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Income Tax Appellate Tribunal, BANGALORE BENCH ‘C’, BANGALORE
Before: SHRI A. K. GARODIA & SHRI VIJAY PAL RAO
against the order of the ld. CIT(A)-II, Bangalore dated 14-03-2013 for the assessment year 2009-10.
Ground no.1 & 2 of the assessee’s appeal are as under;
“1. The orders of the lower authorities in so far as they are against the appellant is opposed to law, equity and weight of evidence, probabilities facts and circumstances of the case 2. The learned CIT(A) failed to appreciate that the order passed by the learned IT) is without jurisdiction, contrary to the instructions No.1/201 dated 31-01- 2011, consequently the order is liable to be set aside”.
The Learned AR of the assessee submitted copy of CBDT Instruction No.1/2011 dated 31-01-2011 and it was submitted that these instructions were issued by the Board u/s 119 of the IT Act, 1961 and therefore, these are binding of the AO. Thereafter, he submitted that in the present case, as per the return of income filed by the assessee in pursuance to notice u/s 142 (1) of the Act, the assessee declared total income of Rs.3,42,45,991/- and even as per the revised return filed by the assessee, the income declared by the assessee is Rs.127,50,050/- and as per the instructions of the Board, if the income declared by the assessee is more than Rs.30.00 lakhs in Metro Cities, the assessment has to be famed by the DCIT or ACIT. But in the present case, the assessment order has been passed by the ITO and therefore, this order is not valid and should be quashed. At this juncture, it was pointed out by the Bench that even if it is held that the ITO was not competent to pass the impugned order, then the matter has to go back for framing de-novo assessment by DCIT or ACIT and in reply, ld. AR of the assessee had nothing to say. As against this, the ld. DR of the revenue placed reliance on the judgment of the Hon’ble Delhi High Court rendered in the case of CIT Vs Kapil Jain reported in 50 DTR 342(Del.) in support of his contention that if no objection has been raised by the assessee regarding the jurisdiction of the AO within one month after completion of the assessment then the assessee cannot raise such objection afterwards. He also supported the order of the ld. CIT(A) wherein he has given a finding that the CBDT Instruction No.1/2011 dated 31-01-2011 are applicable only in cases where returns have been filed in compliance with the provisions of sec.139(1) of the IT Act, 1961 but not where the return is filed following a survey conducted u/s 133A of the IT Act, 1961. He further submitted that in the present case, a survey was conducted by the assessee and thereafter, in pursuance to notice issued u/s 142(1) of the IT Act, this return was filed by the assessee and therefore, these instructions of the Board are not applicable in the present case.
The facts are not in dispute. As per the return filed by the assessee after survey in compliance to notice issued u/s 142(1) of the Act, the income declared by the assessee is Rs.342.45 lakhs and as per the revised income also, the income declared by the assessee is Rs.127.50 lakhs and therefore, the income declared by the assessee is much in excess of the limit prescribed by the CBDT Instruction No.1/2011 dated 31-01-2011 as per which the ITO has no jurisdiction to frame an assessment order where the income declared by the assessee in a Metro City as per the return of income is Rs.30.00 lakhs and the date of assessment order passed by the AO is 17-10-2011 and these instruction are applicable with effect from 01-04-2011. Therefore, this is an admitted position that the impugned assessment order passed by the ITO is not valid. But we feel that the assessment order is irregular but not illegal and therefore, we feel that the matter should go back for de-novo assessment by a competent Officer being ACIT or DCIT.
Regarding the judgment of the Hon’ble Delhi High Court rendered in the case of Kapil Jain (Supra) on which reliance has been placed by the revenue, we find that in that case, the case of the assessee was transferred to Circle-36(1) and such transfer order was passed by the CIT on 21-04-2004 but on the date of issue of notice u/s158BD r.w.s.158BC of the Act on 19-04-2004, the jurisdiction vested with the ITO, Ward29(1) in so far the assessee was concerned.
Admittedly, in that case, the notice u/s 158BC was issued by ACIT, Circle-36(1), New Delhi on 19-04-2004 and at that point of time, the jurisdiction vested with ITO, Ward-29(1) but this was also true that the objection was raised by the assessee only after expiry of one month from the date on which notice was served on the assessee u/s 143(2) of the Act, 1961. Under these facts, it was held by the Hon’ble Delhi High Court that such objection is not valid. In this regard, we would like to observe that this restriction on the assessee to raise objection about jurisdiction of the AO is in sub-sec.3 of sec.124 and such objection about jurisdiction is in respect of direction of order issued under sub- sec.1 and.2 of Sec.120 i.e. regarding the territorial jurisdiction. In the present case, the objection is not regarding territorial jurisdiction but the competence of the ITO to assess the income of the assessee who have declared income in excess of the specified limit and because of that, the jurisdiction lies with ACIT or DCIT and not with ITO. In our considered opinion, in the facts of the present case, the judgment of the Hon’ble Delhi High Court cited by the ld. DR of the revenue is not applicable. Regarding this contention that this circular is applicable only in those cases where return is filed u/s 139 91) and it is not applicable where return is filed u/s 142 (1) after survey, We feel that there is no merit in this contention because there is no such restriction in the circular and otherwise also, if ITO is not considered to be competent to frame an assessment where return is filed u/s 139 (1) declaring income in excess of a specified limit, then how the ITO can be competent to assesss similar return but filed after survey u/sc 142 (1).
Hence, this contention is rejected.
In view of our above discussion, we hold that the assessment order passed by the ITO in the present case is not a valid assessment order and hence, we set aside the same and restore the matter back for framing a de-novo assessment by a competent Officer being ACIT or DCIT. In view of our decision, other grounds raised by the assessee in its appeal and the appeal of the revenue do not require any separate adjudication at this stage.
In the result, the appeal of the assessee is allowed for statistical purposes and the appeal of the revenue is dismissed.
Order pronounced in the open court on the date mentioned on the caption page.