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Income Tax Appellate Tribunal, BENCH “D”, KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM]
Per Shri N.V.Vasudevan, JM
This is an appeal by the assessee directed against the order dated 20.03.2013 of CIT- XXI, Kolkata passed u/s 263 of the Act relating to A.Y.2008-09.
The Assessee is a partnership firm. It is engaged in business of transportation and financing. For A.Y.2008-09 return of income was filed declaring total income at Rs. NIL. The assessment was completed u/s 143(3) of the Act on 23.08.2010 determining the assessee’s total income at NIL.
The C.I.T. in exercising his powers u/s 263 of the Act was of the view that the aforesaid order of the assessment passed by the AO was erroneous and prejudicial to the interest of the revenue for the following reasons : “i) Dividend income for Rs.5,018/- was claimed to be exempted by the assessee. Relatable expenditure for earning such dividend income was calculated to Rs.1,000/- and only Rs.4,018/- was claimed as exempted on account of Dividend income and the same was allowed by the A.O. However, as per provision of section u/s 14A of the I.T.Act, read with the Rule-8D, expenditure should have been worked out at Rs.97,315/- (1/2% of average value of investment of Rs.1,94,62,975/-). Thus, it has resulted in underassessment of income of Rs.96,315/-.
2 M/s. Assam Bengal Carriers. A.Yr.2008-09 ii) Further, loss on sale of motor car amounting to rs.1,93,771/- was wrongly allowed to the assessee as it ceased to exist in the relevant block of assets on the last day of the previous year. iii) FBT of Rs.11,546/- and Income tax of Rs.3,190/- were required to be disallowed as these were pertaining to earlier years.”
3.1. According to the C.I.T. the aforesaid aspects were not examined by the AO while completing the assessment u/s 143(3) of the Act. After hearing the submissions of the assessee, the C.I.T. ultimately passed order u/s 263 of the Act holding that the AO failed to examine the aforesaid aspects and set aside the order of AO and gave the following directions to the AO :- “8. In the interest of justice, the above issues are set aside to the AO who is directed to examine the matter as mentioned above and pass the order in accordance with provisions of the Income Tax Act, after giving due opportunity to the assessee.”
Aggrieved by the order of C.I.T. assessee has preferred the present appeal for the Tribunal raising the following grounds :- “
1. That the order purported to have passed u/s 263 of the I.T .Act, 1961 is bad in law and also on the facts and circumstances of the case.
2. That without prejudice to the legality of proceedings as above the C.I.T. has erred in holding that – (i) Loss on sale of only car was wrongly allowed by A.O. while passing order u/s 143(3) of the Act. (ii) That the AO has not looked into disallowance u/s 14A and that assessing officer is bound to adopt Rule 8D in all cases.
3. That the assessee/appellant craves leave to add, amend or withdraw any or both the above grounds of appeal on or before the hearing of appeal.”
The learned counsel for the assessee in respect of ground no.1 submitted that the Asst. order in this case was passed u/s 143(3) on 23-08-2010 after due scrutiny and prolonged hearing. When the limitation time for passing an order u/s.263 of the Act in respect of the order of the AO u/s.143(3) for AY 08-09 was about to expire, i.e., a period of two years from end of financial year, i.e. 2010-11, a show cause notice u/s 263 dated 26-02-2013 signed by A.C.I.T. (HQT.) of CIT-XXI was served on 28-02- 2013. It was not signed by Ld. C.I.T.-XXI to assume jurisdiction. It was submitted by him Section 263 of the Act provides for notice and adjudication by Ld CIT. Since show cause notice u/s 263 of the Act has not been signed by the Ld. CIT, the jurisdiction assumed is defective and order passed u/s 263 in consequence of such 3 M/s. Assam Bengal Carriers. A.Yr.2008-09 defective notice is liable to be quashed on this ground itself. Reliance in this regard was placed by him on following decisions – (a) CIT vs Rajesh Kumar Pandey – 25 Taxman.com 242 (Allahabad) (b) Satish Kumar Kashri vs. ITO 104 ITD 382 (Patna) (c) Reliance is also placed on co-ordinate bench’s order (Bardhaman Co-op. Milk Products Union Ltd. Vs. C.I.T.Burdwan) in ITA No.310-311/Kol/2009 of “A “ Bench, Kolkata (copy enclosed). Above two cases of Allahabad H.C. and ITAT Patna have been discussed in details in this order of “A “ Bench, Kolkata holding the assumption of jurisdiction by Ld.CIT – Burdwan is not valid.
The learned DR relied on the order of the C.I.T..
We have considered the rival submissions. A perusal of the records shows that the show cause notice u/s 263 of the Act dated 26.02.2013 was signed by A.C.I.T.(HQ)-XXI, Kolkata and not by C.I.T. The question regarding validity of the order passed u/s 263 of the Act when the show cause notice u/s 263 of the Act is not signed and issued by C.I.T. and had come for consideration before this Tribunal in the case of Bardhman Co-op Milk Producers’ Union Ltd. Vs CIT, Burdwan (supra). This Tribunal on identical facts as in the present case has held as follows :- “4. We have carefully considered the submissions and perused the record and we find that delay of 290 days in filing in these cases has been attributed to mistake on the part of assessee’s counsel. The counsel has clearly admitted the mistake on his part. When the delay in filing of these appeals is attributed to the mistake of the consultant, in our considered opinion, assessee should not be penalized on this count. The case law referred by the Ld. counsel for the assessee also supports this proposition. Accordingly, we condone the delay. 5. As regards the matter in appeal, we note that the same is against order passed by the Ld. CIT u/s. 263 of the Act. At the outset, in this case, Ld. counsel for the assessee pointed out that the notice to the assessee u/s. 263 of the Act in these case, was issued by letter dated 06-03-2007. The said notice was signed by ACIT, Hqrs., Burdwan for Commissioner. Referring to this aspect, the Ld. counsel for the assessee pleaded that Section 263 of the Act provides for notice and adjudication by the Ld. CIT. Ld. counsel for the assessee claimed that since notice u/s. 263 of the Act has not been signed by the Ld. Commissioner. The jurisdiction assumed is defective and the order u/s 263 of the Act, is liable to be quashed on this ground itself. In this regard, Ld. counsel for the assessee referred to the decision of Hon’ble Allahabad High Court in the course of cit v. Rajesh Kumar Pandey (2012) 25 taxmann.com 242 (All.). The Ld. counsel for the assessee further referred to the decision of the Tribunal in the case of Satish Kumar Kashri v. ITO 104 ITD 382 (Pat). M/s. Assam Bengal Carriers. A.Yr.2008-09 6. Ld. DR on the other hand submitted that above is not the material defect and he submitted that there is no reason to set aside the order u/s. 263 of the Act, on this account.
7. We have carefully considered the submissions and perused the record. We find that Section 263(1) of the Act provides as under:- “The CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed by the AO is erroneous insofar as it is prejudicial to the interest of Revenue he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing fresh assessment.”
Now we can also refer to the notice u/s. 263 of the Act issued to the assessee. This notice was signed as under:- “ Yours faithfully Sd/- Vikramaditya (Vikramaditdya) ACIT, Hqrs., Burdwan, For Commissioner.” From the above, it is clear that the said notice u/s. 263 of the Act ha s not been signed by the “Commissioner of Income Tax” rather it has been signed by ACIT, Hqrs., Burdwan. The Hon’ble Allahabad High Court in the case of Rajesh Kumar Pandey (supra) has expounded that when the Ld. CIT has not recorded his satisfaction, but it was the satisfaction of the Income Tax Officer (Technical) who is not competent to revise his order u/s. 263 of the Act, the order passed was liable to be set aside. The relevant portion of the order of Hon’ble Allahabad High Court reads as under:-
“6. On perusal of the aforesaid provisions, it will be abundantly clear that the provisions of Section 299-BB deals with the procedure for service of notice and in case, there is a defective service of notice, it provides that if the assessee has cooperated, it will not be open for him to raise the plea, whereas in the instant case, it is not the case of the service of notice, but the initial issuance of notice, which has not been signed by the competent authority as a finding has been recorded by the Tribunal that the notice has been issued under the signature of Income-tax (technical), whereas in view of the provisions of powers under Section 263(1), it is only the Commissioner of Income-tax to issue notice. It is also relevant to add that pleas can be raised only out of the judgment passed by the Tribunal or other authorities, but the plea, which was not raised at any stage, cannot be raised for the first time before this Court. No other arguments have been advanced in respect of other questions framed in the memo of appeal.”
8. Similarly, we note that in the case of Satish Kr. Keshari (supra), the Tribunal had held that when the notice u/s. 263 of the Act was not under the seal and signature of Ld. CIT and suffered for want of details on the basis of which Ld. CIT came into conclusion that the order of Assessing Officer is erroneous and prejudicial to the interest of Revenue, assumption of jurisdiction u/s. 263 of the Act by the Ld. CIT was invalid.
5 M/s. Assam Bengal Carriers. A.Yr.2008-09 9. From the above discussion regarding the provision of law and the case law in this regard, it is clear that for a valid assumption of the jurisdiction u/s. 263 of the Act, the notice issued u/s. 263 of the Act should be issued by the Ld. CIT. In this case, it is undisputed that notice was issued by ACIT, Hqrs, Burdwan who is not competent to assume jurisdiction u/s. 263 of the Act. Hence, the notice was not under the seal and signature of Ld. CIT. Hence, as per the precedents referred to above, the assumption of jurisdiction u/s. 263 of the Act in this case is not valid. Accordingly, the order u/s. 263 of the Act passed in these cases are quashed.”
Facts of the present case being identical to the case referred to above, respectfully following the aforesaid decision we hold that the assumption of jurisdiction u/s 263 of the Act in the present case is not valid. Order u/s 263 of the Act is accordingly quashed and the appeal of the assessee is allowed. In view of the above conclusion, the other grounds of appeal are not taken into consideration.
In the result the appeal of the assessee is allowed. Order pronounced in the court on 15.1.2016.