SHRI ARUN AGRAWAL, RAIPUR,RAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX-3(1), RAIPUR, RAIPUR

आदेश / ORDER PER RAVISH SOOD, JM:

“1. On the facts and in the circumstances of the case, the assessment order passed u/s 147 r.w.s. 143(3) by the Learned ACIT-3(1), Raipur is illegal, bad in law and void ab initio inasmuch as the jurisdiction over the assessee vested with ITO and not with ACIT-3(1), Raipur. Hence, it is prayed that the assessment order passed by the ACIT- 3(1) Raipur who did not have jurisdiction over the assessee in view of monetary threshold limit laid down vide CBDT Instruction No.1/2011 [F. No. 187/12/2010-IT(A-I)] dated 31.01.2011 read together with instruction no.6/2011 dated 08.04.2011, therefore, the assessment order passed by non-jurisdictional income tax authority may kindly be held to be illegal, bad in law and the entire proceedings may kindly be quashed and consequential addition of Rs.21,75,000/- made to the total income may kindly be directed to be deleted.

2. On the facts and in the circumstances of the case, the assessment order passed by the Learned ACIT-3(1), Raipur u/s. 147 r.w.s. 143(3) is bad in law inasmuch as the assessment ought to have been framed under Section 153C of the Income Tax Act, 1961 inasmuch as Section 153C overrides the provisions of Section 147 and 148, hence, the assessment order passed u/s 147 r.w.s. 143(3) is bad in law, illegal and void ab initio. Hence it is prayed that the assessment order passed u/s 147 r.w.s. 143(3) may kindly be declared as illegal, bad in law and consequential enhancement of Rs.21,75,000/- made to the total income may kindly be directed to be deleted.

3. On the facts and in the circumstances of the case, the Learned ACIT-3(1), Raipur has erred on facts and in law by making an 3 Shri Arun Agrawal Vs. ACIT-3(1), Raipur addition of Rs.21,75,000/- by invoking Section 69 of the Income tax Act, 1961 on several grounds, the addition so made is illegal, arbitrary and contrary to facts and law, hence, it is prayed that the addition of Rs.21,75,000/- made to the total income may kindly be directed to be deleted.

4. Without prejudice to the above, alternatively, it is submitted that on the facts and in the circumstances of the case, the Learned CIT (Appeal) is not justified in passing the order and confirming the addition in an ex-parte order without providing sufficient opportunity of being heard to the assessee and thereby violating the principles of natural justice. Hence, the impugned order passed by the Learned CIT (Appeal) is liable to be declared as illegal and bad-in-law. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be declared as illegal and bad-in-law on account of violation of principles of natural justice.

5. The Appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of Appeal.”

4 Shri Arun Agrawal Vs. ACIT-3(1), Raipur requested that his original return that was filed on 15.10.2010 be treated as a return of income filed in response to notice u/s.148 of the Act.

5. The assessee, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before me.

6. At the threshold of hearing of the appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) for the assessee that the A.O, i.e., ACIT, Circle-3(1), Raipur, had wrongly assumed jurisdiction and framed the impugned assessment in the case of the assessee. Elaborating on his

5 Shri Arun Agrawal Vs. ACIT-3(1), Raipur aforesaid contention, it was averred by the Ld. AR that as the assessee had e-filed his return of income on 15.10.2010, declaring an income of Rs. Nil, therefore, the ACIT, Circle-3(1), Raipur had wrongly assumed jurisdiction and framed the assessment vide his order passed u/s.147 r.w.s. 143(3) dated 28.10.2016. Carrying his contention further, the Ld. AR had taken us through the CBDT Instruction No.1/2011 [F. No.187/12/2010-IT(A-1] dated 31.01.2011 and CBDT Instruction No.6/2011 [F.NO.187/12/2010-ITA-I] dated 08.04.2011, Page 1 & 2 of APB. The Ld. A.R submitted that on a conjoint perusal of the aforesaid CBDT Instructions, the pecuniary jurisdiction for framing an assessment in the case of an assessee who had declared an income up to Rs.15 lac was exclusively vested with the ITOs. The Ld. A.R submitted that as the present assessee had filed his return of income declaring Nil income, the jurisdiction to frame assessment in his case was exclusively vested with the ITO, Ward-1(2), Raipur. The Ld. A.R further submitted that as neither the A.O having jurisdiction over his case, i.e., ITO, Ward-1(2), Raipur had issued any notice u/s.143(2) of the Act nor framed the assessment, therefore, the assessment order passed u/s.147 r.w.s. 143(3) dated 28.10.2016 by the ACIT, Circle-3(1), Raipur was liable to be struck down for want of valid assumption of jurisdiction on his part. The Ld. A.R in support of his aforesaid contention, had relied on the following judicial pronouncements:

6 Shri Arun Agrawal Vs. ACIT-3(1), Raipur

(i) Durga Manikant Traders Vs. ITO, dated 12.12.2022 (ii) Ravi Sherwani Vs. ACIT, ITA No.64/RPR/2020 dated 29th May, 2023 (iii) PCIT Vs. Shri Shopper Ltd., ITAT No.39 of 2023, IA No.GA/1/2023 (iv) Ashok Devichand Jain Vs. Union of India, (2023) 151 taxmann.com. 70 (Bom.) (v) CIT Vs. Ramesh D Patel, (2014) 362 ITR 492 (Guj.) (vi) Sudhir Kumar Agrawal Vs. ITO (2023) 221 TTJ (Raipur) 687 (vii) Louis Dreyfus Company Asia Pte. Ltd. Vs. CIT, WP (C) 9713/2019 & CM No.40084/2019 (viii) Dr. Hari Singh Channdel Vs. ITO, (2022) 220 TTJ (Raipur) 839 6.1 Apart from his aforesaid contention, it was submitted by the Ld. AR that as the assessment proceedings in the case of the assessee were initiated based on information that as per certain impounded documents i.e. LPS-1/1, Page-41 seized in the course of search proceedings conducted on “Sharma Group” at Malviya Road, Raipur, the assessee had carried out unexplained cash transactions aggregating to Rs.21.75 lacs, therefore, the A.O could have only framed the assessment under Section 153C of the Act. The Ld. A.R submitted that as the assessment in the case of the assessee had wrongly been framed u/s.147 r.w.s. 143(3) of the Act dated 28.10.2016, i.e., by invoking a wrong statutory provision, the same, thus, could not be sustained and was liable to be quashed.

7 Shri Arun Agrawal Vs. ACIT-3(1), Raipur 6.2 On being queried by the Bench that as the document that was seized in the course of the search proceeding conducted on ‘Sharma Group”, viz. LPS-1/1, Page 41 did not “belong” to the assessee but to the most contents of the same “pertained” to him, therefore, as per the pre-amended section 153C of the Act, i.e., prior to the amendment vide Finance Act, 2015 w.e.f. 01.06.2015 how any infirmity could be attributed to the assumption of jurisdiction by the A.O. for framing the assessment, vide his order passed u/s.147 r.w.w. 143(3) of the Act dated 28.10.2016, Shri Veekaas S Sharma, the Ld. AR submitted that the aforementioned amendment to Section 153C vide the Finance Act, 2015 shall be applicable to the searches conducted u/s.132 of the Act before 01.06.2015, i.e., the date of the amendment. Ld. AR, to fortify his aforesaid claim, had drawn my attention to the judgment of the Hon’ble Supreme Court in the case of ITO Vs. Vikram Sujitkumar Bhatia, (2023) 149 taxmann.com 123 (SC). The Ld. AR submitted that the Hon’ble Apex Court had observed that amendment to Section 153C vide the Finance Act, 2015 shall be applicable to searches conducted u/s. 132 before 01.06.2015, i.e., prior to the date of amendment.

7. Per contra, the Ld. Departmental Representative (for short, ‘DR’) relied on the orders of the lower authorities. The Ld. DR drew my attention to the written submissions that were filed by the A.O, i.e., DCIT-1(1), Raipur, on both

8 Shri Arun Agrawal Vs. ACIT-3(1), Raipur the aforesaid issues on the basis of which the impugned order has been assailed before me. For the sake of clarity, the “written submissions” of the A.O are culled out as follows: “Issue of Jurisdiction a) Consequent upon Search & Seizure Operation in the case of Sharma Group and Others, the DDIT (Central Circle), Raipur vide his letter dated 04/02/2014 had forwarded the said case to ITO-1(2), Raipur for taking appropriate action u/s 153C/148 of the Act. He in-turn transferred the same to DCIT-1(1), Raipur on 05/02/2014 stating that the jurisdiction vests with this office. b) In the mean time during 2014-15 there was Restructuring in the Department consequent to which two new offices of Addl.CIT/JCIT, Range- 3 and Range-4 were created by splitting erstwhile Range-1 and Range-2, Raipur. Territorial jurisdiction of few areas were transferred from one Range to another Vide CIT-1, Raipur's Notification No 1/2014-15 dated 15/11/2014 and subsequent JCIT, Range-3, Raipur’s Notification No. 1/2014-15 dated 15/11/2014. Due to this change, the jurisdiction of the above assessee was transferred to DCIT/ACIT-3(1), Raipur. Since the Order u/s 120 of the Act was passed transferring one territory Flom one Range to another, specifying the jurisdiction, therefore, there is no need for passing of order u/s 127 of the Act relating to transfer of cases consequent to above notification. c) Moreover, it is pertinent to mention here that the assessee had complied to the notices, queries etc. raised during the assessment/re-assessment proceeding but he never challenged the issue of jurisdiction at that time. The assessee was well aware of all the facts because he was provided the reasons of reopening vide this office letter dated 23/06/2016. d) During the entire proceedings, the assessee denied that the said transactions were neither related to him nor done by him, but he never challenged the jurisdiction. e) Section 124(3)(a) precludes the assessee from questioning the jurisdiction of the Assessing Officer, if he does not do so within 30 days of receipt of notice under section 142(1). f) Reliance is placed on the following judgements : (i) In the case of Abhishek Jain Vs. ITO, It is held by Hon'ble Delhi HC that "In terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148." [2018] 94 taxmann.com 355 (Delhi)

9 Shri Arun Agrawal Vs. ACIT-3(1), Raipur

(ii) In the vase of Vaishal Builders & Colonizers Vs. Addl CIT, it is held by Hon'ble ITAT, Jodhpur that "Where assessee did not raise objection relating to jurisdiction of AO to pass assessment order in course of assessment proceedings within specified time period, such an objection could not be raised for first time in appellate proceedings." [2012] 25 taxmann.com 464 (Jodh.) (ii) In the case of Subhash Chander Vs. CIT, Rohtak, it is held by Hon'ble Punjab & Haryana HC that "Jurisdiction of - Assessment year 1992-93 - Whether in terms of section 124(3) (b), jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date of which he was served with a notice under section 142(1) or after completion of assessment, whichever was earlier." [2008] 166 Taxman 307 (Punjab & Haryana) (iv) In the case of Bal Chand Jain & Sons Vs. DCIT, it is held by Hon'ble HC of Allahabad that Provisions of sub-section (3) of section 124 bar an assessee from raising question of jurisdiction before first appellate authority or Tribunal if such an objection has not been raised before assessing authority at very first stage." [2014] 41 taxmann.com 524 (Allahabad) (v) In the case of Farrukhabad Investment India Ltd. Vs. ACIT, Hon'ble Agra Bench of ITAT held that "Where additional ground of grievance against Assessing Officer's order was not raised before Commissioner (Appeals) raising of same before Tribunal was not sustainable."[2013] 34 taxmann.com 220 (Agra - Trib.) g) Considering the above facts and circumstances of the case the objection raised by the assessee regarding jurisdiction is not acceptable. Matter relating to 147/153C/153A 3. The issue regarding completion of assessment u/s 148 of the Act is justified on the part of AO for the following reasons : a) During the course of Search in the premises of Shri Magan Lal Agrawal, Fashion House etc, in the case of Sharma Group and Others, cash amounting Rs. 9,77,450/- was found in the bedroom of Shri Arun Agrawal, S/o Shri Mannulal Ji Agrawal. Consequent to this, the statement of Shri Arun Agrawal was recorded u/s 132(4) of the Act. b) The then ACIT-3(1), Raipur moved the proposal for re-opening the case for AY-2010-11 vide his letter dated 18/01/2016. The competent authority accorded the approval after considering /verifying all the facts. c) In the provisions of section 147, the Assessing Officer is having power to re-open the assessment, if he is of the opinion that the income chargeable to tax has escaped assessment. Before doing so, the AO is required should satisfy himself that, there is material which suggests that there is an escapement of income.

10 Shri Arun Agrawal Vs. ACIT-3(1), Raipur The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessment by way reasons for reopening of assessment, time limit for issue of notice and provision for obtaining sanction of higher authority in certain circumstances. d) The AO had supplied the reasons recorded and the evidences collected during the search enquiries to the Ld. AR of the assessee during the assessment proceedings. The completion of assessment under the provisions of sec.147 instead of sec.153C does not disentitle the AO to forgo the powers vested u/s 147 and 148 and therefore the AO rightly invoked the jurisdiction u/s 147 for reopening the assessment. e) The assessee during assessment proceedings complied but had not challenged the section under which the assessment proceedings were carrying on. f) Reliance is placed on the following judgements : (i) In the case of Raymond Woolen Mills Vs. ITO & Others, Hon'ble SC held that "In determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage." [1999] 236 ITR 34 (SC)/[1999] 152 CTR 418 (SC)] (ii) In the case of Yogendra Kumar Gupta Vs. ITO, Hon'ble SC held that "Where subsequent to completion of original assessment, Assessing Officer, on basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceeding in case of assessee." [51 taxmann.com 383 (SC)/[2014] 227 Taxman 374] (iii) In the case of Devi Electronics Pvt. Ltd. Vs. ITO, Hon'ble Mumbai HC held that "the likelihood of a different view when materials exist of forming a reasonable belief of escaped income, will not debar the AO from exercising his jurisdiction to assess the assessee on reopening notice." [2017 -TIOL-92-MUM-IT] 4. The matter was escalated before CIT(A) also, but the assessee had never challenged the issue of jurisdiction or Section of assessment before him also.

issue of jurisdiction and section of assessment for which he had not objections earlier. This clearly shows that it is an after thought of the assessee to escape from the clutches of taxation and hence, Hon’ble ITAT may be requested to kindly not to admit the objections. Encl: Case record in 01 Volume [Pages 01 to 94 ] Yours faithfully, Sd/- (Tapan Kuma Chatterjee) Deputy Commissioner of Income Tax-1(1), Raipur

12 Shri Arun Agrawal Vs. ACIT-3(1), Raipur the objections that have been raised by the A.O as regards the validity of the jurisdiction assumed by the A.O, i.e., ACIT, Circle-3(1), Raipur, without raising of any objection by the assessee within the stipulated time period contemplated in Section 124(3)(a) of the Act had also been looked into at length in the aforementioned order. For the sake of clarity, the relevant observations of the Tribunal are culled out as follows: “13. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

14. Admittedly, it is a matter of fact borne from record that the CBDT vide Instruction No. 1/2011, dated 31.01.2011 had, inter alia, revised the existing monetary limits for assigning cases to ITOs and DCs/ACs. For the sake of clarity, we deem it fit to cull out the CBDT Instruction No.1/2011 dated 31.01.2011,Page 1 of APB, which reads as under: “INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], 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 Income Declared (Mofussil areas) (Metro cities) ITOs ACs/DCs ITOs DCs/ACs

13 Shri Arun Agrawal Vs. ACIT-3(1), Raipur Corporate Upto Rs.20 lacs Above Rs.30 Upto Rs.30 lacs Above Rs.30 returns lacs Lacs Non-corporate Upto Rs.15 lacs Above Rs.15 Upto Rs.20 lacs Above Rs.20 returns 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.” (emphasis supplied by us) As stated by the Ld. AR, and, rightly so, the CBDT vide its aforesaid Instruction No.1/2011, dated 31.01.2011 had, inter alia, revised the earlier existing monetary limit for assigning the cases to ITOs/ACs/DCs w.e.f. 01.04.2011. On the basis of the aforesaid CBDT Instruction No.1/2011 (supra) w.e.f 01.04.2011, the case of a non-corporate assessee located in a mofussil area having declared an income above Rs.15 lacs in his return of income is to be assigned to the ACs/DCs. As the case of the present assessee for the A.Y.2012-13 was selected for scrutiny assessment vide notice issued u/s. 143(2), dated 24.09.2015, therefore, the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011 that was applicable w.e.f. 01.04.2011 duly applied to his case. Also, as per the areas earmarked in the aforesaid Instruction No.1/2011, dated 31.01.2011 as the assessee is not located in any of those cities/stations which have been held to be metro cities, therefore, his case would be as that of a non-corporate assessee who is located in a mofussil area. Also, as is borne from the record the assessee had filed his return of income for the A.Y.2014-15 declaring an income of Rs. 6,57,380/-.

15. On the basis of the aforesaid facts, we are of the considered view, that as stated by the Ld. AR, and, rightly so, as per the CBDT Instruction No.1/2011, dated 31.01.2011 the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Bhilai and had filed a non-corporate return for the year under consideration, i.e., A.Y.2014-15 declaring an income of Rs.6,57,380/- was vested with the ITO, Ward 1(1), Bhilai. Although notice u/s. 143(2), dated 24.09.2015 had been issued within the stipulated time period, i.e., within six months from the end of the relevant assessment year which would have expired as on 30.09.2015, however, the same was issued by the DCIT-1(1), Bhilai, i.e., an A.O who pursuant to the CBDT Instruction No.1 of 2011, dated 31.01.2011 was not vested with the jurisdiction over the case of the assessee for the year under consideration. On the other hand the ITO-1(1), Bhilai, who as per the aforesaid CBDT Instruction (supra) was vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had issued the notice u/s. 143(2) of the Act, dated 05.05.2016, i.e., beyond the stipulated

14 Shri Arun Agrawal Vs. ACIT-3(1), Raipur time period, therefore, no valid jurisdiction could have been assumed on the basis of the same for framing the assessment vide order under Sec. 143(3), dated 29.12.2016.

16. On the basis of our aforesaid deliberations, we are in agreement with the Ld. AR that the ITO-1(1), Bhilai could not have validly assumed jurisdiction and framed the assessment vide his order passed u/s. 143(3) of the Act, dated 29.12.2016 on the basis of the notice issued u/s. 143(2), dated 24.09.2015 by the DCIT-1(1), Bhilai i.e. a non jurisdictional A.O. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of Ashok Devichand Jain Vs. UOI in W.P. No.3489 of 2019, dated 08.03.2022. In the said case the Hon’ble High Court by referring to the CBDT Instruction No.1 of 2011, dated 31.01.2011, had observed, that as the pecuniary jurisdiction over the case of the assessee before them who had returned an income of Rs.64.34 lacs was vested with the DCs/ACs, therefore, the notice issued u/s.148 of the Act by the ITO who during the year under consideration had no pecuniary jurisdiction over the assessee’s case was bad in the eyes of law. Considering the aforesaid lapse in the assumption of jurisdiction the Hon’ble High Court had quashed the notice that was issued by the ITO u/s.148 of the Act. Also, a similar view had been taken by the Hon’ble High Court of Gujarat in the case of Pankajbhai Jaysukhlal Shah Vs. ACIT, Circle-2 (2019) 110 taxmann.com 51 (Guj.). In the said case, though the A.O who had jurisdiction over the case of the assessee had recorded the ‘reasons to believe’ but notice u/s.148 of the Act was issued by another officer, therefore, the notice so issued u/s.148 of the Act was quashed by the Hon’ble High Court. At this stage, we may herein observe, that the aforesaid order of the Hon’ble High Court had thereafter, been upheld by the Hon’ble Supreme Court in the case of ACIT, Circle-1 Vs. Pankajbhai Jaysukhlal Shah[2020] 120 taxmann.com 318 (SC). Also, we find that the similar view had been taken by this Tribunal in its recent order passed in the case of Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai in dated 17.10.2022, wherein dealing with the multi-facet contentions that were raised by the department, the Tribunal had observed as under: “13. On the basis of our aforesaid deliberations, we are in agreement with the Ld. AR that though the assessment proceedings were rightly initiated and initially embarked upon by Dy. CIT, Circle- 1, Bhilai i.e. the officer who was vested with the jurisdiction over the case of the assessee, but the same thereafter had wrongly been framed by an officer who as observed by us hereinabove did not have jurisdiction over the case of the assessee in so far the year under consideration was concerned. As the criteria laid down vide the CBDT Instruction No.1/2011, dated 31.01.2011 for conferring the varied jurisdictions with the ITOs/DCs/ACs on the basis of income declared by the assessee in his return of income is binding upon the department and has to be scrupulously followed, therefore, there can

15 Shri Arun Agrawal Vs. ACIT-3(1), Raipur be no escape from the same for justifying assumption of jurisdiction by an officer other than that prescribed in the said instruction. Our aforesaid view is fortified by the Judgments of the Hon’ble Supreme Court in the case of UCO Bank Vs. CIT (1999) 237 ITR 889 (SC) and Commissioner of Customs etc. Vs. Indian Oil Corporation Ltd. & Anr. (2004) 267 ITR 272 (SC). In the aforesaid judgments it was held by the Hon’ble Apex Court that though the CBDT/CBEC circulars are not binding on court or the assessee, but the departmental authorities are bound by them and cannot act in contravention of the same. Also, support is drawn from the judgment of the Hon’ble High Court of Chhattisgarh in the case of Dy. CIT Vs. Sunita Finlease Ltd. [2011] 330 ITR 491 (Chattisgarh). In its said order it was observed by the Hon’ble Jurisdictional High Court that the administrative instructions issued by CBDT are binding on the Income-tax authorities. On the basis of our aforesaid observations, we are of the considered view that as the framing of the assessment in the case of the present assessee by the Income-Tax Officer, Ward-2(2), Bhilai is clearly found to be in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the same cannot be justified.

16 Shri Arun Agrawal Vs. ACIT-3(1), Raipur Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Tax Appeal Nos. 19 to 30 of 2017, dated 05.04.2021 and that of the Hon’ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR492 (Guj.). In the aforesaid cases the Hon’ble High Courts have held that as Section 124 of the Act pertains to territorial jurisdiction vested with an AO under sub-section (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which places an embargo on an assessee to raise an objection as regards the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and would have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Also, support is drawn from a recent judgment of the Hon’ble High Court of Calcutta in the case of Principal Commissioner of Income-tax Vs. Nopany & Sons (2022) 136 taxmann.com 414 (Cal). In the case before the Hon’ble High Court the case of the assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was passed by the ITO, Ward-4 without issuing notice u/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant point of time, the Hon’ble High Court quashed the assessment. Apart from that, the aforesaid view is also supported by the order of the ITAT, Kolkata ‘B’ Bench in the case of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee’s objection to the validity of the jurisdiction assumed by the Income-Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124 would not assist the case of the revenue.

15. We shall now deal with the contention of the Ld. DR that as both the officers in question i.e. Dy. CIT, Circle-1, Bhilaiand the Income Tax Officer, Ward-2(2), Bhilai as per sub-section (5) of Section 120 were vested with concurrent jurisdiction over the assessee, therefore, initiation of the assessment proceedings by the Dy. CIT, Circle-1, Bhilai vide notice issued u/s.143(2) dated 24.09.2013, which thereafter had culminated into an assessment framed by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s.143(3), dated 30.03.2015 does not suffer from any infirmity. In our considered view the aforesaid contention of the Ld. DR is 17 Shri Arun Agrawal Vs. ACIT-3(1), Raipur

absolutely misplaced and in fact devoid and bereft of any merit. As the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011 exclusively vests the pecuniary jurisdiction over the case of the assessee for the year under consideration i.e. A.Y.2012-13 with the ACs/DCs, therefore, in our considered view despite vesting of concurrent jurisdiction with the Income- Tax Officer, Ward-2(2), Bhilai and the Dy. CIT, Circle-1, Bhilai the assessment in his case for the year under consideration could only have been framed by the Dy. CIT, Circle-1, Bhilai. Neither is there any reason discernible from the orders of the lower authorities nor demonstrated before us by the ld. DR which would by any means justify framing of the assessment vide impugned order u/s 143(3), dated 30.03.2015 by the Income-Tax Officer, Ward-2(2), Bhilai. Apart from that, we find that as per the mandate of sub-section (1) of section 127 of the Act, where a case is to be transferred by authorities therein specified from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him, then he is under an obligation to record his reasons for doing so after giving the assessee a reasonable opportunity of being heard in the matter wherever it is possible to do so. For the sake of clarity sub-section (1) of Section 127 is culled out as under: “(1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.” On a careful perusal of the aforesaid mandate of law, it transpires, that even in a case where jurisdiction over the case of an assessee that is vested with one A.O (having concurrent jurisdiction over the case of the assessee) is to be transferred to another A.O (having concurrent jurisdiction over the case of the assessee), even then the authority specified under sub-section (1) of Section 127 is obligated to record his reasons for doing so. Considering the aforesaid position of law, we are of the considered view that now when in the present case the assessment proceedings were initiated by the Dy. CIT, Circle- 1, Bhilai vide notice u/s.143(2), dated 24.09.2013, which thereafter were taken up and culminated by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s.143(3) dated 30.03.2015, then, as per the mandate of sub-section (1) of Section 127 of the Act, the specified authority i.e. Commissioner or above was obligated to have 18 Shri Arun Agrawal Vs. ACIT-3(1), Raipur recorded his reasons for transferring the case from the aforesaid Dy. CIT, Circle-1, Bhilai to the Income-Tax Officer, Ward-2(2), Bhilai. However, nothing has been brought to our notice which would justify the transfer of jurisdiction over the assessee’s case from the Dy. CIT, Circle-1, Bhilai to Income-Tax Officer, Ward-2(2), Bhilai.

16. Be that as it may, we are of the considered view that as in the case of the assessee the assessment order u/s.143(3), dated 30.03.2015 had been passed by a non-jurisdictional officer i.e. the Income-Tax Officer, Ward-2(2), Bhilai, which is in clear contravention of the CBDT Instruction No.1/2011 dated 31.01.2011, therefore, the same cannot be sustained and is liable to be struck down on the said count itself. Before parting, we may herein observe that a similar issue as regards the validity of an assessment framed by an A.O who had invalidly assumed jurisdiction in contravention to the CBDT Instruction No.1/2011, dated 31.01.2011 had came up in a host of cases before the various benches of the Tribunal, wherein the respective assessments framed were struck down, for the reason that the same were passed by officers who were not vested with the requisite jurisdiction as per the CBDT Instruction No.1/2011, dated 31.01.2011. Our aforesaid view is fortified by the order of the ITAT, Kolkata Bench ‘SMC’ in the case of Anderson Printing House (P) Ltd. Vs. ACIT (2022) 192 ITD 548 (Kolkata-Trib.). In its order the Tribunal had after drawing support from the order of the ITAT, Kolkata in the case of Bhagyalaxmi Conclave (P) Ltd. Vs. DCIT, (Kol) of 2019, dated 03.02.2021 which in turn had relied on the earlier orders passed in the case of Hillman Hosiery Mills Pvt.Ltd. Vs. DCIT, ITA No.2634/Kol/2019; Soma Roy Vs. ACIT, ITA No.463/Kol/2019 dated 08.01.2020; and Shri Sukumar Ch. Sahoo Vs. ACIT, ITA No.2073/Kol/2016 dated 27.09.2017, had struck down the assessment for want of valid assumption of jurisdiction by the A.O who had framed the assessment in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, observing as under: “5. A perusal of the aforesaid statutory provisions would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also I.T.A. No.339/Kol/2021 Assessment Year: 2016-17 Anderson Printing House Pvt. Ltd having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers. The ld. Counsel in this respect has relied upon the CBDT Instruction No.1/2011 [F.No.187/12/2010-IT(A-I), for the sake of convenience is reproduced as under: "Instruction No.1/2011 [F.No.187/12/2010-IT(A-I), 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 19 Shri Arun Agrawal Vs. ACIT-3(1), Raipur 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 Income Declared (Mofussil areas) (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate Upto Rs.20 Above Upto Rs.30 Above returns lacs Rs.30 lacs lacs Rs.30 Lacs Non- Upto Rs.15 Above Upto Rs.20 Above corporate lacs Rs.15 lacs lacs Rs.20 lacs returns 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.

6. Now, in this case, the assessment has been framed by the ACIT. At this stage, it will be appropriate to refer to the provisions of section 127 of the Act as under: Power to transfer cases (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.

7. A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal in and Others vide

20 Shri Arun Agrawal Vs. ACIT-3(1), Raipur order dated 03.02.2021, wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. The relevant part of the order dated 03.02.2021 passed in and Others is reproduced as under:

"5.2. The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, in order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid down in a number of other decisions of the ITAT, Kolkata Bench on this issue. 5.3. Kolkata "B" Bench of the Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd.(supra) held as follows: "10. In this case, the ITO Ward-3(3), Kolkata, issued notice u/s 143(2) of the Act on 04/09/2014. In reply, on 22/09/2014, the assessee wrote to the ITO, Ward-3(3), Kolkata, stating that he has no jurisdiction over the assessee. Thereafter on 31/07/2015, the DCIT, Circle-11(1), Kolkata, had issued notice u/s 142(1) of the Act to the assessee. The DCIT, Circle-11(1), Kolkata, completed assessment u/s 143(3) of the Act on 14/03/2016. The issue is whether an assessment order passed by DCIT, Circle-11(1), Kolkata, is valid as admittedly, he did not issue a notice u/s 143(2) of the Act, to the assessee. This issue is no more res-integra. This Bench of the Tribunal in the case of Soma Roy vs. ACIT in ITA No. 462/Kol/2019; Assessment Year 2015- 16, order dt. 8th January, 2020, under identical circumstances, held as under:- "5. After hearing rival contentions, I admit this additional ground as it is a legal ground, raising a jurisdictional issue and does not require any investigation into the facts. The ld. Counsel for the assessee submitted that as per Board Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dt. 31/01/2011, the jurisdiction of the assessee is with the Assistant Commissioner of Income Tax, Circle- 1, Durgapur, as the assessee is a non- corporate assessee and the income returned is above Rs.15,00,000/- and whereas, the statutory notice u/s 143(2) of the Act, was issued on 29/09/2016, by the Income Tax Officer, ward-1(1), Durgapur, who had no jurisdiction of the case. He submitted that the assessment order was passed by the ACIT, Circle-1(1), Durgapur, who had the jurisdiction over the assessee, but he had not issued the notice u/s 143(2) of the Act, within the statutory period prescribed under the Act. Thus, he submits that the assessment is bad in law. 5.1. On merits, he rebutted the findings of the lower authorities. The ld. Counsel for the assessee relied on certain case-law, which I would be referring to as and when necessary.

21 Shri Arun Agrawal Vs. ACIT-3(1), Raipur

6. The ld. D/R, on the other hand, submitted that the concurrent jurisdiction vests with the ITO as well as the ACIT and hence the assessment cannot be annulled simply because the statutory notice u/s 143(2) of the Act, was issued by the ITO and the assessment was completed by the ACIT. He further submitted that the assessee did not object to the issue of notice before the jurisdictional Assessing Officer and even otherwise, Section 292BB of the Act, comes into play and the assessment cannot be annulled. On merits, he relied on the orders of the lower authorities.

22 Shri Arun Agrawal Vs. ACIT-3(1), Raipur iii) On 24.09.2014 statutory notices for scrutiny were issued by ACIT, Circle-27, Haldia.

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.”

Apart from that, we find that a similar view had been taken by the ITAT, Cuttack Bench, Cuttack in the case of Kshirod Kumar Pattanaik Vs. ITO, Angul Ward, Angul, dated 10.12.2020.

23 Shri Arun Agrawal Vs. ACIT-3(1), Raipur the order passed by the Income-Tax Officer, Ward-2(2), Bhilai for want of jurisdiction on his part.”

17. On the basis of our aforesaid observations, we are of the considered view that as in the case of the present assessee before us the impugned assessment had been framed by the ITO-1(1), Bhilai vide his order passed u/s.143(3) dated 29.12.2016 on the basis of a notice u/s. 143(2), dated 24.09.2015 that was issued by the DCIT- 1(1), Bhilai, i.e., an A.O who at the relevant point of time was not vested with jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be struck down on the said count itself. Apropos the notice issued u/s.143(2) of the Act, dated 05.05.2016 by the ITO-Ward 1(1), Bhilai, we are of the considered view that as the said notice was issued after the lapse of the stipulated time period, i.e., beyond the specified time frame which expired as on 30.09.2015, therefore, the assessment order so framed would also not be saved on the said basis. To sum up, as the impugned assessment u/s. 143(3), dated 29.12.2016 had been framed by the ITO- Ward 1(1), Bhilai de-hors the issuance of a valid notice u/s. 143(2) of the Act, therefore, the same cannot be sustained is liable to quashed. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O u/s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part.”

25 Shri Arun Agrawal Vs. ACIT-3(1), Raipur to the DCIT, Circle-1(1), Raipur. At this stage, it would be relevant to observe that as per sub-section (3) of Section 127 of the Act, even in case there is a transfer of any case from any A.O or AOs (whether with or without concurrent jurisdiction) to any other A.O or AOs (whether with or without concurrent jurisdiction), the requirement of passing an order of transfer under the aforesaid statutory provision is required and the same cannot be dispensed with. I may further observe that the order of transfer of the assessee’s case by the ITO-Ward 1(2), Raipur to DCIT-Circle 1(1), Raipur on 05.02.104 was much prior to Notifications No. 1/2014-15, dated 15.11.2014 and Notification No. 1/2014-15, dated 15.11.2014, based on which jurisdiction over the case of the assessee was vested with the DCIT/ACIT-3(1), Raipur, as brought to our notice by the A.O.

14. Be that as it may, I am of the view that as the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No.1/2011 (supra) r.w. CBDT Instruction No.6/2011 (supra )was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus, the Ground of Appeal No.1 raised by the assessee is allowed in terms of my aforesaid observations.

26 Shri Arun Agrawal Vs. ACIT-3(1), Raipur