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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
आदेश/ORDER Per Shri A.T.Varkey, JM
This is an appeal filed by the assessee against the order of Ld. CIT(A)-7 dated 31.08.2016 for AY 2012-135. 2. The assessee has raised additional ground which is being adjudicated at the first instance. Additional grounds of appeal are as below: “1. That the notice u/s.143(2) of 1. T. Act, 1961, dated 06.09.2013 issued by the ITO, Ward- 27(1) Haldia, without assume the jurisdiction as per C.B.D.T Instruction No. 1/11, dated. 31.1.2011. As per the CBDT Instruction No. 1/11, dated. 31.1.2011 the "NON-CORPORATE RETURNS" Upto Rs. 15 lacs Income for ITOs in Mofussil areas from 1.4.2011. And "NON- CORPORATE RETURNS" above 15 lacs ACIT/DCIT in Mofussil areas from 1.4.2011. The notice u/s. 143(2) of the I.T. Act, 1961 should/must be issued the jurisdictional ACIT. The action of the I.T.O, Ward- 27(1) Haldia, for issuing the notice u/s. 143(2) was illegal, bad-in- law, void ab initio and liable to be quashed.
2. The notice u/s.143(2) of the I.T Act, 1961 dated 24/09/2014 issued by the ACIT, Cirde- Haldia was beyond the stipulated time enumerated in the statute. The notice u/s. 143(2) of the LT Act, 1961 was illegal, bad-in-law, void ab initio and liable to be quashed.
3. The assessment order passed by the ACIT, Circle – Haldia on the basis of illegal and invalid notice u/s. 143(2) of the I. T Act, 1961, the Assessment Order was illegal, bad in law, void ab initio and liable to be quashed.
Sri Sukumar Ch. Sahoo, AY 2012-13
4. That the assessee never served any order u/s. 127 of the I. T. Act, 1961 for transferred the file from ITO, Ward-1, Haldia to ACIT, Circle - 27, Haldia. Hence the assessment order passed by the ACIT, Circle-27, Haldia without assume the jurisdiction. The Assessment order was illegal, bad-in-law, void- ab-initio and are liable to be quashed.
5. That the case was selected manually without taking the prior approval from the JCIT/ Addl. CIT, Circle – Haldia as per the Scrutiny Guidelines published by the CBDT u/s.119 of the I.T Act 1961.”
The aforesaid additional grounds are legal issues which can be raised at any point of time and even before the Tribunal for the first time as held by the Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 383 (SC) even though the Ld. DR opposed the admission of the same, we are admitting the same and go ahead to adjudicate the legal issue raised before us.
Brief facts of the case are that the assessee is an individual who filed his return of income for the year under consideration wherein he declared total income to the tune of Rs.50,28,040/-. The Ld. AR for the assessee submitted that as per the CBDT Instruction No. 1/11 (F. No. 187/12/2010-IT(AT) dated 31.01.2011 CBDT fixed new monetary limit in Mufassil areas, according to which income above Rs. 15 lacs for ‘non corporate assessee’ and Rs.20 lacs for ‘corporate returns’ has to be assessed by ACIT/DCIT. Thus, according to Ld. Counsel, since Haldia is a Muffasil area and instructions given by the CBDT is binding on the officers of the Department and since the assessee has declared more than Rs. 50 lacs as his returned income, then the scrutiny assessment can be done only by the ACIT/DCIT and not by the ITO who does not have the jurisdiction to do so. For ready reference, Instruction No. 1/2011 is reproduced below:
“INSTRUCTION NO. 1/2011 (F. NO. 187/12/2010-IT(A-1), DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil Income Declared areas) (Metro cities) ITOs ACs/DCs ITOs DCs/ACs
Sri Sukumar Ch. Sahoo, AY 2012-13 Corporate Upto Above Upto Above returns Rs. Rs. 20 Rs. Rs. 30 20 lacs 30 lacs lacs lacs Non- Upto Above Upto Above corporate Rs. Rs. 15 Rs. Rs. 20 returns 15 lacs 20 lacs lacs lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.”
From a perusal of the above Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the ‘non corporate returns’ filed where income declared is only upto Rs.15 lacs ; and the ITO doesn’t have the jurisdiction to conduct assessment if it is above Rs 15 lakhs. Above Rs. 15 lacs income declared by a non- corporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC. In this case, admittedly, the assessee an individual (non corporate person) who undisputedly declared income of Rs.50,28,040/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the assessment order, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward-1, Haldia on 06.09.2013 and the same was served on the assessee on 19.09.2013 as noted by the AO. The AO noted that since the returned income is more than Rs. 15 lacs the case was transferred from the ITO, Ward-1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia on 24.09.2014 and immediately ACIT issued notice u/s. 142(1) of the Act on the same day. From the aforesaid facts the following facts emerged: i) The assessee had filed return of income declaring Rs.50,28,040/-. The ITO issued notice under section 143(2) of the Act on 06.09.2013.
ii) The ITO, Ward-1, Haldia taking note that the income returned was above Rs. 15 lacs transferred the case to ACIT, Circle-27, Haldia on 24.09.2014. iii) On 24.09.2014 statutory notices for scrutiny were issued by ACIT, Circle-27, Haldia.
We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return of income on 29.03.2013 declaring total income of Rs.50,28,040/-. As per the CBDT Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of ‘non corporate returns’ the ITO’s increased monetary limit was upto
Sri Sukumar Ch. Sahoo, AY 2012-13 Rs.15 lacs; and if the returned income is above Rs. 15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs.15 lakh, then the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed.
7. In the result, appeal of assessee is allowed. Order is pronounced in the open court on 27th September, 2017.