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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
O R D E R Per Bench This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar CIT(A),1, Bhubaneswar in Appeal No.0450/16-17 for the assessment year for the assessment year 2013-14.
2. Shri K.K.Bal, ld AR appeared on behalf of the assessee and Shri K.K.Bal, ld AR appeared on behalf of the assessee and Shri K.K.Bal, ld AR appeared on behalf of the assessee and Shri S.C.Mohanty, ld SR DR appeared on behalf of the revenue. S.C.Mohanty, ld SR DR appeared on behalf of the revenue. S.C.Mohanty, ld SR DR appeared on behalf of the revenue.
The assessee has raised the following grounds: The assessee has raised the following grounds:
“1. For that the order of the forum below is arbitrary, illegal and 1. For that the order of the forum below is arbitrary, illegal and 1. For that the order of the forum below is arbitrary, illegal and unjust both in fact a unjust both in fact and law, hence liable to be quashed. nd law, hence liable to be quashed.
P a g e 1 | 20
2. For that the Assessee is not registered u/s 12AA of the Income tax Act and also never claimed any exemption u/s 11 or 12 of the Act. Therefore the assessment has been completed by ITO(Exemption) Bhubaneswar, contravening the Notification No- 52/14 dated 22.10.2014 issued by the CBDT is wholly without jurisdiction and therefore void ab initio.
3. For that the jurisdiction has been changed from ITO ward-2(4) to ITO (Exemption) Bhubaneswar without providing a reasonable opportunity of being heard in the matter. Therefore there is a violation of principles of natural justice, which makes the change of jurisdiction and subsequent proceeding illegal. 4. For that the impugned order of assessment based on mere suspicious, surmise and conjecture. The addition has been made without assigning any valid and cogent reason. Therefore the assessment is not valid and liable to be quashed. 5. For that the assessment has been completed making additions under the heads like fresh contribution to capital fund at Rs.56,03,195/-, unsecured loan at Rs.1,16,26,587/-, excess investment in fixed assets at Rs.38,35,592/-, salary payment at Rs.35,29,955/-interest payment at Rs.2,37,335/- to trusties and on vehicle loan at Rs,l,57,088/- and transportation charges at Rs.33,080/-without verifying the details submitted and material available on record. Therefore the assessment is non application of mind and liable to be quashed. 6. For that the assessee craves leave for any addition, modification or deletion of grounds of appeal either before the hearing of the appeal or at the time of hearing of the Appeal.”
4. The assessee has also filed additional grounds, as follows:
“7. For that the AO erred in not exercising his power and function conferred on him under the Act, in accordance with direction of the Board. Since the present assessment has been completed by brushing aside the mandatory instruction of the CBDT amounts to violation of provisions of law. Therefore, the assessment completed violating the provisions of law is illegal, unsustainable and null in the eye of law, hence, liable to be quashed.
P a g e 2 | 20
For that the present case has been transferred from one AO to another not subordinate to the Same Pr. CIT, after initiation of assessment proceeding by issue of Notice u/s 143(2) of the IT Act, without passing an order u/s 127(2)(a) of the IT Act. There is non compliance to the statutory requirement of law in transfer of case. Therefore the transfer of case, assumption of jurisdiction by ITO exemption and the subsequent proceeding i.e assessment is illegal and liable to be quashed.” 5. There is no memo for explaining why the additional ground, which admittedly, is a legal ground was not raised before the AO and ld CIT(A) have been filed.
In the additional ground, the assessee has raised two issues, the first being that the AO, who has passed the assessment order, did not have jurisdiction to pass the order in so far as his jurisdiction violated the circular issued by CBDT in Instruction No.52/ 2014 dated 22.10,.2014. The second issue raised is that the transfer of the assessee’s case from ITO, Ward 2(4), Cuttack to ITO (Exemptions), Ward, Bhubaneswar was in violation of the provisions of section 127. The assessee has filed a written submission, as follows:
“1. The present assessment has been completed by violating provisions of law: That Ld. Assessing officer has assessed the present assessee by brushing aside the mandatory instruction No-52/2014 dated 22nd October, 2014 of CBDT. Further Ld. Assessing has breached the mandatory instruction issued by CBDT by assessing a person who is not registered u/s 12A of the IT Act and also has not claimed exemption u/s 10,11,12 or 13 of the IT Act, thereby making the assessment order on this issue violation of provision of law. It has been held by Hon'ble Supreme court in the case of Pr. CIT Vs. S.G Asia Holdings (India) 108 Taxamman.com 213(SC). Therefore the P a g e 3 | 20 assessment is illegal and liable to be quashed. Copy of the judgement has been placed at Page-44 of the Paper Book.
The Present Assessment is contrary to the direction of CBDT: That the present assessment is wholly contrary to the direction of the CBDT contained in the notification, dated 22nd October, 2014, which are admittedly binding on even the Assessing Authority Concerned. The impugned Assessment has been made by an authority, which has no jurisdiction to make Assessment. Notification No- 52/2014 dated 22.10.2014 issued by CBDT has specifically conferred jurisdiction on the commissioner of Income tax(exemption) Hyderabad to deal with such trust which is registered u/s 12A or 12AA and claims exemption u/s 10,11,12, 13A & 13B of the Income tax Act. Since the Present Assessee is not registered u/s 12A or 12AA of the Income tax Act and also has not claimed any exemption u/s 10,11,12,13A & 13B, it does not come under the jurisdiction of ITO Exemption ward, Bhubaneswar for making assessment. This fact was brought to the knowledge of the Ld AO in courser of assessment vide order sheet entry dated 13.01.2016. Therefore the present assessment completed by ITO Exemption, Bhubaneswar by brushing aside the CBDT instruction is a violation of provisions of law which makes the assessment is wholly without jurisdiction and void ab initio. [M/s Gurukul Vs. CJT (exemption) Patna Civil writ Jurisdiction case No:9170 of 2016} 3. That the present Appeal is squarely covered under the judgement of Hon'bel Patna High court in the case of M/s Gurukul Vs. CIT (Exemption) passed in Writ jurisdiction case No-9170 of 2016: In the identical facts and circumstances the Hon'ble Patna High court has quashed the assessment treating the assessment order contrary to the direction of CBDT contained in the Notification dated 22nd October,2014, which are admittedly binding on even the assessing authority concerned. Copy of the judgement has been place in the paper Book at Page No-13 and relevant Para of the said judgment are Para-12,13,14 & 15.
The present assessment is without jurisdiction: (i). CBDT by issue of mandatory instruction No-52/2014 at column-5 specifies the cases and classes of cases to be assessed by ITO Exemption. The present assesse is not coming under the category of cases and classes specifies therein to be assessed by ITO
P a g e 4 | 20 (Exemption) Bhubaneswar. Therefore the assessment made by ITO (Exemption), Bhubaneswar is contrary to the direction of CBDT, void ab initio and liable to be quashed. Copy of the Notification has been placed at Page-6 of the Paper Book.
There is no proper compliance to the statutory requirement of Law while transferring the case from one A.O and another not subordinate to the same principal commissioner: (ii). The assessment was selected under CASS and the assessment proceeding was initiate by issue of Notice u/s 143(2) of the IT Act by ITO ward-2(4), Cuttack subordinate to CIT, Cuttack. Thereafter the case was transferred to ITO (Exemption), Bhubaneswar who is subordinate to CIT( Exemption) Hydrabad without passing an order u/s 127 of the IT Act. There is no proper compliance to the statutory requirement of law in transfer of case from one Assessing officer to another Assessing officer who are not subordinate to the same Commissioner after initiation of Assessment proceeding by issue of Notice u/s 143(2) of the IT Act. The present issue is covered under the Order of the this Hon 'ble Bench passed in ITA No- I60/CTK/2010. Copy of the said order is placed at Page-20 of the paper Book. (iii). The case of the Assessee has been transferred from ITO ward- 2(4), Cuttack to ITO(exemption) Bhubaneswar without recording the reasons, without providing an opportunity being heard and without passing an order mentioning therein the reason and the facts and circumstances under which the case was transferred. Ld. Commissioner has transferred the case by supressing and overriding the provisions of law and also violation of principles of natural justice. In support of my argument I am relying the judgement of Hon'ble Supreme court in the Ajantha Industries and others vs. Central Board of Direct taxes 102 ITR 281 (SC). Copy of the judgement has been place at page37 of the paper Book. (iv). In Deep Malhotra & others Vs. CIT & Others (2011) 334 ITR 232 (P&H) it has been held that before transferring any case from one Assessing officer to another Assessing officer not subordinate to the same Commissioner, the assesse is required to be given reasonable opportunity of hearing and after recording reason for doing so and also pass an appropriate order. It is also mandatory that after passing the order it shall be communicated to the Assesee. (v). When law mandates doing something in particular manner, that is the only manner permissible in law and no other made can be P a g e 5 | 20 considered legal { Veena Devi Kami vs ITO (2019 410 ITR 23 (Delhi) para-6} (vi). In Noorul Islam Educational Trust Vs. CIT (2016) 388 ITR 489 (SC) it has been held that for transfer of case from one A.O to another (vi). In Noorul Islam Educational Trust Vs. CIT (2016) 388 1TR 489 (SC) it has been held that for transfer of case from one A.O to another A.O who are not subordinate to same commissioner the agreement between the two commissioners is necessary. It has also been held that in the absence of disagreement can't be tantamount to agreement as visualised u/s 127(a) of the IT Act. (vii) In Parapathu Varghse Mathai Vs. Pr. CIT and others (2020) 428 ITR 79 (Bom) It has been held that a statute requires a thing to be done in particular manner, then it has to be done in that particular manner. If an order is passed without compliance to the statutory requirement it can't be sustained. Prior to the transfer of case the jurisdiction was with ITO ward-2(4), Cuttack. There is also an Assessing officer i.e ITO(exemption) ward, Cuttack for assessing the cases or class of cases claiming exemption u/s 10,11 or 12 of the IT Act and there was no need for transferring the case from Cuttack to Bhubaneswar. Therefore the change of territorial jurisdiction from ITO (Exemption ward), Cuttack to ITO ( Exemption ward) Bhubaneswar was arbitrary. The jurisdiction has been assumed by ITO (Exemption), Bhubaneswar without proper compliance to the statutory requirement of law and also there is a violation of principles of natural which makes the assessment void and deserves to be quashed. Under the above facts and circumstances it is respectfully submitted in light of ratio of the judgements cited, particularly the Judgment of Hon'ble Patna High court in the case of M/s Gurkul the assessment may be quashed and oblige.”
The revenue has also filed a counter written submission, as follows:
“In addition to relying on the assessment order and the appellate order following submissions are made. Ground 2. Assessment without jurisdiction.
P a g e 6 | 20 i. To keep the record straight, contrary to paragraph 3 of the written argument of the learned counsel, notification no. 52/2014 dated 22/10/2014 of the CBDT is silent on registration u/s 12A or 12AA and confers jurisdiction on the C.I.T. (Exemption), Hyderabad over 'All cases of persons in the territorial area specified in column (4)' of the notification only 'claiming exemption' under specified provisions of the income Tax Act irrespective of registration under the aforesaid provisions. So the fact of the assessee not having been registered is irrelevant to the issue. ii. The relevant part of the order sheet entry dated 13/01/2016 reads as follows: 'The A/R stated that the assessee does not enjoy the benefit of 12AA of IT. Act, 1961: This is not bringing to the knowledge of the Ld. AO the fact that since the assessee has not claimed any exemption it does not come under his jurisdiction for making assessment as argued by the Ld. AR in paragraph 3 of the written argument but just an innocuous statement of fact. iii. The above position of the jurisdiction of the AO not having been called in question by the order sheet entry relied on in the written argument of the Ld. AR is supported by the petition dated 17/06/2020 by the appellant through the advocate himself for admission of new grounds on legal issue (page 5 of the appellant's paper-book). As per this, this issue is contained in ground no. 2 and 3, which are new grounds and were not taken before the CIT(A). iv.The appellant, having made a return u/s 139(1), is not entitled u/s 124(3)(a) of Income tax ict to call in question the jurisdiction of the AO after one month from service of the notice u/s 143 (2)/142(1) or completion of assessment, whichever is earlier. v. By dint of s. 124(5) of Income Tax Act the AO having done the assessment has 'all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area,' i.e., areas under Bhubaneswar Municipal Corporation in the State of Odisha among other areas as per the order Memo no. JCIT(Exemp.)/BBSR/JURIS./2014-15/17-32 dated 15/11/2014 of the J.C.I.T. (Exemption), Bhubaneswar contained at page 14-16 as annexure G at sl. no. 7 of the paper-book of the Revenue. The income of the appellant accrues/arise/is received in P a g e 7 | 20 that area. This order is issued in exercise of the powers conferred by the notification no. 52/2014 dtd. 22/10/2014 relied on by the Ld, AR, among other bases. This sub-section has over-riding effect on other sub-sections of this section and any direction or order issued under section 120 by the use of the non-obstante clause. vi. The order u/s 127 of Income Tax Act is intended for transfer of cases from its legal jurisdiction in terms of orders/directions u/s 120 to another officer for administrative reasons. This provision is not meant for scenarios of only transfer of records or PAN or both to legal jurisdiction in terms of orders/directions u/s 120 from officers these are tagged with historically or due to issues of information technology. vii. The provision for opportunity of being heard in case of orders u/s 127 is not absolute but 'wherever it is possible to do so'. viii. The assessment is in substance and effect in conformity with or according to the intent and purpose of Income Tax Act. The assessment made in pursuance of the provisions of this Act shall not be invalid or shall not be deemed to be invalid merely by reason of any mistake, defect or omission in such assessment u/s 292B of Income Tax Act. ix. The claim of no exemption having been claimed may kindly be seen in the light of the way the statutory form for the return of income has been filled in. The Part B-TI: Statement of Income has been left blank without even '0' or 'nil'. In view of provisions of the law as contained in ss.124(3)(a), 124(5), 127, 292B of the Income tax Act and facts of the jurisdiction of the AO being called into question belatedly, grounds of appeal of legal nature not agitated before the first appellate authority may kindly not be admitted.”
8. The primary argument of ld AR is that the assessee is a trust which is not registered under section 12A of the Act. The assessee has not claimed exemption or deduction u/ss. 10,11,12 or 13 of the Act. The assessee is running an educational institution. The assessee had filed the return of income on 22.10.2013 showing a loss. Notice u/s.143(2) of the Act was P a g e 8 | 20 first issued on 22.10.2014 by ITO, Ward 2(4), Cuttack. Thereafter, the case was transferred from ITO, Ward 2(4), Cuttack to ITO (Exemptions), Ward, Bhubaneswar. Subsequent notice u/s.142(1) r.w.s 143(2)/129 was issued by ITO(Exemptions), Ward, Bhubaneswar on 29.12.2014. it was the submission by ld AR that as the assessee did not have registration u/s.12A of the Act nor have claimed exemption or deduction u/ss.10,11,12 or 13 of the Act, in view of CBDT Notification in regard to exercise of powers by CIT (Exemptions) and their sub-ordinates in respect of notified cases or classes in circular No.52/14 dated 22.10.2014, the assessee’s case could not have been assessed by ITO (Exemptions), ward, Bhubaneswar. Ld AR submitted that consequential assessment passed by ITO(Exemptions), Ward, Bhubaneswar is void ab-initio and is liable to be quashed. Ld AR placed reliance on the decision of Hon’ble High Court of Patna in the case of M/s. Gurukul vs CIT (Exemptions) in Civil Writ Jurisdiction case No.9170 of 2016 dated 27.10.2016, which is placed at paper book at pages 13 to 19, wherein, in paras 12 to 15, the Hon’ble High Court has held as follows:
“12. Considering the fact that impugned order of assessment has been made by Income Tax Officer-(Exemptions-). Muzaffarpur, who, in the light of the Notification dated 22nd October. 2014, has not been vested with the jurisdiction to deal with the Trust, which do not claim exemption from payment of taxes, the Income Tax Officer (Exemptions), Muzaffarpur, could not have, apparently, made any assessment of tax in the case of the present petitioner.
13. In other words, the impugned order of assessment runs wholly contrary to the directions of the CBDT contained in the Notification,
P a g e 9 | 20 dated 22"" October, 2014, which are, admittedly, binding on even the assessing authority concerned.
Because of the fact that the assessment, has impugned in the present case, has been made by an authority, which hat?90 jurisdiction to make assessment inasmuch as the authority to make assessment stood vested in the Commissioner of Income-Tax (Exemption), Patna, the impugned assessment, so made, is void ab initio cannot be regarded as a mere irregularity.
15. Left, therefore, with no other option, we hereby, in the interest of justice, set aside and quash the impugned assessment and demand notice, dated 31.03.2016, raised by the respondent- Income Tax Officer (Exemption), Muzaffarpur, with, however, liberty given to the Revenue to deal with the question of assessment of the petitioner's case, in accordance with law, in the light of the Notification, dated 22n October, 2014.”
It was the submission that the decision of Hon’ble High Court of Patna in the case of Gurukul referred (supra) was the solitary decision on this issue in the whole of the country and it had a binding precedence on the Tribunal. Ld AR placed before us a copy of the decision of Co-ordinate Bench of Mumbai ITAT in the case of ITO vs Ranisati Fabric Mills Pvt Ltd., 116 TTJ 177 (Mum) to submit that “the view of a solitary judgment of any Hon’ble High Court in the country on a particular point or issue, should be followed in its letter and spirit by all Benches of the Tribunal notwithstanding contrary views are expressed by some Benches of the Tribunal, unless there are strong reasons to deviate from the view expressed by the High Court. Otherwise, the hierarchical of judicial system would collapse”. Ld AR also placed reliance upon the decision of Hon’ble Bombay High Court in the case of Godabari Saraf, 113 ITR 589 (Bom),
P a g e 10 | 20 wherein, the Hon’ble High Court has held “until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Maharasthra, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. It was the submission that the Tribunal was duty bound to follow the decision of Hon’ble High Court of Patna in the case Gurukul (supra) and quash the impugned assessment order in so far as the assessment order passed by ITO (Exemptions), Ward, Bhubaneswar was void ab-initio.
Ld AR further submitted that the jurisdiction of the assessee’s case was transferred from the ITO, Ward 2(4), Cuttack, which came under the jurisdiction of Ld CIT, Bhubaneswar to the jurisdiction of ITO (Exemptions), ward, Bhubaneswar, who was under the jurisdiction of CIT (Exemptions), Hyderabad. It was the submission that no order u/s.127 had been passed and consequently, the change of jurisdiction was invalid, as a result of which also, the assessment is liable to be annulled. For this proposition, ld AR placed reliance on the decision of Co-ordinate Bench of this Tribunal in the case of Dillip K. Chatterjee in order dated 23.8.2018, wherein, the Tribunal following the decision of the Hon’ble Delhi High Court in the case of Valvoline Cumins Limited vs DCIT, 307 ITR 103 (Del) had held that when one AO has already exercised his jurisdiction, another AO cannot exercise his jurisdiction for the same assessee by issuing notice u/s.143(2) of the Act,, when no order u/s.127 of the Act was passed
P a g e 11 | 20 by the competent authority under that section. It was the submission that on this ground also, the assessment order is liable to be quashed.
On merits, it was submitted by ld AR that no reasoned order has been passed by the AO and that the assessee has a right to receive the reasoned order. It was the submission that even the ld CIT (A) has not passed a reasoned order. He placed reliance on the decision of Hon’ble Supreme Court in the case of Vishal Ashwin Patel vs ACIT, [2022] 136 taxmann.com 372 (SC).
In reply, ld SR DR submitted that the concept of Assessing Officer is to be understood and when the ITO (Exemptions), Ward, Bhubaneswar assumes the jurisdiction in assessee’s case, he became the AO and the ITO, Ward 2(4), Cuttack lost is status of an AO in respect of assessee’s case. It was the further submission that in view of the order No.JCIT (E)/BBSR/Juris/2014-15 dated 15.11.2014, which is placed at page 14 of Revenue’s paper Book, the Income Tax Officer (Exemptions), Ward, Bhubaneswar became the AO in respect of territorial jurisdiction under the revenue district as mentioned against the name. It was also the submission that the assessee has not challenged the jurisdiction of the AO within one month time provided in section 124(3) of the Act. It was the submission that as the assessee has not challenged the jurisdiction within the time prescribed, the question of jurisdiction cannot be gone into now. On merits, ld SR DR vehemently supported the order of the AO and ld CIT(A). It was P a g e 12 | 20 the submission that there was no compliance either of the lower authorities by the assessee.
We have considered the rival submissions.
14. In the course of arguments, a specific query had been raised to the ld. AR in respect of the additional ground filed as to whether these issues of jurisdiction has been raised before the AO or the CIT(A). It was submitted by the ld. AR that he was not the counsel who appeared before the lower authorities.
There seems to be a misconception that it is the counsel who raises the arguments before the lower authorities or the appellate authorities. A counsel follows the instructions given by the client or the assessee. A representative is authorised to appear before the authorities for efficient and competent representation. A representative or counsel has the duty only to advise the client but he follows the instructions as given by the client, therefore, whether it is one counsel or another, it is the assessee, who has to raise the issue before the lower authorities.
A reading of the orders of the lower authorities clearly shows that the issue was not raised before the lower authorities. Thus, clearly this is a fresh ground of appeal in respect of jurisdiction and in respect of the issuance order u/s.127 of the Act, which has been raised for the first time before the Tribunal. When a fresh ground is being raised, though
P a g e 13 | 20 admittedly, it is a legal ground and a ground which is competent to be raised at any appellate level, it has to be supported by reasons for non- raising such grounds before the authorities below. In the absence of valid reasons, a Tribunal/Court is entitled to reject admission of such grounds. However, as these two grounds have been raised for the first time before the Tribunal and as substantial arguments have been placed before the Tribunal, they are being adjudicated upon.
A perusal of the assessment order in the present case, clearly shows and records “The persistent non compliance on the part of the assessee.....”, which has been mentioned by the AO in page 3 para 3 of the assessment order. When this is compared with the ordersheet entries which are found in the paper book filed by the assessee at pages 57 to 61, 26 opportunities have been given by the AO right from September, 2014 to March, 2016. In September, 2014, the case was taken up for scrutiny and after five opportunities in December, 2015, the audit report and the trust deed was filed that too with reference to the telephonic discussion. This clearly shows that it is practically the AO, who has to follow up with the assessee, to plead before him. After that again non-compliance continues. Then in December, 2015, there was another compliance. Then again non- compliance from the assessee in February, 2016. On 10th March, 2016, the AR of the assessee appeared with the cash book and list of loans but no books of accounts were produced. There is also record of non-explanation
P a g e 14 | 20 was being provided. Thus clearly the assessee had been given substantial number of opportunities but there remains a continuous and as mentioned by the AO i.e. “persistent non compliance”. A perusal of the order of the CIT(A) shows that in page 3 para 2, there is again non-compliance. The appeal has been filed before the CIT(A), various grounds have been raised, there was no action from the assessee’s side to have the appeal disposed off.
Now, before the Tribunal, the assessee has raised the issue of jurisdiction and has also relied upon the decision of the Hon’ble Patna High Court for quashing of the assessment. Here, it is to be mentioned that the decision of the Hon’ble Patna High Court in the case of Gurukul (supra) is of October, 2016 and it was very much available with the assessee when the issue was before the CIT(A). The issue has not been represented before the CIT(A). The provision of Section 124(3) of the Act was discussed during the course of hearing at which point ld. Counsel submitted that the requirement of Section 124(3) of the Act that the challenge to the jurisdiction must be done within one month of the issuance of the notice, was in regard to the territorial jurisdiction as mentioned in Section 124(1) of the Act. A perusal of the Section 124(4) of the Act shows that when the legislature wants to curtail a particular provision then it uses the word ‘notwithstanding anything contained in section’ in regard to which it wants to curtail. Such curtailment is not available in Sections 124(1), 124(2) or 124(3) of the Act. A reading of P a g e 15 | 20 the provision of Section 124(3) of the Act makes abundantly clear that no person shall be entitled to call in question the jurisdiction of an AO; (i) when the assessee has filed his return under sub-section 139 of the Act, which is in the present case, is applicable to the assessee; (ii) after the expiry of one month from the date on which he was served with a notice under sub- section (1) of Section 142 of the Act, which date is 29th December, 2014; or (iii) sub-section 2 of Section 143 of the Act, which in the present case is also 29th December, 2014 or after completion of the assessment which in the present case is 11.03.2016. Thus, the assessee had an outer limit of one month from 11.03.2016 to question the issue of jurisdiction. The jurisdiction has not been challenged within the prescribed period. Now it is no more open to the assessee to challenge such jurisdiction. The decision of the Hon’ble Patna High Court in the case of Gurukul (supra) clearly holds that in view of the Circular issued by the CBDT in Circular No.52 of 14 dated 22.10.2014, the ITO(Exemption), Muzaffarpur had no jurisdiction to make the assessment in the case of the assessee therein. The issue as to whether the provisions of Section 124(3) were applied is also not coming out of the decision of the Hon’ble Patna High Court in the case of Gurukul (supra). However, what is decipherable is that the assessment order is 31.03.2016 in that case and the decision of the Hon’ble Patna High Court in the case of Gurukul (supra) is of 27.10.2016. Obviously the challenge must be within 30 days or thereabout before the Hon’ble Patna High Court. In the present
P a g e 16 | 20 case, clearly the challenges are different, insofar as the challenge has not been done within the time provided u/s.124(3) of the Act.
Here it is to be appreciated that in the decision of the Hon’ble High Court of Patna, the Hon’ble High Court has also given liberty to the revenue to deal with the question of assessment of the petitioner’s case, in accordance with law, in the light of the Notification dated 22/10/2014 in that case.
Why is the provision of Section 124(3) of the Act important is also to be understood. There are time limitations in respect of proceedings in the Income Tax Act. If an assessee is to challenge the jurisdiction after the expiry of the limitation for the proceedings under the Act, the proceedings otherwise validly done could be lost on account of want of jurisdiction of the Assessing Authority who has done the proceedings. In the present case, clearly the assessee has waited patiently for the time limitation by using the process of “persistent non compliance”. After the time limitation expired the new legal ground has been raised questioning the jurisdiction. The decision of the Hon’ble Patna High Court was available right from October, 2016. The impugned assessment year is 2013-2014. The time limitation for reopening of the assessment was available till March,2020. The appeal before the CIT(A) was instituted on 02/05/2016. The same was disposed off on 25/11/2019. The appeal was filed before the Tribunal on 26/05/2020.
P a g e 17 | 20 The additional ground being the legal ground was raised on 08/11/2020. Thus, the jurisdiction now challenged is in effect to preclude the revenue from acting in any way to protect its interest. It is to overcome such unscrupulous practices that the provisions of Section 124(3) are put in place.
Coming to the issue of requirement of the order u/s.127 of the Act, again this is a question of jurisdiction, which should have been done within the time provided u/s.124(3) of the Act. This having not been done, the assessee gets barred from challenging the jurisdiction in respect of the completed assessment order.
Coming to the merits of the additions made, through various grounds have been raised before the Tribunal, the ld. AR of the assessee has raised only the issue of non-speaking order. As has been mentioned earlier to repeat the words of the AO i.e. “persistent non compliance”, how can the AO pass a more speaking order than the order passed in the present case, when the evidences and the explanations themselves are not provided before the AO, the AO cannot put words into the mouth on behalf of the assessee and would be compelled to complete the assessment as he has understood. What is the shortfall in the reasoning given by the AO in his order is also not explained. Insofar as, a perusal of the ordersheet entry shows that as early as on 31.08.2015, the counsel was telephonically
P a g e 18 | 20 contacted in regard to the notice issued u/s.143(2) of the Act and circumstances followed thereafter intimated to JCIT(E) Range over phone. In February, 2016, a letter had also been issued to the assessee mentioning the addition to the total income in the case of non-compliance. Thus, technically a show cause notice was also been issued to the assessee. Even to that there was no compliance. In respect of the appeal before the ld. CIT(A), just because of an appeal is filed, it does not become the duty of the ld. CIT(A) to acclimate the facts which are in favour of the assessee or against the assessee and make arguments on behalf of the assessee to pass a speaking order. He is bound to pass an order on the basis of the material as available before him. It is for the assessee to represent his appeal and failure on his part cannot put the blame at the doorstep of the ld. CIT(A). This being so and also on the fact that perusal of the order of the ld. CIT(A) shows that it is the absence of any explanation from the assessee that the additions have been confirmed, we find no reason to interfere with the same.
In the result, appeal filed by the assessee is dismissed. Order dictated and pronounced in the open court on 18 /5/2022.