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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI. A. D. JAIN & SHRI T. S. KAPOOR
PER A.D. JAIN, V.P.: These are cross-appeals by the Revenue as well as the assessee against the order of the ld. CIT(A), Bareilly, dated 22.9.2020 for Assessment Year 2011-12.
There is a delay of 116 days in filing of the appeal by the Revenue. The Revenue has filed an application dated 30.6.2022 for condonation of delay, stating therein that the order of the
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CIT(A) was received on 05.10.2020 in the office of the PCIT and the time limit for filing the appeal before the Tribunal was 3.12.2020; that, however, the appeal was filed on 30.3.2021; that in accordance with the order of the Hon'ble Supreme Court in Civil Writ Petition No. 3 of 2020, passed on 8.3.2021, in cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all the persons shall have a limitation period of 90 days from 15.03.2021; that in view of this fact, the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days; and that therefore, the delay in filing the appeal be condoned. 3. In view of the above facts, we find that there was sufficient reason for delay in filing of the appeal. Accordingly, we condone the delay. 4. The Revenue has raised the following Grounds of Appeal: 1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,76,12,585/- ignoring the facts brought out by the Assessing Officer that the assessee has made cash payments to parties on a regular basis, thus violating the provisions of section 40A(3) of the Income Tax Act, 1961. 2. The Ld. CIT(A) has erred in law and on facts in holding that the so called insistence of the parties for the cash payments were bonafide circumstances under Rule 6DD(j) of the Income Tax Rules, 1962. 3. The Ld. CIT(A) has erred in relying upon the judgment of Hon'blc Allahabad High Court in the case of Commissioner of Income-tax Vs. Raja Oal Automobiles [2010] 320 ITR 185 (Allahabad), wherein it is clearly stated that the assessee should satisfy the AO regarding circumstances under which the payments in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty
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to the payee, which is not the fact in the present case of the assessee. 4. The Ld. C1T(A) has erred in law and on facts by failing to appreciate the fact that mere insistence of parties for cash payments without any specific and valid reasons, does not entitle the assessee violate the well laid out specific provisions of law as per section 40A(3) of the Income Tax Act, 1961. 5. The ld. Counsel for the assessee, at the outset, has contended that the appeal of the Department is not maintainable for tax effect. The computation of the tax effect has been filed, according to which, the computation is as below:
Total income assessed by the A.O. Rs.2,50,81,470.00
Relief by the ld. CIT(A) Rs.1,56,50,282.00
Tax effect on disputed relief Rs.48,35,937.00
The ld. CIT(A) gave a relief of Rs.1,56,50,282/- to the assessee [and not Rs.1,76,12,585/- as claimed by the Department in their Ground No. 1 (reproduced above)]. 7. In view of the above, clearly, the appeal filed by the Department is liable to be dismissed, for low tax effect. Ordered accordingly. 8. The appeal of the Department is dismissed, for low tax effect. I.T.A. No.458/LKW/2020: BY THE ASSESSEE: 9. This appeal is a cross appeal to the afore-discussed Department’s appeal in ITA No.36/LKW/2021. The following Grounds have been raised:
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Because CIT(A) has erred in law and on facts in upholding the validity of assessment order u/s 143(3) dated 24.03.2014 passed by Income Tax Officer-II, Faizabad even though he (ITO-II, Faizabad) was not vested with the jurisdiction of assessing officer in the case of assessee. 2. Because on a due consideration of material & information on record, the Assessing Officer in the case of the assessee was vested with the Income Tax Authority situated in Lucknow, the Income Tax Officer-II, Faizabad had no jurisdiction to make assessment of the assessee and consequently the assessment order dated 24.03.2014 passed u/s 143(3) by ITO-II, Faizabad was liable to be held as illegal, being without jurisdiction. 3. Because CIT(A) has erred in law and on facts in upholding the validity of the notice u/s 143(2) dated 28.09.2012 issued by Income Tax Officer-II, Faizabad, even though the said notice was not issued on the basis of application of mind by Assessing Officer himself as required in Clause (ii) of Sub Section (2) of 143 of the Act. 4. Because while upholding the validity of notice u/s 143(2) dated 28.09.2012, the Ld. CIT(A) failed to appreciate that selection of the case for scrutiny assessment is the prerogative of the Assessing Officer only and in the present case the selection for scrutiny assessment not based on the opinion expressed by Assessing Officer himself, the assessment order dated 24.03.2014 passed in pursuance of the said notice deserved to be held as null and void. 5. Because in any case, the notice u/s 143(2)(ii) of the Act, dated 28.09.2012 issued by Income Tax Officer-II, Faizabad
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was not served upon the assesse within the statutory time limit as a consequence of which the assessment order passed in pursuance of the said notice is rendered illegal and consequently the Ld. CIT(A). 6. Because Ld. CIT(A) has erred in law and on facts in sustaining the addition to the extent of Rs.84,81,202/- out of total disallowance of Rs.2,41,31,484/- made u/s 40A(3) of the Act by the Income Tax Officer-II, Faizabad. 7. Because looking to the material and information on record, payments of sums aggregating Rs.84,81,202/- were made to the suppliers against their bills for goods supplied to the appellant and the authorities below not having brought out any evidence on record so as to doubt the genuineness of the said payments, the addition of Rs.84,81,202/- too deserved to be deleted. 8. Because Ld. CIT(A) was not justified in sustaining the ad-hoc disallowance (out of various expenses) to the extent of Rs.5,000/-. 9. Because the order appealed against is contrary to facts, law and principles of natural justice. 10. The following Additional Ground has also been raised by the assessee: 1. BECAUSE the notice u/s 143(2) of the Income-tax Act, 1961 was not issued by the income-tax authority vested with the jurisdiction of Assessing Officer in the case of the assessee, the entire subsequent proceedings got wholly vitiated rendering the assessment order dated 24.03.2014 passed by the Income-tax Officer-II, Faizabad as null and void.
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The Additional Ground raises a purely legal issue going to the root of the matter and not requiring anything fresh to be gone into. Accordingly, the same is admitted. It is seen that this Ground was also taken as an Additional Ground (Ground No.13) before the ld. CIT(A). 12. Apropos the Additional Ground, the ld. Counsel for the assessee has contended that though before the ld. CIT(A), the assessee, by way of written submissions, had contended (APB:1 page 32) that the jurisdiction of the Assessing Officer in the assessee’s case no longer vested with the ITO-II, Faizabad, since the assessee’s address as per PAN database was House No.551, GHA/491, Jay Prakash Nagar, Natkhera Road, Alambagh, Lucknow, Uttar Pradesh, 226005, which address was the address of the assessee since much before 28.9,2012, i.e., the date of issuance of notice under section 143(2), and which address was available with the Income Tax authorities, as evident from the fact that it was this Lucknow address of the assessee at which the notice under section 143(2) was issued on 28.9.2012; that subsequently, i.e., after the passing of the order under appeal, it became evident that the jurisdiction of the Assessing Officer in the assessee’s case always vested with the Income Tax authority at Lucknow, due to the fact that since its inception, the address of the assessee as per PAN database was the aforesaid address at Lucknow. To support this contention, the ld. Counsel for the assessee has, on our asking, produced before us a copy (APB: 245) of online RTI status report dated 21.10.2021, issued in response to the assessee’s RTI application dated 25.9.2021. For ready reference, the same is scanned and reproduced hereunder:
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The ld. Counsel for the assessee has also produced a copy (APB: 246) of acknowledgement of PAN application (Form No.49A) dated 23.9.2008, issued by Alankit Assignment Ltd., on behalf of NSDL (Alankit Assignment Ltd. is the body authorized to manage PAN services on behalf of NSDL). This is scanned and reproduced below:
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A copy (APB:247 – 248) of the aforesaid Form No.49A dated 23.9.2008 submitted by the assessee for allotment of PAN has also been filed. It is scanned and reproduced as under:
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Then, a copy (APB: 249) of High School Mark Sheet dated 27.7.1992 (as enclosed with PAN application form) of the
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assessee, as a proof of date of birth has been filed. It is scanned and reproduced as under:
Further, the ld. Counsel for the assessee has also filed a copy (APB: 250) of the assessee’s Driving License dated 26.6.2003 as proof of the aforesaid address of the assessee. This Driving License (copy) has been enclosed with the PAN application form. It is scanned and reproduced as under:
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Lastly, the A.O. Code Report (APB: A144 – 149) has also been filed. This Report has been downloaded from NSDL’s Income Tax PAN Service Unit Website, showing the details of the jurisdictional Assessing Officers for different classes of assessees under the areas falling in Lucknow District. Pertinently, as per this Report, the jurisdiction of the assessee is vested with the ITO-6(4), Lucknow – New, with whom the jurisdiction of the
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assessees whose names start with the letter “S” lies. Her Postal Pin Code is 226005, which also falls in the jurisdiction of ITO – 6(4), Lucknow – New. This A.O. Code Report is scanned and reproduced below:
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It is, on the basis of above, contended that since the very inception, the jurisdiction of the assessee vested with the ITO – 6(4), Lucknow – New and not with the ITO – II, Faizabad. 19. The ld. D.R., on the other hand, has not been able to controvert the aforesaid documentation produced on behalf of the assessee, having been obtained under the RTI Act. Obviously, these details are the details which were already in the possession of the Department. It was only therefore, that they were transmitted by the Income Tax Department, in the Director General of Income Tax (System), New Delhi, to the assessee, on the RTI application filed by the assessee. 20. From the details filed, it is amply clear that the jurisdiction of the assessee always lay in Lucknow, rather than in Faizabad. It would bear repetition that the notice dated 28.9.2012, issued by the ITO-II, Faizabad, under section 143(2), was issued at this very address. For this reason, it does not lie in the mouth of the Department to say that it was not in the knowledge of the correct address of the assessee being that of Lucknow and hence, the jurisdiction of the assessee lay at Lucknow and not in Faizabad. Besides, this stand of the Department, even if, for the sake of argument, is taken to be correct, it does not further the cause of the Department. This is so, since the jurisdiction does not depend on the possession of one address or the other by the Department. Jurisdiction is a legal matter and it vests where it vests legally and nowhere else. 21. The ld. CIT(A), while rejecting Ground No. 13 raised before him, which is to the same effect as the Additional Ground taken before us, has observed (para 14 of the impugned order) that
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since ITO at Faizabad was having possession of PAN of the assessee, it was he who was having jurisdiction over the assessee. This finding, in our considered opinion, is wholly incorrect. Mere possession of PAN, like mere possession of address, as seen in the preceding paragraph, can in no manner vest jurisdiction in a particular Assessing Officer. It is trite law that jurisdiction can neither be conferred, nor withdrawn by the consent of the parties. It lies where it legally does. And in view of the aforesaid documentation supplied by the Department to the assessee in response to her RTI application, the jurisdiction of the assessee at all times lay at Lucknow and not in Faizabad. In fact, as noted hereinabove, the acknowledgement of PAN application Form issued by NSDL itself supports the assessee’s case. 22. The only other reason given by the ld. CIT(A) to reject the assessee’s aforesaid Ground was that the assessee, according to the ld. CIT(A), failed to raise this objection before the Assessing Officer during the assessment proceedings, within thirty days as per the requirement of section 124(3), due to which, in the opinion of the ld. CIT(A), the assessee was not, before him, entitled to raise this issue belatedly. The ld. CIT(A) has, for arriving at such a conclusion, placed reliance on the decision of the Hon’ble Delhi High Court in the case of ‘PCIT vs. Mega Corporation’, rendered in ITA No.128/2016. However, we find that the issue of jurisdiction is a legal issue, which can be raised at any time. ‘Mega Corporation’ (supra) has not been shown to hold otherwise. As such, on this count also, the ld. CIT(A) has erred in rejecting the Ground raised by the assessee. 23. Now, so far as regards the issue as to whether a notice issued by an incompetent Assessing Authority can validate the
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proceedings pursuant thereto, it is, again, well settled that it is not so. 24. In ‘CIT vs. M/s Dalipur Construction (P) Ltd.’, passed on 13.1.2017, by the Hon'ble jurisdictional Allahabad High Court in ITA No.43 of 2015 (copy APB :166 – 168), it has been held that if an authority has no jurisdiction, that lack of jurisdiction is not a mere irregularity and so, if an authority has no jurisdiction, the same cannot be conferred even by consent of the parties; that something which is wholly without jurisdiction, that is a nullity in the eyes of law, no principal of law would come to confer any kind of effectiveness to such proceedings so as to have any legal consequences; and that the mere fact that the objection was not taken before the Assessing Officer will not make the order of assessment final, where such order of assessment was passed by an Officer who did not have jurisdiction in the matter and the objection was taken in appeal by the assessee before the ld. CIT(A), but he rejected this ground, observing that the said objection ought to have been taken before the Assessing Officer itself. 25. In view of the above, we hold that since the notice under section 143(2) in the assessee’s case was not issued by the Income Tax Authority vested with the jurisdiction over the assessee, such notice and all the proceedings pursuant thereto, culminating in the order under appeal, are null and void and they are, accordingly quashed, accepting the Additional Ground raised by the assessee. 26. Since the Additional Ground taken by the assessee has been accepted, as above, nothing further survives for adjudication, nor was anything else argued. Accordingly, the Appeal of the assessee is allowed.
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In the result, the appeal of the Revenue is dismissed whereas the appeal of the assessee is allowed. Order pronounced in the open Court on 17/08/2022.
Sd/- Sd/- [T. S. KAPOOR] [A. D. JAIN] ACCOUNTANT MEMBER VICE PRESIDENT
DATED:17/08/2022 JJ: