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Income Tax Appellate Tribunal, DELHI BENCHES : “G” NEW DELHI
Before: SHRI J.SUDHAKAR REDDY & SHRI SUDHANSHU SRIVASTAVA
PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER
This is the Department’s appeal filed against the order dated 15.1.2008 passed by the Ld. CIT(A) – XXIV, New Delhi. The ground of appeal reads as under :-
1. “Ld. CIT(A) has erred in facts and circumstances of the case in annulling the assessment completed by the AO i.e. DAO-43 making addition of Rs. 1,98,27,780/- on account of unexplained income without appreciating the fact that the jurisdiction to the DAO was assigned by the CCIT-1, New Delhi and therefore has holds valid jurisdiction over the case.”
The facts of the case are that the AO (DAO – 43) had received information from CIT (CIB), New Delhi vide reference No. CIT (CIB)/Delhi/GSL5340 for a DCIT vs. M/s. S.V. Liquor India Ltd.
transaction of Rs. 1,97,27,780/-. The AO issued notices u/s 142(1) but according to the AO none attended nor any adjournment was sought. The AO completed the assessment u/s 144 of the Act treating the transaction of Rs. 1,97,27,780/- as unexplained income.
Before the Ld. CIT(A) it was submitted that the assessee had filed its return of income for the year under consideration with the office of ACIT, Circle-7(1), New Delhi vide acknowledgment No. 0700000782 dated 31st October 2005 at a total income of Rs. 47,88,910/-. Assessee also demonstrated before the Ld. CIT(A) that he had complied with the notices issued by the AO (DAO-43) which were not considered by the AO. It was also submitted that the AO had no jurisdiction on the case of the assessee but he completed the assessment on the basis of the report received from the office of the CIT (CIB), New Delhi. Thereafter the Ld. CIT(A) while allowing the appeal of the assessee gave a categorical finding that the assessee had filed return for the year under consideration in the normal course with ACIT Circle 7(1) New Delhi and the order passed by the AO Ward 25(4) (DAO-43), New Delhi passed u/s 144 of the Act on 22.12.2007 was passed without making any inquires or ascertaining the facts of the income of the assessee despite having been in receipt of a reply accompanied with ample clarification and evidence regarding the transaction in question, but solely on the basis of an AIR information received by him with regard to certain investments in purchase of property. The Ld. CIT(A) further observed that even if the information of the transaction had come into the possession of DAO-43 the same should have been linked to the return of income filed by the assessee. The Ld. CIT(A) was also of the view that sufficient time was DCIT vs. M/s. S.V. Liquor India Ltd.
available with DAO, New Delhi to ascertain the facts and take appropriate action under the Act rather than making an assessment of the entire amount reported in AIR information.
In the present appeal before us, the Ld. Departmental Representative strongly urged that the jurisdiction to the DAO was assigned by the CIT(CIB), New Delhi and that he held the valid jurisdiction over the case and as such the order passed by the AO did not lack jurisdiction and that it should be upheld.
The Ld. AR on the other hand strongly supported the order of Ld. CIT(A) and submitted that in view of the findings recorded by Ld. CIT(A) the assessee deserves to succeed. He drew our attention to pages 8 to 121 of the paper book which are copies of various documents filed before Income Tax Officer Ward 25(4) (DAO-43) in response to notice u/s 142(1) dated 29.11.2007. The Ld. AR submitted that the assessee had duly furnished the information sought by the AO in his notice which was not considered at all and an ex parte order was passed. Ld. AR further submitted that the order passed by the AO suffered from an inherent lack of jurisdiction and therefore it was rightly quashed by the Ld.CIT(A).Ld. AR also placed reliance on the decision of ITAT, Mumbai ‘C’ Bench in in the case of Pravin Balubhai Zala vs. ITO reported in 129 TTJ 0373.
On going through the case records and after considering the facts of the case, we are of the considered opinion that the contention of the AR that the AO erred in treating the property purchase transaction of Rs. 1,97,27,780/- as income in the hands of the assessee is correct. The AO despite having no jurisdiction on the case of the assessee completed the assessment on the basis of report received from DCIT vs. M/s. S.V. Liquor India Ltd.
the office of CIT(CIB), New Delhi. In principle only one AO can hold jurisdiction over a case at one point of time for a particular assessment year. Since the assessee had filed its return for the year in the normal case with ACIT Circle 7(1), New Delhi and had duly declared the transaction in question with regard to the purchase of land, the jurisdiction was vested with ACIT Circle 7(1) by virtue of filing of return of income. The assumption of jurisdiction by AO Ward 25(4) and subsequent passing of order u/s 144 without making any inquiries or ascertaining the facts of the case despite having been in receipt of a reply accompanied with ample clarification and evidence regarding the transaction in question, but solely on the basis of AIR information suffers from an inherent lack of jurisdiction and is void ab initio. The Hon’ble Apex Court in the case of Raza Textiles Ltd. vs. ITO 87 ITR 539 (SC) has held that “ no authority, much less a quasi judicial authority can confer jurisdiction on itself by deciding a jurisdictional fact wrongly.” It was further held that “it is incomprehensible to think that a quasi judicial authority like the ITO can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen.”
Respectfully following the Hon’ble Apex Court in the case of Raza Textiles (supra) we hold that DAO - 43 had no jurisdiction to frame the assessment of the assessee and the assessment order passed by the DAO - 43 is without jurisdiction and we accordingly cancel the assessment order passed by the DAO – 43 while upholding the order of the LD. CIT (A).
DCIT vs. M/s. S.V. Liquor India Ltd.
In the result the appeal of the department is dismissed.