Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S. S. Viswanethra Ravi
Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd…..…………….............................…..……………….…...……..…….............Appellant C/o. RSVPC & Company 41A, A.J.C. Bose Road Suite No. 613 Kolkata – 700 017 [PAN : AACCJ 0218 Q] Vs. Income Tax Officer, Ward-7(1), Kolkata……........................................……………...…...........Respondent Appearances by: Shri V.K. Jain, A/R, appeared on behalf of the assessee. Shri A.K. Nayak, CIT, Sr. D/R. appearing on behalf of the Revenue. Date of concluding the hearing : February 4th, 2019 Date of pronouncing the order : March 15th , 2019 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-3, Kolkata, (ld. CIT(A)) passed u/s. 250 of the Income Tax Act, 1961, (the ‘Act’), dt. 29/11/2016, for the Assessment Year 2009-10.
The assessee is a private limited company and is in the business of investments. It filed its original return of income for the Assessment Year 2009-10 on 18/07/2009, declaring total income of Rs.1,370/-. The Assessing Officer processed the return u/s 143(3) of the Act, and thereafter the assessment was re-opened and an order u/s 143(3) r.w.s. 147 of the Act, was passed on 24/11/2011, assessing the total income at Rs.63,670/-. This order was set aside by the ld. CIT-2, Kolkata, vide order u/s 263 of the Act, dt. 25/03/2014 and the Assessing Officer was directed to pass a fresh assessment order for making necessary enquiries and verifications as mandated by the ld. CIT-2, Kolkata.
2 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd In pursuance to this order u/s 263 of the Act, the Assessing Officer passed the impugned order u/s 144/263 of the Act, on 20/03/2015, determining total income of the assessee at Rs.15,94,40,000/- u/s 68 of the Act. On appeal, the ld. First Appellate Authority confirmed the same. 3. Aggrieved the assessee is in appeal before us on the following grounds:- “
1. The ld Commissioner of income Tax(Appeal)-3/Kolkata confirming the addition made u/s 68 of the Act of Rs.1S)}4,40,OOO by Income Tax Officer ward 7(1)/Kolkata is contrary to the law and on the facts of the case.
2. The Ld Commissioner of Income Tax (Appeal)-3/Kolkata erred in passing the order without providing the opportunity to the appellant de-spite of several requests.
3. The order of Ld Commissioner of Income Tax (Appeal)-3/Kolkata was passed exparte in confirming the order passed by the Income Tax officer u/s 144 read with 263 of the Act, thus denying any chance to present the case and to adduce the evidence in support of grounds. The act of Ld Commissioner of Income Tax (Appeal) was denial of natural justice.
4. The appellate craves leave to add, modify or amend the ground of appeal and to adduce additional evidence in support of ground of appeal at the time of hearing of the case.”
The assessee also filed the following additional grounds of appeal:- “
1. That on the facts and in the circumstances of the case, the Assessing officer failed to issue notice u/s 143(2) of the Act for the purpose of making the assessment under section 143 (3) of the Act, thus assumption of jurisdiction u/s 143(3) for making the assessment without serving the notice us 143(2) of the Act is bad in law, hence the order passed u/s 144 r.w 143(3) be quashed, as it vitiate the assessment proceeding altogether.
2. That on facts and circumstances of case, the assessment order dated 20.03.2015 passed by the Income tax officer ward 7(1)/Kolkata under section144 is bad in law, illegal and without jurisdiction and / or in excess of jurisdiction as per provisions of section 127 of the Act and on the grounds amongst others, that he failed to establish that he possessed legal and valid jurisdiction under the Act to pass the assessment order, hence the said assessment order passed u/s 144 of the Act be quashed.
3. That on facts and in circumstances of the case, the order passed u/s 144 by the income tax officer ward 7(1)/Kolkata is not in terms of the any of the conditions specified under subsection (1) clause (a) to (c) of said section, as the appellant had not violated any of the conditions. The Income Tax officer has wrongly 3 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd assumed the jurisdiction to make the assessment of income to the best of his judgement under said section and consequently the order be quashed on this ground.
4. The appellant plead for admission of such grounds as these are on legal issues, which goes to the root of the matter and in the interest of substantial justice. The additional grounds are raised in bona fide manner without indulging in unfair act.”
The ld. Counsel for the assessee submitted that the order passed by the Assessing Officer is bad in law for the reason that, no notice u/s 143(2) of the Act was issued by the Assessing Officer prior to the initiation of the assessment proceedings. He relied on the judgment of the Hon’ble Supreme Court in the case of Asstt.Commr.Of Income Tax & Anr vs M/S Hotel Blue Moon reported in [2010] 321 ITR 632 SC, and submitted that it was mandatory on the part of the Assessing Officer to have issued notice u/s 143(2) of the Act, prior to the commencement of scrutiny proceedings. He relied on many other case- law which we would be referring to as and when required for this proposition that non- issuance and service of notice u/s 143(2) of the Act, makes an assessment bad in law.
The second issued raised by the ld. Counsel for the assessee is that the Assessing Officer who passed order u/s 144 r.w.s. 263 of the Act, i.e., ITO, Wd-7(1) Kolkata, has no jurisdiction to pass the order in the absence of an order u/s 127 of the Act, from the appropriate authority. He submitted that the original jurisdiction of the Act was with ITO, Wd-6(2), Kolkata, who falls under the jurisdiction of CIT-II, Kolkata. He submitted that ITO, Wd-7(1), Kolkata, falls within the jurisdictional limits of CIT-3, Kolkata. He vehemently contends that Section 127(3) of the Act states that in case of transfer of jurisdiction of an assessee within the same State, no opportunity has to be given of being heard before passing of an order u/s 127(1)/112(2) of the Act. He argued that no order whatsoever was passed transferring jurisdiction of the assessee from CIT-II to CIT-3, Kolkata. He relied on the decision of the Hon’ble Patna High Court in the case of Jharkhand Mukti Morcha vs. CIT [1997] 255 ITR 284 (Patna HC) and submitted that the assessment order has to be quashed for lack of jurisdiction as no order transferring the jurisdiction from CIT-II to CIT-3, Kolkata, has been passed . He also relied on other case- law, which we would be referring to as and when necessary.
4 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd 6. The next proposition argued by the ld. Counsel for the assessee is that the Assessing Officer wrongly invoked Section 144 of the Act. He relied of sub-Section (1) of Section 144 of the Act and submitted that this Section can be invoked only when the condition satisfied therein are fulfilled. As the notice in question was issued by the Assessing Officer at the wrong address and the same was not received by the assessee, the condition specified in Section 144(1) of the Act, were not fulfilled and thus the assessment order passed u/s 144 of the Act, is bad in law. He pointed out the correct address of the assessee and the address to which the notice were sent by the department for proving that the notice was sent at the wrong address.
The ld. D/R, on the other hand, vehemently controverted the arguments by the ld. Counsel for the assessee. He submitted that the Bench, if it so desires, it can go ahead and hear the appeal and that he is not in a position to produce the order u/s 127 of the Act, transferring the jurisdiction of the assessee from CIT-II to CIT-3. To this submission, the Bench stated that it is for the ld. D/R to either argue his case or seek an adjournment and that the Bench has no suggestions in the matter. It was made clear to the ld. CIT D/R that the Bench is ready to hear any matter which the parties are ready to argue and it is for the parties to seek time, if they require time to produce documents etc. The ld. D/R, chose to argue this case and submitted that he is making a statement at the Bench that there was re-organisation that had taken place in the department and the post of Principal Commissioners of Income Tax, were newly created and on such creation the jurisdiction of certain assessee’s were transferred from one CIT to another. On a query from the Bench, he submitted that he does not have any documents to support his contentions and hence he cannot file any order before the Bench but his statement at the Bar may be taken on record and the issue adjudicate in favour of the revenue. He relied on the decision of the Mumbai Bench of the ITAT in the case of Tata Sons Limited vs. ACIT in ITA Nos. 193 & 3745/Mum/2006 and ITA No. 3658/Mum/2006 order dt. 27.11.2017 for the proposition that no two officers can concurrently exercise jurisdiction in a case and submitted that the Assessing Officer has rightly exercised his jurisdiction.
5 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd 7.1. On the issue of notice u/s 143(2) of the Act, he submitted that when an assessment is made in pursuance to the directions u/s 263 of the Act, no fresh notice u/s 143(2) of the Act, is required. He argued that only in cases where a fresh assessment order is to be framed, to assume jurisdiction of the Assessing Officer it is required to issue a fresh notice u/s 143(2) of the Act. 7.2. On the issue whether the order u/s 144 of the Act, has been rightly passed he submitted that notice was issued to the address available in the articles of association and memorandum of association of the company and hence there was no default on part of the revenue. He submitted that the matter may be remanded back to the file of the Assessing Officer for fresh adjudication as the notice could not be properly served on the assessee.
We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 9. The first issue is whether the notice u/s 143(2) of the Act, is required to be served in an assessment framed u/s 143 r.w.s. 263 of the Act. The Assessing Officer in this case has already framed an assessment after properly assuming jurisdiction. This assessment has been set aside by the ld. CIT, Kolkata-II, vide his order u/s 263 of the Act. Hence the assessment proceedings which were already validly initiated and concluded, got revived. Under these facts and circumstances, in our considered opinion, there is no requirement of issual of fresh notice u/s 143(2) of the Act. In the case of Hotel Blue Moon (supra), the Hon’ble Supreme Court was considering a case where the assessee has filed a return in response to a notice of block assessment u/s 158BC of the Act. The issue is whether this return of income filed in response to notice can be scrutinized without a notice u/s 143(2) of the Act. The Hon’ble Supreme Court held that the issual of notice is mandatory. Similarly, in the case of Pr. CIT vs. Oberoi Hotels Pvt. Ltd. in ITAT No. 152 of 2015, G.A. No. 3671 of 2015, the Hon’ble Jurisdictional High Court, was considering a case of issue of notice u/s 143(2) of the Act, in the course of re- assessment proceedings. In all these cases, a notice was served on the assessee to file a return of income and the issue was whether such return of income filed in response to a 6 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd notice can be scrutinized, without issue of a notice u/s 143(2) of the Act. These propositions, to our mind, cannot be applied to a case where a completed assessment was set aside and the Assessing Officer was directed to re-do the assessment. It is not a fresh case of picking up a return of income for scrutiny assessment due to the action of the ld. CIT u/s 263 of the Act. Thus, this ground of the assessee is dismissed as devoid of merit.
Coming to the issue of jurisdiction, we find that the original return of income was filed with the ITO, Wd-6(2), Kolkata, who falls within the jurisdiction of ld. CIT-II, Kolkata. The CIT-II, Kolkata, passed an order u/s 263 of the Act, restoring the matter to the file of the ITO, Wd-6(2), Kolkata with the direction to pass fresh assessment order. Thereafter, notice was issued by the ITO, Wd-6(2), Kolkata to the assessee. Till this stage, the jurisdiction of the assessee was with CIT-II, Kolkata. Later the ITO, Wd-7(1), Kolkata, falling within the jurisdiction of Pr. CIT-3, Kolkata, has issued notice to the assesee. He passed an assessment order u/s 144 r.w.s 263 of the Act, on 20/03/2015. The issue is whether this order passed u/s 144 r.w.s. 263 of the Act, 0n 20/03/3015, by ITO Wd-7(1), Kolkata, who is under the jurisdiction of ld. CIT-II, Kolkata is without jurisdiction. The contention of the assessee is as follows:- “As per section 2(7 A), "Assessing Officer" means the Assistant Commissioner 27[ or Deputy Commissioner] 28[or Assistant Director] 27[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 sub-section (2) of section 120 or any other provision of this Act, and the 29[Additional Commissioner or] 30[Additional Director or] 31 [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 of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act There is no mention about the change of jurisdiction from ITO ward 6(2)/Kolkata to ITO Ward 7(1)/Kolkata in assessment order passed dated 20.03.2015 U/S 144/263 of the Act. Section 127(3) states that in case of transfer of jurisdiction of an assessee within same city, the opportunity of being 7 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd heard for the transfer be provided to the assessee will not be required. But compliances of U/S 127(1) and (2) are mandatory. The ITO ward 6(2)/Kolkata was subordinate to Pr Cit-2/Kolkata and the assessing officer ITO ward 7(1)/Kolkata is subordinate to Pr CIT-3/Kolkata. There is no hint of any procedure being followed as stipulated under Section 127(2). The assumption of jurisdiction without authority is bad in law. The order once passed by an officer having no jurisdiction to pass such order, that order is void ab-initio and it deserves to be annulled.” 10.1. The ld. D/R has not produced any document/ order/ circular, in support of the claim that there was a valid order transferring the jurisdiction from CIT-II, Kolkata to CIT-III, Kolkata. Merely making a statement at the Bar does not, in our view, serve the purpose. When challenged, the department has to file the necessary orders in support of the contentions that ITO Wd-7(1) has jurisdiction in this case.
The Hon’ble Jurisdictional High Court in the case of Kusum Goyal vs. ITO reported in (2010) 329 ITR 283, held as follows:- “10. It is evident that respondent No. 2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated October 21, 2009 is patently illegal since it has been held in this judgment that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-08, 2008-09 and the earlier years as intimated in the letter/notice dated July 30, 2009 issued by respondent No. 1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla [1965] 56 ITR 14 (SC) and in S.L. Singhania [1992] 193 ITR 275 (Delhi) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgment in Subhas Chandra Bhaniramka [2010] 320 ITR 349 (Cal) where it has been held that in case of transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgment in M. A. E. K. K. Varma [1981] 129 ITR 31 (AP) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under the Wealth-tax Act, 1957 and the Gift-tax Act, 1958. Therefore, since it has been held in this judgment that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty 8 Assessment Year: 2009-10 Jelly Commotrade Pvt. Ltd proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G. A. No. 81 of 2010 is also allowed.”