The Principal Commssioner of Income Tax-1 vs. M/s. Jaya Constructions

Whether the Tribunal was justified in law in restoring the matter back for framing the de-nova assessment by a competent officer being ACIT or DCIT and thereby elongating the period of limitation on the facts and circumstances of the case.

Whether the Tribunal was justified in law in not holding that the assessment order, passed is without jurisdiction and contrary to the Instruction No.1/2011 dated 31.01.2011

Whether the Tribunal was justified in law in not adjudicating the various grounds of appeals filed by the appellant on the facts and circumstance of the case.

Heard Shri. A. Shankar, learned Senior Advocate for the Assessee and Shri. K.V. Aravind, learned Senior Standing Counsel for the Revenue.

Brief facts of the case are, assessee is a partnership firm. A survey under Section 133A of the Income Tax Act, 19612 was conducted in assessee’s premises on 19.02.2010. Assessee filed its returns for A.Y.3 2009-10 on 17.03.2010 declaring a total income of Rs.3,42,45,991/-. Subsequently, it filed revised returns on 31.03.2010 declaring a total income of Rs.1,27,50,050/-.

The AO4 passed the assessment order making certain additions. On appeal, the CIT(A) 5 partly allowed assessee’s appeal. On further appeal, the ITAT held that AO’s

Shri. Shankar, praying to allow the appeal submitted that:  the ITAT has erred in restoring the matter for framing the de-novo assessment by the ACIT or the DCIT. It ought to have annulled the assessment order;  the ITAT having recorded a finding that as per the CBDT8 instruction 1/2011, the ITO9 had no jurisdiction to frame the assessment, ought not to have remitted the case;  jurisdictional defect cannot be cured and assessment proceedings are void-ab-initio;

In support of his contentions, Shri. Shankar has placed reliance on following authorities: i. Sudhir Kumar Agarwal Vs. ITO Bhilai10; ii. Deepak Agro Foods Vs. State of Rajasthan11.

Opposing the appeal, Shri. Aravind, submitted that the objection raised by the assessee is with regard to the pecuniary jurisdiction which has to be urged at the earliest point of time. The ITAT has rightly recorded that the assessment order is an irregular one but not an illegal one and rightly remitted the case for framing fresh assessment.

In support of his contentions, he placed reliance on following authorities:

We have carefully considered the rival contentions and perused the records.

Undisputed facts of the case are, a survey was conducted in the business premises of the assessee on 19.02.2010. In response to the notice under Section 142(1) of the Act, assessee filed its returns declaring a total income of Rs. 3,42,45,991/-. Subsequently it filed a revised return declaring a sum of Rs.1,27,50,050/-. The AO processed and framed the assessment. Feeling aggrieved, assessee filed an appeal before the CIT(A) and it was partly allowed. On further appeal, the ITAT held that the AO had no jurisdiction and

We may record that the assessee raised its objection with regard to pecuniary jurisdiction for the first time before the CIT(A). According to Shri. Shankar, the AO lacked inherent jurisdiction. To buttress his argument, he has relied upon Deepak Agro Foods.

In Abhishek Jain, the Delhi High Court has held as follows: “As far as territorial or pecuniary jurisdiction are concerned, objection should be taken at the earliest possible opportunity and/or before the settlement of issues and not at the subsequent state. Jurisdiction as to the subject matter is distinct and stands on a different footing.” (Emphasis Supplied)

This court in Fidelity Business Services India (P.) Ltd. has held that the words ‘as it thinks fit’ confer wide powers upon the ITAT to pass such orders in the subject matter of appeal.

Admittedly, assessee has not raised any objection with regard to pecuniary jurisdiction before the AO. In view of the law laid down in Abhishek Jain that any objection with regard to territorial and pecuniary jurisdiction should be taken at the earliest possible opportunity before the settlement of issues and not at a subsequent stage and the interpretation of Section 254 of the Act by this Court, we find no error in the order passed by the ITAT.

All three questions raised by the appellant in the memorandum of appeal are similar in nature, i.e., assailing the ITAT’s order and remitting the case for framing fresh assessment by the competent officer. The main ground urged is that the AO had no jurisdiction.

In the light of above discussion, this appeal must fail and hence, the following: