RAVI SHERWANI,RAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX -4(1), RAIPUR

आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur dated 23.01.2020, which in turn arises from the order passed by the A.O under sec. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) dated 29.03.2016 for assessment year 2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1. Whether learned CIT(A) is correct in passing order without providing valid opportunity of being heard, which is against the principles of natural justice. 2. Whether learned CIT(A) is correct in making addition of Rs.1,00,00,000.00 deposited in Punjab National bank. 3. Whether Learned CIT(A) is correct in disallowing cost of improvement of Rs.1,11,02,013.00 without going through actual facts and circumstances. 4. The appellant reserves the right to amend, modify or add any of the grounds of appeal.”

Also, the assessee has raised an additional ground of appeal before us, which reads as under:

“On the facts and circumstances of the case and in law, assessment made u/s.143(3) dt.29-2-16 by ACIT-4(1) is invalid, since notice issued u/s.143(2) by the ITO-1(3) on 8-9-14, who was not having pecuniary jurisdiction over the assessee to make assessment for A.Y.2013-14 as per CBDT Instruction No.1/2011 dt.31-1-11, since ‘returned income’ shown at Rs.19,12,120/-; in absence of a valid notice issued u/s.143(2) by the ‘Jurisdictional AO’, assessment made u/s.143(3) would be invalid, bad in law, non-est and is liable to be quashed.”

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income declared upto Rs.10 lac would fall within the jurisdiction of the Income-Tax Officer (ITO); and (ii) a non-corporate assessee with an income declared above Rs.10 lacs would fall within the jurisdiction of ACs/DCs. In support of his aforesaid contention the Ld. AR had drawn our attention to the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011; Instruction No. 6/2011, dated 08.04.2011 and letter issued by the Chief CIT dated 30.05.2011. It was, thus, the claim of the Ld. AR that as the present assessee who was putting up in a mofussil area i.e. Raipur had filed his return of income for the year under consideration i.e. A.Y 2013-14, declaring an income of Rs.19,12,120/-, therefore, pursuant to the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011 r.w Instruction No. 6/2011, dated 08.04.2011 r.w letter issued by the Chief CIT, Raipur to the CIT, Raipur dated 30.05.2011 the jurisdiction over his case was vested with the ACIT/DCIT. It was submitted by the Ld. AR that the notice u/s.143(2) of the Act was issued by the ITO-1(3), Raipur who was not vested with the pecuniary jurisdiction over the case of the assessee to issue the same as on 08.09.2014. It was submitted by the Ld. AR that as the ACIT, Cicle 4(1), Raipur, had framed the assessment in the case of the assessee without issuing any notice u/s.143(2) of the Act within the prescribed time period of six months from the end of the financial year in which the return was furnished, therefore, the assessment so framed by him was liable to quashed for want of valid assumption of jurisdiction by him. In sum and substance, it was averred by the Ld. AR that as the ACIT, Circle-4(1), Raipur, i.e an officer who was vested with jurisdiction over the

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assessee’s case for the year under consideration, had assumed jurisdiction to frame the assessment on the basis of notice u/s 143(2) of the Act, dated 08.09.2014 issued by the ITO-1(3), Raiur, i.e a non-jurisdictional officer, therefore, the assessment framed by him vide his order passed u/s.143(3) of the Act, dated 29.03.2016 could not be sustained and was liable to be struck down. The Ld. AR in support of his contention that the assessments not framed in conformity with the CBDT Instruction No.1/2011, dated 31.01.2011 r.w Instruction No. 06/2011, dated 08.04.2011 could not be sustained and was liable to be struck down had relied on a host of judicial pronouncements, as under:

Sr. Particulars No. 1. Bhagyalaxmi Conclave PL (2021) ITANo.2517/Ko1/2019 (Kol-Trib) dated 03-02- 2021 2. Ashok Devichand Jain Vs. UOI (2023) 452 ITR 43 (Bom.) 3. Pankajbhai Jaysukhlal Shah Vs. ACIT (2020) 425 ITR 70 ( Guj.) 4. DCIT Vs. Parmar Built Tech, ITA No.4124/Mum/2012, dated 12.09.2022 5. Mateshwari Construction Vs. ACIT, ITA No.245/Pat/2018 dated 16.06.2022 6. JR Roadlines P Ltd. Vs. DCIT, ITA No.2534/KOl/2019 dated 27.05.2022 7. Anderson Printing House PL (2021)134 taxmann.com 4(Kol-Trib), dated. 28-10- 2021 8. Hillman Hosiery Mills PL(2021) ITA No.2634/Ko1/2019 (Kol-Trib),dated 12-01- 2021 9. ITO Vs. Arti Securities & Services (2020) ITANo.553/Lkw/2018 (Luck-Trib) 06- 11-2020 10. Khirod Kumar Pattnaik (2020) ITA No.380/Ctk/2019 (Ctk-Trib) dated 10-12- 2020.

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assessee as per the mandate of sub-section (3) of Section 124 had called in question the jurisdiction of the A.O i.e. the ITO-1(3), Raipur within the stipulated time period of one month from the date on which he was served with the notice u/s. 143(2), dated 08.09.2014, the Ld. AR answered in the negative. It was submitted by the Ld. AR that as the obligation cast upon an assessee to call in question the jurisdiction of the Assessing Officer under sub-section (3) to Section 124 of the Act would get triggered only where there was any dispute as regards the “territorial jurisdiction” of the officer issuing the notice, which however, was not the issue involved in the present case, therefore, the assessee remained under no obligation to have called in question the jurisdiction of the ITO-1(3), Raipur on receipt of notice u/s. 143(2), dated 08.09.2014 from him. The Ld. AR had in support of his aforesaid contention relied on the judgment of the Hon’ble High Court of Bombay in the case of Peter Vaz Vs. CIT [2021] 128 taxmann.com 180 (Bombay). It was averred by the Ld. AR that the Hon’ble High Court in its aforesaid order while reversing the view taken by the Tribunal, had observed, that the provisions of Section 124(3) referred mainly to the territorial jurisdiction of the A.O. Also, support was drawn by the Ld. AR from the judgment of the Hon’ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR 492 (Guj.). It was submitted by the Ld. AR that the Hon’ble High Court had observed that the provisions of Section 124 of the Act clearly concern the territorial jurisdiction of the Assessing Officer and have no relevance in so far the inherent jurisdiction for passing the assessment order is concerned. It was submitted

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by the Ld. AR that as in the present case the assessment had been framed by the jurisdictional A.O without issuing any valid notice u/s 143(2) of the Act, therefore, the same de hors lack of valid assumption of jurisdiction on his part was invalid and non-est, and thus, liable to be struck down on the said count itself.

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Hon’ble High Court of Punjab & Haryana in the case of Josh Builders & Developers (P) Ltd. Vs. PCIT, (2016) 389 ITR 314 (P&H).

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“That the Assessment Order framed u/s.143(3) is bad in law, without jurisdiction & void ab initio since in view of the returned income of Rs.6,57,380, the assumption of jurisdiction u/s.143(2) vested with the Income Tax Officer as per the Instruction issued on 31.01.2011 by the Hon’ble CBDT whereas in the present case, mandatory notice u/s.143(2) dated 24.09.2015 was issued by the Ld. DCIT, Circle-2(1), Bhilai accordingly, the impugned assessment framed u/s.143(3) by the Ld. ITO, Ward-1(1), Bhilai (Ld. AO) is without timely issuance of mandatory notice u/s.143(2) ( as the notice u/s. 143(2) had been issued by the Ld. AO only on 05.05.2016 i.e. after the expiry of six months from the end of the financial year in which the return was furnished i.e. 30.09.2015), accordingly, the Assessment order is bad in law & legally unsustainable hence, it is earnestly prayed that the Assessment order passed u/s. 143(3) may please be quashed and cancelled in limine.”

The Tribunal after relying on its order in the case of Shri Sudhir Kumar Agrawal Vs. ITO, ITA No.158/RPR/2017 dated 17.10.2022, had observed as under:

“ 11. Before proceeding any further we deem it fit to cull out the CBDT Instruction No.1/2011, dated 31.01.2011, 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 Corporate Upto Rs.20 Above Rs.30 Upto Rs.30 Above Rs.30 returns lacs lacs lacs Lacs

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Non- Upto Rs.15 Above Rs.15 Upto Rs.20 Above Rs.20 corporate lacs lacs lacs 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.”

(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 24.09.2013, 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.2012-13 declaring an income of Rs.19,07,440/-, Page 7 to 12 of APB. 12. On the basis of the aforesaid facts, we are of the considered view that as stated by the Ld. AR and, rightly so, the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Raipur and had filed a non- corporate return for the year under consideration i.e. A.Y.2012-13 declaring an income of Rs.19,07,440/-, as per the CBDT Instruction No.1/2011, dated 31.01.2011 was vested with the ACs/DCs. Although the notice u/s.143(2) dated 24.09.2013 was rightly issued by the Dy. CIT, Circle-1, Bhilai who was vested with the requisite jurisdiction over the case of the assessee and had thereafter vide his notice u/s.142(1), dated 20.08.2014 a/w. a query letter (of even date) rightly proceeded with the assessment, but then we cannot remain oblivion of the fact that as the assessment u/s. 143(3), dated 30.03.2015 had thereafter been framed by the Income-Tax Officer, Ward- 2(2), Bhilai, who as per the aforesaid Instruction No.1/2011 (supra) was divested of any jurisdiction over the case of the assessee for the year under

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consideration, therefore, the same having been framed without any valid assumption of jurisdiction was invalid; or in fact non-est. 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 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 Chattisgarh 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. 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 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

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(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 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.

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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 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, ITA No.2517 (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

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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 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 Above Upto Above returns Rs.20 lacs Rs.30 lacs Rs.30 lacs Rs.30 Lacs Non- Upto Above Upto Above corporate Rs.15 lacs Rs.15 lacs Rs.20 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

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Officers (whether with or without concurrent jurisdiction) also subordinate to him.

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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. 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. 7. I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:- 8. I find that there is no dispute in the fact that the notice u/s 143(2) of the Act dt. 29/09/2016 has been issued by the ITO, Wd-1(1), Durgapur. Later, the case was transferred to the jurisdiction of the ACIT on 11/08/2017. Thereafter, no notice u/s 143(2) of the Act was issued by the Assessing Officer having jurisdiction of this case and who had completed the assessment on 26/12/2017 i.e., ACIT, Circle- 1(1), Durgapur. Under these circumstances, the question is whether the assessment is bad in law for want of issual of notice u/s 143(2) of the Act. 9. This Bench of the Tribunal in the case of Shri Sukumar Ch. Sahoo vs. ACIT in ITA No. 2073/Kol/2016 order dt. 27.09.2017, held as follows:-

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"5. From a perusal of the above Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the 'non corporate returns' filed where income declared is only upto Rs.15 lacs ; and the ITO doesn't have the jurisdiction to conduct assessment if it is above Rs 15 lakhs. Above Rs. 15 lacs income declared by a non- corporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC. In this case, admittedly, the assessee an individual (non corporate person) who undisputedly declared income of Rs.50,28,040/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the assessment order, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward-1, Haldia on 06.09.2013 and the same was served on the assessee on 19.09.2013 as noted by the AO. The AO noted that since the returned income is more than Rs. 15 lacs the case was transferred from the ITO, Ward- 1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia on 24.09.2014 and immediately ACIT issued notice u/s. 142(1) of the Act on the same day. From the aforesaid facts the following facts emerged: i) The assessee had filed return of income declaring Rs.50,28,040/-. The ITO issued notice under section 143(2) of the Act on 06.09.2013. ii) The ITO, Ward-1, Haldia taking note that the income returned was above Rs. 15 lacs transferred the case to ACIT, Circle-27, Haldia on 24.09.2014. iii) On 24.09.2014 statutory notices for scrutiny were issued by ACIT, Circle-27, Haldia. 6. We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return of income on 29.03.2013 declaring total income of Rs.50,28,040/-. As per the CBDT Instruction the monetary limits in respect to an assessee who is an individual which falls under the category of 'non corporate returns' the ITO's increased monetary limit was upto Rs.15 lacs; and if the returned income is above Rs. 15 lacs it was the AC/DC. So, since the returned income by assessee an individual is above Rs.15 lakh, then the jurisdiction to assess the assessee lies only by AC/DC and not ITO. So, therefore, only the AC/DC had the jurisdiction to assess the assessee. It is settled law that serving of notice u/s. 143(2) of the Act is a sine qua non for an assessment to be made u/s. 143(3) of the Act. In this case, notice u/s. 143(2) of the Act was issued on 06.09.2013 by ITO, Ward-1, Haldia when he did not have the pecuniary jurisdiction to assume jurisdiction and issue notice. Admittedly, when the ITO realized that he did not had the pecuniary jurisdiction to issue notice he duly transferred the file to the ACIT, Circle-27, Haldia on 24.09. 2014 when the ACIT issued statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143(2) of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed

22 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No.64/RPR/2020

for issuance of notice u/s. 143(2) of the Act notice became qoarum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143(3) of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised 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, ITA No.380/CTK/2019 dated 10.12.2020. 17. Consequent to our aforesaid deliberations, we are of the considered view that as in the present case before us the assessment had been framed by the Income Tax Officer, Ward-2(2), Bhilai u/s. 143(3), dated 30.03.2015 in clear contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, which divested him of his jurisdiction over the case of the assessee for the year under consideration i.e AY 2012-13, therefore, the same cannot be sustained and is liable to be struck down in terms of our aforesaid observations. We, thus, in terms of our aforesaid observations quash the order passed by the Income-Tax Officer, Ward-2(2), Bhilai for want of jurisdiction on his part.”

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148 issued by DCIT-1(1), i.e non-jurisdictional officer. Issue that was, inter alia, raised before the Tribunal, read as under:

“1. On the facts and circumstances of the case and in law, reasons recorded & notice issued u/s.148 by DCIT-1(1), Raipur on 18-6-13 is invalid, non-est, as she was not having pecuniary jurisdiction as on 18-6-13, since, CBDT Instruction No.1/11 dt.31- 1-11 was applicable from 1-4-11, is binding on IT authorities u/s119; in absence of a valid notice issued u/s148 by ITO-1(2), Raipur (`jurisdictional AO') who framed the assessment u/s. 147 rws.143(3) dt.31-3-15; initiation of reassessment u/s148 would be invalid, non-est and thereby, consequential assessment made u/s 147 rws.143(3) dt.31- 3-15 would also be invalid, non-est and is liable to be quashed.”

The Tribunal adjudicated the aforesaid issue, observing as under:

“11. Ostensibly, the proceedings u/s.147 of the Act were initiated by the DCIT- 1(1), Raipur, Page 2 of APB. Notice u/s.148 18.06.2013 was issued by the DCIT- 1(1), Raipur. Assessment u/s.143(3)(sic. 143(3)/147) was, thereafter, framed by the ITO-1(2), Raipur. 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, I deem it fit to cull out the CBDT Instruction No.1/2011 dated 31.01.2011, 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)

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ITOs ACs/DCs ITOs DCs/ACs Corporate Upto Rs.20 Above Rs.30 Upto Rs.30 Above Rs.30 returns lacs lacs lacs Lacs Non- Upto Rs.15 Above Rs.15 Upto Rs.20 Above Rs.20 corporate lacs lacs lacs 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.”

(emphasis supplied by me) 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 upto Rs.15 lacs in his return of income is to be assigned to the ITO’s. As the assessee had in compliance to notice u/s.148 of the Act, dated 18.06.2013 requested vide his letter dated 05.07.2013 that his original return of income disclosing an income of Rs.9,47,500/- that was filed on 30.09.2010 be treated as a return filed in compliance to the aforesaid notice, 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. As is discernible from the records, the aforesaid request of the assessee vide his letter dated 05.07.2013 that his original return of income disclosing an income of Rs.9,47,500/- be treated as a return u/s.148 of the Act was accepted by the A.O, who, thereafter, had framed assessment vide his order passed u/s.143(3)(sic), dated 31.03.2015, therein taking the income of the assessee as originally returned as the base figure while arriving at the assessed income. 12. On the basis of the aforesaid facts, I am 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. Raipur and had in compliance to the notice u/s.148, dated 18.06.2013 filed a non-corporate return on 05.07.2013 for the year under consideration, i.e., A.Y.2010-11 declaring an income of Rs.9,47,500/- was vested with the ITO, Ward 1(3), Raipur [which w.e.f. 15.11.2014 was transferred to ITO-1(2), Raipur]. Although notice u/s. 148, dated 18.06.2013 was issued within the stipulated time period, however, the same was issued by the DCIT-1(1), Raipur, i.e., an A.O who pursuant

25 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No.64/RPR/2020

to the CBDT Instruction No.1 of 2011, dated 31.01.2011 was not vested with jurisdiction over the case of the assessee for the year under consideration. On the other hand as the ITO, Ward-1(3), Raipur [succeeded by ITO, Ward-1(2), Raipur w.e.f. 15.11.2014] who as per the aforesaid CBDT Instruction (supra) was at the relevant point of time vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had not issued any notice u/s. 148 of the Act, and had proceeded with on the basis of the notice u/s.148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional Officer, therefore, no valid jurisdiction could have been assumed by him for framing the impugned assessment vide order passed u/s.143(3)(sic), dated 31.03.2015. 13. On the basis of my aforesaid deliberations, I am in agreement with the Ld. AR that the ITO-1(2), Raipur could not have validly assumed jurisdiction and framed the assessment vide his order passed u/s.143(3)(sic), dated 31.03.2015 on the basis of the notice issued u/s. 148 dated 18.06.2013 by the DCIT-1(1), Raipur i.e. a non jurisdictional A.O. The aforesaid view of mine 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, I find that a similar view had been taken by the Hon’ble High Court of Bombay in the case of Pavan Morarka Vs. ACIT-2, (2022) 136 taxmann.com 2 (Bombay). It was observed by the Hon’ble High Court that as the A.O at Delhi who had issued notice u/s.148 of the Act had no jurisdiction over the case of the assessee who was being assessed at Mumbai, therefore, the subsequent reopening notice that was issued by the A.O at Mumbai after the case of the assessee was transferred to his jurisdiction could not be held to be in continuation of the proceedings which were initiated by the A.O at Delhi. To sum up, it was observed by the Hon’ble High Court that if an A.O who had issued notice u/s.148 was not vested with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non-jurisdictional A.O. Also, a similar view had been taken by the Hon’ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case before the Hon’ble High Court notice u/s.148 was issued by the ITO-(IV)(1), Lucknow who at the relevant point of time had no jurisdiction over the case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s.148 of the Act, therefore, the Hon’ble High Court treating the notice u/s 148 issued by the ITO-

26 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No.64/RPR/2020

(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O. Apart from that, a similar view had earlier been taken by the Hon’ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon’ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s.148 of the Act by him, therefore, the notice so issued by him would be without jurisdiction. Also, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No.84/RPR/2022, dated 29.11.2022. Further, 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, I 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, I find that a similar view had been taken by a “SMC” Bench of this Tribunal in its recent order passed in the case of Shreyansh Bothra Vs. ITO-2(1), Bhilai, ITA No.114/RPR/2019, dated 16.12.2022, wherein, it was observed as under: “11. Controversy involved in the present appeal in the backdrop of the aforesaid factual matrix boils down to the solitary aspect, i.e., as to whether or not the assessment framed by the ITO, Ward-2(1), Bhilai vide order passed u/ss.143(3)/147 dated 25.03.2016 on the basis of notice issued u/s.148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. a non-jurisdictional A.O is sustainable in the eyes of law? 12. As observed by me hereinabove, the assessment proceedings in the case of the assessee were initiated by the ITO, Ward-1(1), Raipur vide notice u/s.148 dated 23.03.2015. Subsequently, the ITO, Ward-1(1), Raipur had transferred the case record of the assessee on 12.05.2015 to ITO, Ward- 2(1), Bhilai. The ITO, Ward-2(1), Bhilai had, thereafter, on the basis of notice u/s.148 dated 23.03.2015 (supra) proceeded with and framed the assessment vide his order u/ss.143(3)/147 dated 25.03.2016. Ostensibly, the ITO, Ward-2(1), Bhilai, i.e., jurisdictional officer had not issued any notice u/s.148 of the Act but had acted upon that as was issued by the ITO, Ward- 1(1), Raipur i.e. a non-jurisdictional officer on 23.03.2015. At this stage, I may herein observe that it is not the case of the department that the jurisdiction over the case of the assessee was transferred from ITO, Ward- 1(1), Raipur to ITO, Ward-2(1), Bhilai vide an order passed by the appropriate authority u/s.127 of the Act. Also, no material had been placed before me by the Ld. DR which would reveal that as the ITO, Ward-1(1), Raipur at the time of issuance of notice u/s.148 dated 23.03.2015 was duly vested with the jurisdiction over the case of the assessee, which, thereafter, had validly been transferred to the ITO, Ward-2(1), Bhilai, therefore, as per

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Section 129 of the Act the assessment framed by the latter on the basis of notice u/s.148 dated 23.03.2015 issued by the ITO, Ward-1(1), Raipur could not be faulted with. 13. On the basis of the aforesaid facts, I am of the considered view that as stated by Mr. R.B Doshi, the Ld. AR, and, rightly so, the framing of the impugned assessment u/ss.143(3)/147 dated 25.03.2016 by the ITO, Ward- 2(1), Bhilai on the basis of notice issued u/s. 148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. an officer who at the relevant point of time was not vested with jurisdiction over the case of the assessee, was devoid and bereft of any force of law. I find that involving identical facts a similar issue had came up before 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 case before the Hon’ble High Court as the notice u/s.148, dated 30.03.2019 was issued by the ITO, Ward 12(3)(1), Mumbai, i.e., a non-jurisdictional Officer, therefore, on a writ petition filed by the assessee assailing the validity of the jurisdiction that was assumed by the A.O for reopening of its case on the basis of the aforesaid impugned notice, the Hon’ble High Court had quashed the notice issued u/s.148 of the Act, 30.03.2019 for the reason that the same was issued by an A.O who at the relevant point of time had no jurisdiction over the assessee-petitioner. Also, I find that a similar view had been taken by the Hon’ble High Court of Bombay in the case of Pavan Morarka Vs. ACIT-2, (2022) 136 taxmann.com 2 (Bombay). It was observed by the Hon’ble High Court that as the A.O at Delhi who had issued notice u/s.148 of the Act had no jurisdiction over the case of the assessee who was being assessed at Mumbai, therefore, the subsequent reopening notice that was issued by the A.O at Mumbai after the case of the assessee was transferred to his jurisdiction could not be held to be in continuation of the proceedings which were initiated by the A.O at Delhi. To sum up, it was observed by the Hon’ble High Court that if an A.O who had issued notice u/s.148 was not vested with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non-jurisdictional A.O. Also, a similar view had been taken by the Hon’ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case before the Hon’ble High Court, notice u/s.148 was issued by the ITO-(IV)(1), Lucknow who at the relevant point of time had no jurisdiction over the case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s.148 of the Act, therefore, the Hon’ble High Court treating the notice u/s 148 issued by the ITO-(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O., i.e, ITO-

28 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No.64/RPR/2020

(IV)(1), Lucknow. Apart from that, a similar view had earlier been taken by the Hon’ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon’ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s.148 of the Act by him, therefore, the notice so issued would be without jurisdiction. Further, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No.84/RPR/2022, dated 29.11.2022. 14. Considering the aforesaid position of law, I find substance in the claim of the Ld. AR that the assessment framed in the case of the present assessee by the ITO-2(1), Bhilai vide his order passed u/ss.143(3)/147, dated 25.03.2016 on the basis of notice u/s.148 of the Act, dated 23.03.2015 issued by the ITO-1(1), Raipur ,i.e., a non-jurisdictional A.O, being devoid and bereft of any of force of law cannot be sustained and is liable to be vacated on the said count itself. Thus, the Ground of appeal No.1 (to the extent relevant) is allowed in terms of the aforesaid observations.” 14. On the basis of my aforesaid deliberations, I am of the considered view that as the assessment framed in the case of the present assessee by the ITO-1(2), Raipur vide order u/s.143(3)(sic) dated 31.03.2015 on the basis of notice u/s.148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional A.O, is devoid and bereft of any force of law, therefore, the same cannot be sustained and is liable to be struck down on the said count itself. Accordingly, the impugned assessment framed by the ITO-1(2), Raipur u/s.143(3)(sic), dated 31.03.2015 is quashed for want of valid assumption of jurisdiction on his part.”

As the facts and the issue involved in the present appeal remains the same as were involved in the aforementioned orders of the Tribunal in the case of Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019 dated 12.12.2022 and Chowaram Dhiwar Vs. ITO, ITA No.31/RPR/2022 dated 28.12.2022, therefore, respectfully following the same parity of reasoning, we are of the considered view that as the assessment framed in the case of the present assessee by the ACIT, Circle-4(1), Raipur vide order u/s.143(3) dated 29.03.2016 on the basis of notice issued by the ITO-1(3), Raipur i.e. a non-jurisdictional A.O is devoid and bereft of any force of law, thus, the

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same cannot be sustained and is liable to be struck down on the said count itself. Accordingly, the impugned assessment framed by the ACIT, Circle 4(1), Raipur u/s.143(3) dated 29.03.2016 is quashed for want of valid assumption of jurisdiction on his part.

Order pronounced in open court on 29th day of May, 2023.

Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 29th May, 2023 *#SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The CIT (Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G.)

30 Ravi Sherwani Vs. ACIT-4(1), Raipur ITA No.64/RPR/2020