book) (g) Notice u/s 143(2) and Assessment order u/s. 43(3) for Assessment Year 2005-06 was by ACIT, Ahmednagar. (copy placed at page 7 to 9 of paper book) (h) Intimation u/s. 143(1) for A.Y. 2004-05 and A.Y. 2005-06 were issued by ITO Ward 4, Ahmednagar. (copy placed at page 10 of paper book) (i) Notice dated 23.11.2012 u/s 142(1) for Assessment Year 2010-11 is issued by ITO Ward 4, Ahmednagar. (copy placed at page 11 of paper book). All these facts clearly establish that the jurisdiction over the present assessee always vested with Income Tax Officer/Dy. CIT Ahmednagar. 1.2 On receipt of notice u/s 143(2) dated 24.09.2013 for Assessment Year 2012-13, assessee had immediately objected as to jurisdiction by letter dated 04.10.2013 i.e. within 30 days as per 124(3)(a). (copy of the said letter is placed at page 27 to 29 of the paper book) 1.3 The assessee had been continuously filing applications to the AO- DCIT, CIT, CCIT both at Mumbai and Ahmednagar bringing to their notice the incorrect jurisdiction, requesting for correction therein and

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transfer of case from Mumba to Ahmednagar from as early as 29.11.2012. (The copies of all the correspondence is placed at page 12 to 18; page 27 to 35 & page 39 of the paper book). 1.4 Assessee again filed written objection on 07.06.2014 explicitly stating that the AO i.e. ld. DCIT-1(3)(1), Mumbai has no jurisdiction whatsoever over the case and requested for determination of jurisdiction u/s. 124(4) of the Act. (copy of the said letter is placed at page 33 to 34 of the paper book). 1.5 It is submitted that, the ld. AO has failed to comply with provisions of sec. 124(4) under which it was incumbent on him to decide the jurisdictional issue and if not satisfied with claim of assessee to refer the matter for determination of correct jurisdiction u/s. 124(2), before passing the assessment order. Thus, the Assessment order passed by the ld. DCIT 1(3)(1) Mumbai is rendered illegal and invalid and this ground alone. 1.6 The ld. AO has assessed the case over which he had no jurisdiction. (a) As per sect. 124(1)(a) the AO can assess the case in respect of any person carrying on Business or Profession if the place of such Business or Profession, is situated within the area over which the AO exercise jurisdiction. (b) As per sec.124(1)(b) the AO can assess the case of any person who resides within the area over which the AO exercise jurisdiction. In the present case, both of these conditions are not satisfied. 1.7 In spite of objections of the assess, the ld. Assessing Officer, Mumbai completed the Assessment u/s 143(3). 1.8 The ld. CIT(A)-2, Pune erred in confirming the said Assessment order dismissing the contentions of the appellant and holding that the ld. AO had jurisdiction as the PAN of the assessee was lying with jurisdiction of the DCIT-1(3)(1), Mumbai (i.e. the AO). In this respect, it is submitted that : (a) The Income Tax Act, 1961 does not prescribe under any section, as to jurisdiction of the case will be that as mentioned on PAN allotment letter or officer with whom the PAN is lying. The jurisdiction of an authority under the Income Tax Act, is determined and governed by sec.120, sect.124 & 127 of the Income Tax Act, 1961. (b) The ld. CIT(A)-2, Pune erred in losing sight of the fact that, it is PAN which follows the jurisdiction and not that jurisdiction follows PAN. (Appellant relies on judgement of the Hon’ble Pune ITAT in Capstone Securities Analysis Pvt. Ltd. vs. DCIT, Circle-1, Pune ITA No.177/PUN/2015 dated 09.08.2017 – copy of which is filed in compilation of judgements at page....). (c) It is undisputed that jurisdiction over the present assessee was always with Ahmednagar since inception. Neither there was any transfer anytime in the past nor any notice was ever issued nor any opportunity of hearing whatsoever, was ever granted to the assessee before the so called transfer of its PAN from ITO/Circle Ahmednagar to DCIT, Mumbai. Accordingly, the so called transfer of PAN, if any, by the income tax Department from ITO/Circle Ahmednagar to DCIT, Mumbai, was in itself illegal and band in law. In support of the above contentions, the Appellant relies on the following judgements : (i) Hon’ble Pune ITAT in Capstone Securities Analysis Pvt. Ltd. vs. DCIT, Circle-1, Pune ITA No.177/PUN/2015 dated 09.08.2017 (ii) Prashant Chandra vs. CIT (2017) 81 taxman.com 106 (Allahabad High Court).

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Thus it is submitted that, the entire assessment proceedings before the AO (i.e. Ld. Dy. CIT- 1(3)(1), Mumbai) were without having any jurisdiction over the assessee and the same are null and void, illegal and liable to be quashed. 2. Ground No.2: Page No. Para No. AO's Order -- Issue though raised not dealt with CIT(A) Order Page 3 Para 4 Without prejudice to the other submissions herein. 2.1 In the present case, as submitted hereinabove, the jurisdiction was always with ITO/Dy.CIT Ahmednagar Circle and never with Dy.CIT- 1(3)(1), Mumbai. 2.2 The Notice of Assessment u/s. 143(2) dt. 24.09.2013 in the present case was issued by the Dy. CIT 1(2), Mumbai. The copy of the said Notice is placed at page No.26 of the paper book. 2.3 It is submitted that, an Assessment Notice u/s. 143(2) of the Income Tax Act, 1961 can be issued only by the Jurisdictional Assessing Officer. A perusal of definition of “Assessing Officer” in sec.2(7A) would make it clear that the Assessing Officer means the officer who is vested with the relevant jurisdiction over the Assessee. Thus, the Notice of Assessment can be issued only by the officer who is vested with the jurisdiction to issue the notice and not any other officer of the Department, who is not having jurisdiction over the assessee. Accordingly, the Notice of Assessment u/s.143(2) in the present case issued by the Dy.CIT(2), Mumbai being issued without jurisdiction was in itself invalid and void ab-initio. 2.4 The Notice u/s.143(2) forms the foundation of the entire assessment proceedings. The issue of jurisdiction goes to the root of the matter and accordingly, the entire assessment proceedings are vitiated and the Assessment Order passed is null and void ab-initio and bad in law and deserves to be quashed and annulled. 2.5 In support of the above contentions the Appellant herein relies on the following judgements: (a) In the case of The Income Tax Officer Vs NVS Builders Pvt. Ltd. (ITA No.3729/Del/2012 decided on 08.03.2018), the Hon’ble ITAT has held that assessment proceedings are vitiated because of non-service of jurisdictional notice under section 143(2) by the A.O. having jurisdiction over the case of the assessee and the assessment order passed is null and void. (b) Prashant Chandra Vs CIT (2017) 81 taxmann.com 106 (Allahabad High Court) (c) Indorama Software Solution Ltd. v ITO (2013) 29 Taxmann.com 78 (Mumbai ITAT) (d) Y. Narayana Chetty and Another vs. ITO (1959) 35 ITR 0388 (SC) & CIT Vs Ramsukh Motilal (1955) 27 ITR 0054 Bombay High Court : The Hon’ble Courts have held that the service of a valid notice on the assessee is a condition precedent to the validity of any reassessment and if a valid notice is not issued as required, proceedings taken by the ITO in pursuance of an invalid notice and consequent assessment orders passed by him would be void and inoperative.” 12. On the other hand, ld. DR for the Revenue submitted that she has no document to justify the reason for transfer of the PAN or the assessment

8 ITA No.1735/PUN/2016 records from Ahmadnagar to Mumbai. However, ld. DR relied on the order of the Assessing Officer and the CIT(A). 13. We have heard ld. DR for the Revenue on the preliminary issue on jurisdiction of Assessing Officer, Mumbai and perused the written submissions of the assessee and also perused the orders of the lower authorities. On the preliminary issue, we find there is no dispute about the fact that the assessee company was incorporated and situated at Ahmednagar and filed returns of income over the years at Ahmednagar only. Assessments were completed by Assessing Officer, Ahmednagar only. For some unknown reasons, assessee received a notice u/s 143(2) of the Act from DCIT- 1(3)(1), Mumbai. Assessee is not privy to the said transfer of assessment files to Mumbai. The assessee filed voluminous data and correspondence undertaken by it with the concerned authorities supporting the illegality of the PAN and the transfer of the files. However, the same never yielded any result to the benefit of the assessee. 14. We also considered the DR’s arguments. Ld. DR explained the reasons for holding of jurisdiction by DCIT- 1(3)(1), Mumbai and submitted the PAN lies with the DCIT, Mumbai jurisdiction. The ld. DR simply mentioned that there must be some valid reasons for transfer of the PAN and the file to Mumbai. However, the said reason is never communicated either to assessee or to the Tribunal with evidences. This is so despite number of opportunities given to the DR. Therefore, the undisputed facts relating to the jurisdiction of the Assessing Officer include that the assessee has a Registered as well as Corporate Office in Ahmednagar. Assessee filed the returns of income over the years in Ahmednagar only and assessments

9 ITA No.1735/PUN/2016 were completed by the Assessing Officer, Ahmednagar only. Assessments for the assessment years 2004-05 and 2005-06 were completed by the ITO, Ward-4, Ahmednagar. Therefore, it is an undisputed issue that the assessee falls under the jurisdiction of the Assessing Officer of Ahmednagar. For some unknown reasons, the assessee’s records were transferred from Ahmednagar to Mumbai without intimating the assessee. The ACIT, Ahmednagar, Mumbai was requested the assessee to make correction to the erroneous address given in PAN allotment letter. Therefore, without much difficulty, we find the assessee’s jurisdiction lies in Ahmednagar not in Mumbai. Transfer of assessee’s file to Mumbai was done due to erroneous address mentioned in the PAN allotment letter, which should have been rectified by the Department. The I.T. officers of Mumbai should have transferred the file at Ahmednagar after affecting the request i.e. correction in PAN address. Further, we also find this is not a case where the assessee was covered by the provisions of section 132/133A r.w.s. 127 of the Act if any. Therefore, instead of making correction in the PAN data, calling for the return of income from Assessing Officer, Ahmednagar and the issue of notice u/s 143(2) by the DCIT, Mumbai is not sustainable in law. Therefore, we are of the opinion the assessee succeeds on this preliminary issue. Accordingly, grounds no.1 to 4 are allowed. On Merits 15. Ground no.5 pertains to the merit of addition of Rs.30,83,444/-. The adjudication of this issue becomes an academic exercise only due to relief granted by us to the assessee in respect of the preliminarily issue raised in

10 ITA No.1735/PUN/2016 grounds no.1 to 4 above by the assessee. Therefore, this ground is dismissed as academic. 16. The other issues in grounds no.6 to 8 are general in nature and do not require any separate adjudication and the same are dismissed. 17. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 17th day of December, 2018. Sd/- Sd/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 17th December, 2018. Sujeet आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-2, Pune; 4. The Pr. CCIT, Pune; िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, 5. ITAT, Pune; गाड� फाईल / Guard file. 6. // True Copy // आदेशानुसार/ BY ORDER, स�यािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune