M/S MATA ROAD CARRIERS,RAIPUR (CG) vs. THE DEPUTY COMMISSIONER OF INCOME TAX, RAIPUR (CG)

आयकर अपीलीय अधिकरण, रायपुर न्यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश सूद, न्याधयक सदस्य एिं श्री अरुण खोड़वपया, लेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.79/BIL/2016 (Assessment Years: 2011-2012) Mata Road Carriers, Vs DCIT-1(1), Raipur In front of Lunkad Petrol Pump, Ring Road No.2, Hirapur, Raipur PAN No. :AAJFM 0294 R (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. : Shri Sunil Kumar Agrawal, CA धििााररती की ओर से /Assessee by राजस्ि की ओर से /Revenue by : Shri N.C.Roy, Sr. DR सुििाई की तारीख / Date of Hearing : 28/06/2023 घोषणा की तारीख/Date of Pronouncement : 10/07/2023 आदेश / O R D E R Per Arun Khodpia, AM : The assessee has filed this appeal against the order passed by the CIT(A)-I, Raipur, dated 01.02.2016 for the assessment year 2011-2012, on the following ground :- The Assessee / Appellant has submitted all required information & documents to substantiate the genuineness of operational expenses but the Assessing Officer was merely not satisfied for want of "paper supporting" and made additions. Subsequently, the First Appellate Authority has not gone through the supporting information / documents thoroughly so as to understand our strong justification and simply relied on the Assessment Order only. If in the previous assessment year, the AO makes a particular stand for arriving best judged profit assessment, the Department should be firm on the same stand in the subsequent assessments also. It cannot make "additional additions" on some other grounds also. The assessment was made on ''one sided approach" and not made on "best judged assessment principle". 2. Further, vide letter dated 04.11.2022, the assessee has filed revised grounds of appeal, including the additional ground, which read as under:-

2 ITA No.79/BIL/16 Revised Gr.No.l "1. On the facts and circumstances of the case and in law. Id CI'f(A) has erred in sustaining the addition of Rs.29,37,587 & Rs.2,21,050 on the count of estimation of 5% & 25% on adhoc basis, on 'Direct expenses' on "repairs & maintenance' & 'labour charges' of Rs.5,87,51,733 & Rs.8.84.200 respectively, since no bills & vouchers produced for verification before the Id AO on 'gross receipts' of Rs.17.09 crorcs; while. GP/NP shown in the year, is much higher than the GP/ NP of AY10-11 which has been accepted by the Id AO; addition of Rs.29,37,587 & 2,21,050. is not sustainable in the eyes of law even if the books of account is to be rejected & sec!45(3) be applied; is liable to be deleted."

Additional Gr.No.l "1. On the facts and circumstances of the case and in law, assessment order u/s!43(3) dt.27-3-14 by DClT-l(l), Raipur is invalid, since notice u/s 143(2) dt.23-9-13 issued by ITO-l(l), Raipur who was not having pecuniary jurisdiction to make assessment for AY11-12 as per CBDT Instruction No.1/2011 dt.31-1-11. since 'returned income' shown at Rs.23,44.3 10; more so, the impugned notice u/s 143(2) is beyond 6 months period from the end of the FY in which the R01 has been filed (i.e., on 26-9-1 1); assessment made u/s 143(3) dt.27-3-14 is invalid, bad in law, non-est and is liable to be quashed." 3. Ld. AR before us submitted that the above 'additional ground' raised, is legal in nature and raised first time before the Tribunal, which goes to root of the matter and the assessee is entitled to urge legal issue on the basis of facts already available on record which though not raised before the Id AO & Id CIT(A), however, the same has direct bearing on tax liability of the assessee. In this regard, ld. AR relied on the decision of Hon’ble Suprme Court in the case of NTPC Ltd (1998) (SC); and submitted that the above additional ground of appeal may kindly be allowed and the appeal may kindly be decided on the legal ground.

3 ITA No.79/BIL/16 4. Ld. Sr.DR objected to the admissibility of additional ground raised by the assessee before the Tribunal as the same were never raised before the revenue authorities. 5. In view of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., reported in (1998) 229 ITR 383 (SC), it is open to the assessee to raise the points of law even before the Tribunal which was not raised earlier. Therefore, the arguments advanced by the ld. Sr. DR objecting to the additional ground of assessee, is not accepted and the legal grounds raised in the form of additional ground is admitted and taken on record. 6. Brief facts of the case are that the assessee is engaged in the business of cement transportation filed its return of income on 26/09/2011 electronically declaring total income of Rs.23,44,310/-. The case of the assessee was selected for scrutiny and notice u/s.143(2) of the Act was issued on 23.09.2013. During the course of assessment proceedings, the assessee was asked to produce the comparison chart of GP and NP and total turnover of the year under consideration with the last year. The AO on verification of direct expenses found that the assessee has claimed repair and maintenance expenses at Rs.5,87,51,733/-, which were not substantiated or explained. Further the AO noted that the assessee has failed to discharge its onus. It was also observed by the AO that repair and maintenance expenses may be inevitable and incidental to the nature of business however due to non-submission of bills/vouchers inflating of these expenses cannot be ruled out. Accordingly, the AO disallowed 5 %

4 ITA No.79/BIL/16 of the said expenses i.e. Rs.29,37,587/- and added back to the total income of the assessee. Further, the AO on verification of profit and loss account, found that repair and maintenance expenses were claimed at Rs.2,16,695/-. No bills and vouchers were produced to support these claims. During the course of assessment proceedings, the AR of the assessee has admitted that no log book for personal use of these expenses is maintained. On account of non-production of any bills and vouchers and the personal use due to nature of these expenses 1/4th of these expenses i.e 54,173/- disallowed by the AO and added to the total income. It was also noted by the AO that labour charges are shown at Rs.8,84,200/-. As per the AO no bills and vouchers were produced by the assessee in this regard. Accordingly, the AO disallowed l/4th of expenses claimed under this head i.e. Rs. 2,21,050/- and added to the total income of the assessee. 7. Against the above order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A) and filed its written submission substantiating its claim, however, the ld CIT(A) dismissed the appeal of the assessee upholding the findings of the AO on the ground that the assessee could not substantiate its claim before the AO. 8. Now, the assessee is in further appeal before the Tribunal. 9. Ld. AR before us argued on the additional ground assailing the validity of jurisdiction of the ld. AO i.e. ITO-1(1), Raipur mentioning the reason that the AO was not having pecuniary jurisdiction over the assessee for issuing notice u/s.143(2) of the Act in the case of the

5 ITA No.79/BIL/16 assessee. It was submitted that the assessee declared its income at

Rs.23,44,310/-, which was selected for scrutiny and notice u/s.143(2) was

issued on 23.09.2013 by the ITO-1(1), Raipur, who was not having

pecuniary jurisdiction over the assessee. However, in absence of valid

notice u/s.143(2) of the Act, framing of assessment u/s.143(3) of the Act is

invalid, bad in law, non-est and is liable to be quashed. Ld. AR drew our

attention to the CBDT Instruction No.1/2011, dated 31.01.2011 placing

the argument that the instruction of CBDT was binding on the revenue

authorities u/s.119 of the Act and in contravention thereto issuing notice

u/s.143(2) of the Act by the AO, who had not possessed valid jurisdiction

over the assessee, is liable to be quashed. Instruction No.1/2011, dated

31.01.2011 issued by the CBDT reads as under :-

INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], ________________________________________________ SECTION 119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES 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 Corporate Upto Rs.20 lacs Above Rs.20 lacs Upto Rs.30 lacs Above Rs. 30 lacs Returns Non- Upto Rs.15 lacs Above Rs.15 lacs Upto Rs.20 lacsq Above Rs.20 lacs corporate returns

6 ITA No.79/BIL/16

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. 10. Further, the ld. AR relied on the CBDT Instruction No.6/2011, dated 08.04.2011, wherein the Board has instructed the CCIT/DGIT to adjust the limits by an amount upto Rs.5 lakhs to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. The said Instruction No.6/2011 is as under :- INSTRUCTION NO. 6/2011 [F.NO.187/12/2010-ITA-I], ______________________________________________ SECTION 119 OF THE INCOME - TAX ACT, 1961 - CENTRAL BOARD OF DIRECT TAXES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTIONS - REGARDING INCOME LIMITS FOR ASSIGNING CASES TO DEPUTY COMMISSIONERS/ASSISTANT COMMISSIONERS/ITOS INSTRUCTION NO. 6/2011 [F.NO.187/12/2010-ITA-I], DATED 8-4-2011 Reference may kindly be made to Board's Instruction No. 1/11, dated 31-1-2011 which lays down revised monetary limit of cases to be assessed by DCsIT/ACsIT in metro cities and mofussil areas w.e.f. 1-4-2011. Some CCsIT have expressed the view that the limit fixed in the aforesaid Instruction, if strictly enforced would lead to unequal distribution of workload between the ACITs and the ITO in some of the charges. 2. In view of the above, the Instruction No. 1, dated 31-1-2011 has been reconsidered by the Board and it has been decided that if the application of above limits in any CIT charge leads to a substantially uneven distribution of workload between DCsIT/ACsIT am ITOs, the CCIT/DGIT may adjust the above limits by an amount of upto Rs. 5 lakhs to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. 3. It is further clarified that the mofussil areas referred to in the Instruction No. 1/2011 means all stations other than the metro cities. of Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Ahmedabad, Pune and Bangalore. 11. Based on the aforesaid instruction, the office of the Chief Commissioner Income Tax, Raipur issued a Notification dated 30.05.2011 to be followed by the revenue authorities for assigning case to

7 ITA No.79/BIL/16 ITO land ACITs/DCITs with monetary limit as prescribed therein, copy of the same is reproduced hereunder :-

8 ITA No.79/BIL/16 13. In view of the above submissions, it was the prayer of the ld. AR that since the notice u/s.143(2) of the Act itself was invalid, the assessment order u/s. 143(3) of the Act, dated 27.03.2014, is illegal, non- est, bad in law, and deserves to be quashed. 14. On the contrary, ld.Sr.DR vehemently supported the order of the authorities below and produced the clarification sought from the ACIT, Circle-1(1), Raipur, which reads as under :-

GOVERNMENT OF INDIA MINISTRY OF FINANCE: DEPARTMENT OF REVENUE, OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, 1(1) C. R. BUILDING, CIVIL LINES, RAIPUR (C.G.) – 92001 F. No.ACIT-l(l)/RPR/Misc./MA/2022-23 Dated : 15-11-2022 To . The Joint Commissioner of Income-tax, Sr. DR, ITAT, Raipur Sir,. Sub: Clarification in case of M/s Mata Road Carrier -PAN: AAJFM0294R- ITA 79/RPR/2016 -A.Y.2011-12 - Regarding – ----------------------- Kindly refer to your letter F.No.JCIT-ITAT/RPR/Clarification/2022-23 dated 21-11-2022 on the above subject. 2. As desired, clarification sought on different points are as under: a. As desired, copies of original and revised return are enclosed herewith. b. Neither any search/or third party information was there which mandated assessee to file revised return. c. The issue raised by the assessee is regarding notices u/s 143(2) and completion of assessment by the Assessing Officer. This case was selected for scrutiny through CASS. This case was selected for scrutiny on the basis of revised return dated 22-03-' 2013 filed by the assessee u/s 153C r/w 153A. Copy of return and e-filing details is enclosed herewith for ready reference. In the said return Designation of AO (Ward/Circle) is mentioned as ITO-l(l), Raipur. The assessee seems to be hiding this fact about filing of revised return by it. Thus filling revised return u/s 153A does not have any legal requirement and the same has not been disclosed in its submission before Hon'ble ITAT. Accordingly, notice u/s 143(2) dated 23-09-2013 was issued by the I.T.O.-l(l), Raipur which was duly served upon the assessee on 26-09-2013. Subsequently, notice u/s 142(1) dated 11-11-2013 was issued by the D.C.I.T.-l(l), Raipur and assessment order was passed on 27-03-2014.

9 ITA No.79/BIL/16 Dispute over jurisdiction to assess the case

(3). The jurisdiction of the Deputy Commissioner of Income Tax, Circle- 1(1), Raipur, the territorial areas assigned are ITO Ward-1(1) to (4) and the range code is 1. Here, the territorial jurisdiction of ITO Ward-1(1), DCIT-Cir-l(l) and the range code for his jurisdiction is 1. Therefore, the assessment is within the same Ward/Circle and there is no prejudice caused to the petitioner. (4). In the judgment of Hon'ble Madras HC vide W.P. Nos.5792 & 5793 of 2013 dtd. 27.11.2014 it was pronounced that – "The circular dated 31.01.2011, has been issued by the Board in exercise of its power under Section 119 of the Act, which gives instruction regarding income limits for assigning cases to the Deputy Commissioners/Assistant Commissioners/ITOs. It was pointed out by the Board that references have been received from large number of the tax payers 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 DC/AC who is located in different station, which increases their cost of compliance. The Board therefore considered the matter and opined that the existing limit needs to be revised to remove the hardship referred to therein. Further, the Board opined that increase in their monetary limit is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the earlier income limits were introduced. Therefore, for non-corporate returns in mofussil area, the ITOs were assigned cases upto Rs.15,00,000/- and the Assistant Commissioners and Deputy Commissioners above Rs.15,00,000/-. Subsequently, by another instruction dated 08.04.2011, the earlier instruction was reconsidered and it was decided that if the application of the limits mentioned in the instruction dated 31.01.2011, leads to substantially uneven distribution of workload between DCs/ACs and ITOs, the CCIT/DGIT may adjust the limits by an amount upto Rs.5,00,000/- to ensure that the workload is equitably distributed amongst the Assessing Officers after recording reasons in this regard. (5) The Hon'ble Supreme Court in the case ofKerala Financial Corporation vs. CIT, reported in [1994] 210 ITR 129 (SC), and in UCO Bank vs. CIT reported in [1999] 237 ITR 889 (SC), pointed out that the Board cannot issue circulars overriding, modifying or in effect amending the provisions of the Act. The circular issued by the Central Board though binding on the Assessing Officer in matters relating to general interpretation, the circular cannot deal with specific cases or override the judicial decisions. (6) On a reading of the Section 119 of the Act, it is seen that the said provision empowers the Board to issue orders, instructions and directions to other Income Tax Authorities for the proper administration of the Act and such authorities shall observe and follow such orders, instructions and directions of the Board. Proviso under Section 119(1) states that no such orders, instructions or directions shall be issued to direct the Income Tax Officer to make a particular assessment or to dispose of a particular case in a particular manner or to interfere with the discretion of the Commissioner (Appeals) in exercise of his appellate functions. Therefore, there is a distinction between an

10 ITA No.79/BIL/16 order issued by the Board, an instruction given by the Board and a direction issued by the Board to the Income Tax Authorities and none of this can interfere with the right of the Income Tax Authority, while making an assessment proceedings or by the Commissioner (Appeals) while exercising appellate functions. Admittedly, the proceedings dated 31.01.2011/08.04.2011 are instructions and are not orders or circulars. An instruction issued, cannot obliterate or deny the powers of the Director General or the Chief Commissioner or the Commissioner to exercise power of transfer under Section 127 of the Act. (7) The tax information network of the Income Tax Department, has published a tabulated statement mentioning the Ward/Circle/Range/Commissioner, description, area code, AO type, Range Code and AO number. (8) Further, it is to be seen as to whether the instruction issued with regard to the pecuniary jurisdiction issued by the Board from time to time is as sacrosanct and cannot be amended. (9) It is seen that after the issuance of the instruction dated 31.01.2011, a subsequent instruction was given on 08.04.2011. The said instruction modifies the earlier instruction dated 31.01.2011 and vests a discretion to the Chief Commissioner of Income Tax and the Director General of Income Tax to adjust the monetary limits by an amount upto Rs.5,00,0007-, and the purpose for giving such discretion is to ensure that the workload is equitably distributed amongs the Assessing Officer. Therefore, the monetary limit fixed in the instruction dated 31.01.2011, was not a rigid limit. This is manifest from the subsequent instruction dated 08.04.2011, which has given discretion to the Chief Commissioner and Director General to adjust the limits. The underlining object of the instructions is equitable distribution of work. It is seen that the amended instruction dated 08.04.2011 itself, came to be issued, as Chief Commissioners have expressed the view that the limits fixed in the instruction dated 31.01.2011, if strictly enforced would lead to unequal distribution of workload between Assistant Commissioner and Income Tax Officers. Therefore, the Board re-considered the matter. d. Inadvertently, in the assessment order u/s 143(3) dated 27-03-2014, date of filing of return is mentioned as 26-09-2011 (date of filing of original return) whereas it should have been mentioned as 22-03-2013 (date of filing of revised return). However, returned income remains the same i.e. Rs.23,44,310/-. 5. Case record in one volume is enclosed herewith. Yours faithfully, Encl. As above. Sd/- (Tapan'Kumar Chatterjee) Assistant Commissioner of Income-tax Circle-1 (1), Raipur (CG) Copy to the: 1. The Chief Commissioner of Income-tax, Raipur for favour of information. 2. The Pr. Commissioner of Income-tax, Raipur for favour of information. 3. The Addl.Commissioner of Income-tax, Range-1, Raipur for favour of information. Sd/- Assistant Commissioner of Income-tax Circle-l(l), Raipur (CG)

11 ITA No.79/BIL/16 15. Further, the ld. DR has filed his written submissions which read as under :- Before, The Hon'ble Member(s), ITAT Bench, Raipur (C.G.). Sub:- Appeal filed under section 253 by the assesee in the case of Mata Road carrers Ltd For the A.Y. 2011-12, ITA 79/BSP/2016 with reference to form no 36 filed on 06.04.2016 request regarding:- 1.This is an appeal filed on 06-04-2016 before the Honble ITAT by the assesse on being aggrieved with adverse appeal order of the CIT appeal passed on 01-02-2016 . 2. Cross objection under section 253(4) has not been filed as per record. 3. As per records, additional ground under rule 29 is added by the assesse for adjudication on 20-7-2022,Paper book withdrawn on 04-11-2022 and submitted fresh paper book. Additional ground-1 was added on 04-11-2022 challenging the jurisdiction of the assessee and was again revised on 04-11-2022 adding ground no 02 to adjudicate adhoc addition made in the case. 4. Evidences for payment of tax is not on records. 5. The revenue involved is Rs. 16,42,450/- is lower than prescribed limit specified in CBDT Circular no 17/2019 dated 08-08-2019 and does not falls under exceptional cases vide CBDT circular no 03/2018 dated 11-07-2018. 6. Direction to produce case records was given to the AO on 23-07- 2022, clarification sought on PAN history was furnished on 01-08- 2022, clarification sought on issuance of notice under section 143(2) was furnished on 15-11-2022 and revised clarification was also furnished on 15-11-2022, personal attendance of the AO was directed on 21-11-2022. 7. The assessee filed affidavit on 26-11-2022 under rule 10 to clarify filing of ITR and search proceedings. 8. Brief of A0,s observation:- Order under section 143(3) of the Act was passed and income was assessed at Rs. 56,27,200/- the assessee failed to produce bills and other relevant records of expenses for verification before AO, hence, Rs. 29,37,587/-, 5% of direct expenses of Rs. 5,87,51,173/( Para-5 page3) Rs. 54,173, Y» of Rs. 2,16,695)under head repair and maintenance/-( Para-6 page -3) and Rs. 2,21,050/-,l/4 of Rs. 8,84,200/- under head labor charges( Para -7 Page 4) was disallowed and added to the Income of the assessee. Interest paid of Rs. 70,120/- was paid to Magma

12 ITA No.79/BIL/16 finance company is disallowed and added under section 40a(ia) of the Act.( Para-8 page-4) 9. CIT observation: - The CIT appeal confirmed the above addition Para 2.3 Page 4 10. The assessee has challenge the notice under section 143(2) and assessment order passed under section 143(3) by the DCIT Circle-1, Raipur. Apart from the above submissions, ld. DR relied on the following case laws and submitted that the assessee’s objection may not be acceptable:- 1. CIT vs SS Ahluvalia ITA no 255.2002 dated 14-03-2014, Delhi High court,Page 29 to 65 2. Panna lal BIN] Raj Vs union of India 31ITR 565(SC) page 66 to 88. S.Deepak Agro Food vs state of Rajsthan 2008 TIOL 134 SC CT Page 89 to 94, 4. Abhishek Jain writ petition Civil 11844/23-04-2011 Delhi HC page 95 To 111. 5. Hindustan Transport CO. vs IAC and Anr 1991) 189 ITR 326 Allhabad High Court Page 112 to 120. 6. Kimtee Vs CIT(1985) 151 ITR 73 MP high court Page 121 to 123. 7. Guduthur bros vs ITO (1960) 40 ITR 298 (SC) Page 124 to 127. 8. Ashish Agrwal vs UOI (2022) 138 taxman com 64 SC page 128 to 141. 9. Harish kumar Chhabad , ITA 323/RPR/2016 ,ITAT Raipur bench Page 142 to 162. 10. Goyal Construction Co ITA 17/ RPR/ 2017 ITAT Raipur bench Page 163 to 198 11. ITO ward -1(4) Vs C, Krishnan (2014) 52 taxman Com 30Madras Highcourt. Page 199 to 209; 12. Kerla finecila Corporation Vs CIT (1994) 75 taxman 573 (SC) 1994 210 ITR 210.Page 210 to 215 13. UCO bank vs CIT (1999) 104 taxman 547 ( SC) Page 216 to 227 16. Accordingly, ld. Sr. DR submitted that additional ground raised by the assessee may not entrained and decision of the CIT appeal deserves to be upheld. 17. We have considered the rival submissions, perused the material available on record and the case laws pressed into our service. Regarding admissibility of additional legal ground of the assessee with respect to

13 ITA No.79/BIL/16 challenging the jurisdiction of the AO which was not challenged before the AO under the provisions of Section 124(3) of the Act within the stipulated time period of one month from the date of which the notice u/s.143(2) of the Act was served upon the assessee, as opposed by the ld.Sr. DR, we take guidance from the observation of the coordinate bench of this Tribunal in the case of Sudhir Kumar Agrawal, in ITA No.158/RPR/2017, order dated 17.10.2022/[2023] 221 TTJ 687 (Raipur-Trib), wherein it has been observed in para 14 as under :- 14. We shall now deal with the objection raised by the Ld. DR that as the assessee had not called in question the jurisdiction of the Income-Tax Officer, Ward-2(2), Bhilai within the stipulated time period of one month Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 from the date on which he was served with the notice(s) u/ss.143(2) and 142(1), dated 03.03.2015, therefore, it was not permissible for him to challenge the same for the first time in the course of the proceeding before the tribunal. Having given a thoughtful consideration to the aforesaid claim of the ld. DR we are unable to persuade ourselves to subscribe to the same. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under sub- section (1) and sub-section (2) of Section 120 of the Act. On the other hand sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143. In sum and substance, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where the assessee objects to the assumption of territorial jurisdiction by the A.O, and not otherwise. 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 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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

14 ITA No.79/BIL/16 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 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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. 18. Admittedly, the assessee has filed its return of income for the assessment year 2011-2012 with a returned income of Rs.23,44,310/-, which is above Rs.15 lakhs. As per the CBDT Instruction No.1/2011, dated 31.01.2011 and Instruction No.6/2011, dated 08.04.2011 and the Notification of the CCIT, Raipur, dated 30.05.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh was vested with an officer in the rank of ACIT/DCIT, whereas the notice u/s.143(2) of the Act was issued by the ITO-1(1), Raipur. Though, subsequently the case was transferred to DCIT-1(1),

15 ITA No.79/BIL/16 Raipur, however, the jurisdiction assumed by the ITO-1(1), Raipur, who has issued notice u/s.143(2) of the Act was not in accordance with the CBDT Instruction No.01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011. Therefore, the notice issued u/s.143(2) of the Act was invalid in terms of non-following the binding instructions issued by the CBDT and, therefore, the framing of assessment on the basis of such invalid notice was also void ab initio and needs to be struck down. This issue has already been settled by the coordinate bench of the Tribunal in the case of Amarjeet Singh Bhatia, passed in ITA No.63/RPR/2018, vide order dated 07.07.2023, wherein the Tribunal following various judicial pronouncements has held that the Instructions/Circulars are binding on the revenue authorities. The relevant observations of the Tribunal are as under :- 18. Admittedly, the assessee has filed its return of income for the assessment year 2007-2008 with a returned income of Rs.5,22,820/-, which is below Rs.15 lakhs. As per the CBDT Instruction No.1/2011, da ted 31.01.2011 and Instruction No.6/2011, dated 08.04.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh. Therefore, the jurisdiction to assess the case of the assessee was vested with an officer in the rank of ITO, whereas the case of the assessee was reopened by the DCIT-1(1), Raipur, which was subsequently transferred to ACIT, Circle-3(1), Raipur. Since the jurisdiction assumed by the ACIT Circle-3(1), Raipur, who has framed the assessment of the assessee was not in accordance with the CBDT Instruction No.01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011, therefore, the instruction assumed was invalid in terms of non-following the binding instructions issued by the CBDT and, therefore, the order remained on the basis of such reopening was also void ab initio and needs to be struck down. In this regard, reliance can be placed on the decision of Hon’ble Supreme Court in the case of Indian Oil Corporation Ltd., reported in (2004) 267 ITR 272 (SC), wherein the Hon’ble Supreme Court, considering various earlier judgments, has held that the circulars issued u/s.119 of the IT Act are binding on the revenue. The relevant observations of the Hon’ble Supreme Court are as under :-

16 ITA No.79/BIL/16 7. This Court has, in a series of decisions, held that circulars issued under Section 119 of the Income Tax Act, 1961 and 37B of Central Excise Act are binding on the Revenue. (See Navnit Lal C Jhaveri vs. K.K. Sen (1965) 56 ITR 198 (SC); Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 (1971) 82 ITR 913 (SC); K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : 1981 (4) SCC 17i Union of India vs. Azadi Bachao Andolan (2003) 184 CTR (SC) 450 : 2003 (8) SCALE 287, 308 Collector of Central Excise vs. Usha Martin Industries 1994 (94) ELT : 1997 (7) SCC 47 Ranadey Micronutrients vs. CCE 1996 (8) ELT 19 : 1996 (10) SCC 387; Collector of Centra Excise vs. Jayant Dalai (P) Ltd. 1998 (100) ELT 10 : 1997 (10) SCC 402; Collector of Centra. Excise vs. Kores India Ltd. 1997 (89) ELT 441 : 1997 (10) SCC 338; Paper Products Ltd. vs. Collector of Central Excise 1999 (112) ELT 765 : 1997 (7) SCC 84; Dabur India Ltd. vs. CCE 2003 (157) ELT 129). 8. The somewhat different approach in M/s. Hindustan Aeroneutics V. Commissioner of Income Tax, Karnataka, Bangalore 2000 (5) SCC 365 by two learned Judges of this Court, apart from being contrary to the stream of authority cannot be taken to have laid down good law in view of the subsequent decision of the Constitution Bench in Collector of Central Excise, Vadodara V. Dhiren Chemical Industries. After this Court had construed an exemption notification in a particular manner, it said (p. 130 of SCC and p. 557 of ITR) :: "We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue".. 9. Despite the categorical language of the clarification by the Constitution Bench, the issue was again sought to be raised before a Bench of three Judges in Central Board of Central Excise, Vadodara v. Dhiren Chemicals Industries: (2002) 143 SCC 654 : 2002 (143) ELT 19 where the view of the Constitution Bench regarding the binding nature of circulars issued under Section 37B of the Central Excise Act, 1944 was reiterated after it was drawn to the attention of the Court by the Revenue that there were in fact circulars issued by the Central Board of Excise and Customs which gave a different interpretation to the phrase as interpreted by the Constitution Bench. The same view has also been taken in Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam 2003 (5) SCC. 10. The principles laid down by all these decisions are : (1) Although a circular is not binding on a Court or an assessee, It is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute.

17 ITA No.79/BIL/16 (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show cause notice and demand contrary to existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars. 19. In the case of Khirod Kumar Pattnaik, the Cuttack Bench of the Tribunal in ITA No.319/CTK/2019, vide order dated 10.12.2020, has held that, “it was the duty of the revenue authorities to give effect to the circulars/instructions issued by the CBDT which are binding on them. If the CBDT Instruction No.1/2011, dated 31.01.2011 & No.6/2011, dated 08.04.2011 is not accepted by the revenue authorities, as has been occurred in the present case in hand, anyone can frame the assessment/reassessment even having no jurisdiction to enter into the same. The power conferred upon the CBDT to issue instructions and directions by section 119 of the Act is for proper working of the Act, which should be followed by the revenue authorities in true spirit. Accordingly, the Tribunal quashed the reassessment framed by the ITO/AO, who was having no jurisdiction over the assessee. 20. Further, the coordinate bench of the Tribunal in the case of Ravi Sherwani, in ITA No.64/RPR/2020, vide order dated 29.05.2023, in para 11 has held that, “controversy involved in the present appeal lies in a narrow compass, i.e, sustainability of the assessment framed by the ACIT, Circle 4(1), Raipur vide his order passed u/s 143(3) of the Act, dated 29.03.2016, which in turn was based on a notice u/s 143(2) of the Act, dated 08.09.2014 issued by the ITO-1(3), Raipur, i.e a non-jurisdictional officer. We find that the issue involved in the present appeal is squarely covered by the order of this Tribunal in the case of Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019 dated 12.12.2022; wherein, it has been held, that in case an A.O vested with jurisdiction over the case of the assessee, had framed an assessment u/s.143(3) of the Act, by assuming jurisdiction to frame such assessment on the basis of notice u/s 143(2) of the Act issued by a non-jurisdictional officer, i.e an A.O who was not vested with pecuniary jurisdiction over the case of the assessee as per CBDT Instruction No.1 of 2011, then, the assessment so framed could not be sustained and was liable to be struck down for want of valid assumption of jurisdiction”. 21. In the backdrop of aforesaid observations, we are in agreement with the ld. AR that the reopening proceedings were initiated without having vested jurisdiction by the DCIT-1(1), Raipur and also the same was thereafter wrongly been framed by an officer, who was not having jurisdiction over the case of the assessee as per the criteria laid down by the CBDT Instructions, referred to supra. Since similar issues were decided by the coordinate bench of the Tribunal in several different cases, referred to above, alongwith observations in these cases as are extracted hereinabove, therefore, respectfully following the view taken in the

18 ITA No.79/BIL/16 above judicial pronouncements, we are of the considered opinion that the order framed u/s.147/143(3) of the Act by the ACIT, Circle- 3(1), Raipur, dated 11.02.2015 for the assessment year 20047- 2008 in the case of assessee, is liable to be quashed and we do so. Thus, the legal ground of assessee is allowed. 19. The coordinate bench of the Tribunal under the similar facts and circumstances, in the case of Ravi Sherwani, passed in ITA No.64/RPR/2020, order dated 29.05.2023, observations of which have been reproduced in the foregoing paragraphs, which has already been followed in the case of Amarjeet Singh Bhatia (supra), considering the observations made in the case of Durga Manikanta Traders (supra), held that the assessment framed by the AO on the basis of notice issued u/s.143(2) of the Act by the non-jurisdictional officer is void ab initio. In the present case, the ITO-1(1), Raipur having no jurisdiction over the assessee issued notice u/s.143(2) of the Act, overlooking the binding Instructions of the CBDT as well as the Notification issued by the CCIT, Raipur, which is not sustainable in the eyes of law. Had the notice u/s.143(2) of the Act been issued by the jurisdictional AO, i.e. DCIT-1(1), who was having pecuniary jurisdiction over the assessee, there would have been no case for the assessee to raise the issue of wrong assumption of jurisdiction. When the notice issued u/s.143(2) of the Act is itself invalid owing to the wrong assumption of jurisdiction, the assessment framed thereafter has no legs to stand. Respectfully following the observations of the coordinate bench of the Tribunal in the case reproduced hereinabove, we set aside the order of the ld. CIT(A) and

19 ITA No.79/BIL/16 strike down the assessment order dated 27.03.2014. The legal ground raised by the assessee is allowed. 20. Since, we have decided the legal ground for want of valid assumption of jurisdiction by the AO and have struck down the assessment order itself, we, therefore, refrain ourselves from adverting to and to adjudicate the other grounds raised in the present appeal by the assessee with regard to the additions made by the AO and confirmed by the ld. CIT(A). 21. In the result, appeal of the assessee is allowed. Order pronounced in the court on 10/07/2023. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) न्याधयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER रायपुर/Raipur; ददिांक Dated 10/07/2023 Prakash Kumar Mishra, Sr.P.S(on tour) आदेश की प्रधतधलवप अग्रेवषत/Copy of the Order forwarded to : अपीलार्थी / The Appellant- 1. 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, रायपुर/ DR, ITAT, Raipur 6. गार्ा फाईल / Guard file. आदेशािुसार/ BY ORDER, सत्यावपत प्रधत //True Copy// (Assistant Registrar) आयकर अपीलीय अधिकरण, रायपुर/ITAT, Raipur