BMS TRADEWINGS PVT. LTD., JAGDALPUR,JAGDALPUR V. ACIT-1(1), RAIPUR, RAIPUR

ITA 539/RPR/2024

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BMS Tradewings Pvt. Ltd., engaged in trading of coal, coke products, and iron ore, filed an appeal against the order of the Commissioner of Income Tax (Appeals), Raipur, which confirmed additions made by the Assistant Commissioner of Income Tax under section 68 of the Income Tax Act, 1961. The additions pertained to unexplained cash credits received as share capital and unsecured loans. The primary legal contention was the lack of jurisdiction of the assessing officer and the improper issuance of notice under section 143(2). The Tribunal, referencing previous decisions and CBDT instructions, found the assessment and subsequent additions to be without legal basis due to jurisdictional errors.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705831 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: ACIT vs. Rajdhani Jewellers and Gems Pvt. Ltd., Ashok Devichand Jain vs Union of India, Peter Vaz vs CIT, CIT vs Ramesh D. Patel, Pr. CIT vs Shree Shoppers Ltd., ITO vs Sri Ashok Kumar Periwal, ACIT & Anr. vs. Ravneet Solutions P. Ltd. & Anr., ACIT vs Hotel Blue Moon, CIT vs Laxman Das Khandelwal, Raijendra Pathak vs. ADIT (Intl. Taxation), Balaji Enterprise vs ACIT, Cosmat Traders (P.) Ltd. vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: R. B. DOSHI
• Keywords: Invalid notice; Unexplained cash credit
• Section: 143(3)

Judgement Text

"आयकरअपीलीयअिधकरण, रायपुर Ɋायपीठ,रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR Įी पाथ[ सारथी चौधरȣ, Ɋाियक सद˟ एवं ŵीअŜण खोड़िपया, लेखा सद˟क ेसमƗ । BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 539/RPR/2024 (िनधाŊरण वषŊAssessment Year: 2017-18) BMS Tradewings Private Limited, BMS House, Motitalab Para, Jagdalpur-494001, Chhattisgarh v s Assistant Commissioner of Income Tax, Circle-1(1), Raipur [erstwhile Assistant Commissioner of Income Tax-2(1), Raipur] PAN: AACCB7797G (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरतीकीओरसे /Assessee by : Shri R. B. Doshi, CA राजˢकीओरसे /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाईकीतारीख/ Date of Hearing : 17.06.2025 घोषणाकीतारीख/Date of Pronouncement : 30.06.2025 आदेश / O R D E R Per ArunKhodpia, AM: The captioned appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeal), Raipur-3, [in short “Ld. CIT(A)”], passed on 03.10.2024, under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2017-18, which in turn arises from the order of Assistant Commissioner of Income Tax, Circle- (2)1, Raipur (in short “Ld. AR”), u/s 143(3) of the Act, dated 12.12.2019. 2 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 2. The grounds of appeal raised by the assessee are as under: 1. Ld. CIT(A) erred in confirming addition of Rs.1,13,02,975/- made by AO on account of share capital received by the appellant involving sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 2. Ld. CIT(A) erred in confirming addition of Rs. 14,00,000/- made by AO on account of unsecured loan by the appellant invoking sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 3. Assessment order passed by ACIT-2. Raipur is illegal in as much as the same has been passed by AO who did not have jurisdiction over appellant. Assessment order is liable to be quashed. Ld. CIT(A) erred in confirming additions made in illegal order. 4. Assessment order passed by ACIT- 2(1).Raipur is illegal inasmuch as no notice u/s 143(2) was issued by jurisdictional AO. Assessment order has been passed without issuance of notice u/s 143(2). 5. The appellant reserves the right to amend, modify or add any of the ground/s of appeal. 3. The brief facts of the case as emanating from the records are that the assessee is a resident company, engaged in the business of trading of coal and coke products and Iron ore. The return of income for the assessment year 2017-18 has been filed on 08.11.2017 showing the taxable income at Rs. Nil. Subsequently the case of assessee was selected for complete scrutiny under ‘CASS’. Statutory notices are accordingly issued along with questionnaire. In compliance, the assessee had filed submissions online along with supporting documents, which were examined by the Ld. AO. On verification of ITR, Audit Report, books of accounts and other records, Ld. AO have come across an issue regarding share capital / 3 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur premium received by the assessee during the year under consideration. Relevant information and clarification were sought from the assessee regarding the identity and creditworthiness of investors as well as genuineness of the transactions. Ld. AO observed that investment made in the assessee company by the investors are from cash deposits in their bank account, and the creditworthiness of the shareholders was also found to be questionable. Detailed deliberations were made by the Ld. AO and finally an addition of Rs. 1,13,02,975/- was made on account of unexplained cash credit received by the assessee under the guise of share capital and premium from various investors. Another addition qua the unsecured loan received by the assessee having similar facts and circumstances where in the creditworthiness of the lenders was not found to be established by the Ld. AO, therefore, an addition of Rs.14,00,000/- was made u/s 68 by adding back the said amount as unexplained cash credit under garb of unsecured loan received by the assessee sourced out of cash deposits by the respective lenders. With aforesaid observations and additions assessment was completed, determining assessed income of assessee at Rs 1,27,02,975/- 4. Aggrieved with the aforesaid addition, assessee preferred an appeal before the First Appellate Authority, where in the submissions of the assessee are not found convincing by the Ld. CIT(A), therefore, the 4 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur additions made by Ld. AO are sustained and appeal of assessee has been dismissed. 5. Being dissatisfied with the order of Ld. CIT (A), assessee filed the present appeal before us, which is under consideration. 6. At the outset, Shri R. B. Doshi, Authorized Representative (in short “Ld. AR”) of the assessee had requested to assail the legal grounds raised in the present appeal having firm conviction that the assessee’s case is strong on legal footing and is also covered by the decision of this tribunal in its earlier orders. Ld. AR submitted that impugned assessment order passed by the Ld. AO dated 12.12.2019 u/s 143(3) was illegal and without jurisdiction, as the same has been passed by the Ld. AO, who did not have jurisdiction over the case of the assessee, and therefore, the assessment order is liable to be quashed. In view of such facts, Ld. CIT (A) had erred in confirming the addition made based on an illegal order. The second legal contention has been raised by Ld. AR, stating that the impugned assessment is illegal, as no notice u/s 143(2) was issued by the jurisdictional AO, therefore, the assessment order is liable to be struck down on this count also. In order to support the aforesaid contentions, Ld. AR drew our attention to the copy of the assessment order and have submitted that it is a recorded fact that the income declared by the 5 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur assessee in its return was Nil, therefore, according to Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31.01.2011 issued by CBDT, the assessee’s case was to be assessed by the jurisdictional ITO, whereas the assessment order was framed by ACIT-2(1), Raipur. Ld. AR furnished before us a copy of Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31.01.2011 along with Instruction No. 6/2011 [F. No.187/12/2010- ITA-I], Dated 08.04.2011 regarding income limits for assigning the case to DCsIT / ACsIT and ITO’s. Copies of both the aforesaid Instructions are extracted hereunder for the sake of quick reference and to check its applicability: 6 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 7 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 7. On the basis of aforesaid submission, it was the argument by Ld. AR that the return income of the assessee for AY 2017-18 was less than 15 Lacs (declared for Rs. NIL), therefore, the jurisdiction over the assessee’s case was of ITO, Jagdalpur and not of ACIT, Circle-2(1), Raipur (who passed the assessment order), therefore, passing of an order by non-jurisdictional Assessing Officer itself vitiates the entire assessment proceedings and 8 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur accordingly the assessment framed u/s 143(3) dated 12.12.2019 is liable to be held as illegal and without jurisdiction, therefore, merits to be quashed. 8. Apropos the 2nd legal contentions, Ld. AR submitted that the notice u/s 143(2) was issued on 09.08.2018 by ACIT, Circle-2(1), Raipur, copy of the said notice is placed before us at page no. 55 to 58 of Assessee’s Paper Book. Further, it is submitted that notice u/s 143(2), which was to be issued by ITO, Jagdalpur within the specified time period prescribed under the statute was not issued, therefore, on this count also the assessment order passed by Ld. AO is illegal and without jurisdiction. 9. To substantiate and support the aforesaid contentions, Ld. AR placed his reliance on the following judgments: Resultant assessment order illegal and without jurisdiction. Reliance on: -  ACIT vs. Rajdhani Jewellers and Gems Pvt. Ltd. in ITA no. 79/RPR/2020 vide order dt. 24.01.2024, relevant finding at para no. 13.  Ashok Devichand Jain vs Union of India (2023) 452 ITR 43 (Born.).  Peter Vaz vs CIT (2021) 436 ITR 616 (Born.), relevant para no. 44.  CIT vs Ramesh D. Patel (2014) 362 ITR 492 (Guj.). Jurisdiction wrongly assumed. Consequent assessment order illegal and unsustainable. Reliance on: -  Ashok Devichand Jain vs. Union of India (2023) 452 ITR 43 (Bom.).  Pr. CIT vs Shree Shoppers Ltd. ITAT no. 39 of 2023 dated 15.03.2023 of Calcutta High Court 9 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur No notice u/s 143(2) by jurisdictional AO, assessment order not sustainable. Reliance on:- i) ITO vs Sri Ashok Kumar Periwal in IT A No. 339Niz/2016 order dt. 09.05.2018 Vide para no. 10.3, it was held that the AO in relation to assessee means, the AO who is entrusted with the relevant jurisdiction as per notification issued in this regard. ii) ACIT &Anr. vs. Ravneet Solutions P. Ltd. &Anr. (2017) 49 CCH 0156 Del. Trib iii) ACIT vs Hotel Blue Moon (2010) 321 ITR 362 (SC), PN 358 to 365; reaffirmed in CIT vs Laxman Das Khandelwal (2019) 417 ITR 325 (SC) iv) Raiendra Pathak vs. ADIT (Intl. Taxation) (2015) 44 CCH 0694 Jaipur Trib. It was held that the notice u/s 143(2) was required to be issued by the AO having jurisdiction over the assessee. As per the definition of Assessing Officer, the assessing officer is the officer who is vested with jurisdiction as per order under sub section (1) or (2) of section 120 of the Income Tax Act. Notice u/s 143(2) issued by non-jurisdictional AO cannot be considered as a notice issued by Assessing Officer. v) Balaii Enterprise vs ACIT (2021) 187 ITO 111 (Gau.) It was held that since the notice was issued by the AO who did not have jurisdiction, it is non-est in the eyes of law and therefore, all subsequent action is null in the eyes of law because it is ab initio void. vi) Cosmat Traders (P.) Ltd. vs ITO {2021) 189 ITD 504 (Kol.) The jurisdiction over the assessee fell with ITO Ward-7(1), Kolkata. Notice u/s 143(2) was issued by ITO, Ward-6(1), Kolkata who was non jurisdictional AO. After considering several decisions on the subject, it was he]d by the Tribunal that notice u/s 143(2) was issued by AO who did not have jurisdiction over the assessee and therefore, the resultant assessment is illegal. 10. In terms of aforesaid submissions, it was the prayer by Ld. AR that the assessment framed u/s 143(3) in the present case dated 12.12.2019 is without jurisdiction, therefore, the same cannot be sustained under the eyes of law and the same is liable to be struck down. 10 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 11. Ld. Sr. DR representing the revenue on the other hand have vehemently supported the order of revenue authorities. Ld. Sr. DR submitted that there was a communication dated 15.11.2014 issued by JCIT, Range-2 regarding jurisdiction of the AO’s copy of which is available page no. 50-54 of the APB. It was the contention by Ld. Sr. DR that according to the said notification issued by JCIT, Range-2, Raipur the assessee in present case falls under the jurisdiction of DCIT / ACIT-2(1), Raipur, therefore, the assessment is rightly framed by the Ld. AO, i.e., ACIT, Circle-2(1), Raipur. It was the prayer that the assessment is validly framed by the jurisdictional Assessing Officer, therefore, the same cannot be treated as illegal or without jurisdictional, accordingly, the contentions raised by the Ld. AR being bereft of merits are liable to be rejected. 12. We have considered the rival submissions perused the material available on record and the jurisprudence relied upon by the Ld. AR. Admittedly, Ld. AR’s contention assailing the legal issues found to be convincing of the decision that the assessment was framed by the Ld. ACIT, Circle-2(1), Raipur, who is barred by the Instructions No. 01/2011 issued by CBDT according to which the cases having declared income / loss below Rs. 20 Lacs for the corporate assessee’s (Mofussil area’s) are to be assessed by the jurisdictional ITO’s and such assessee’s having 11 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur declared income more than Rs. 20 lacs are to be assessed by ACs/ DCs. Further, the clarification was issued by CBDT by issuing another Instruction No. 6/2011 to the CCIT / DGIT to adjust the aforesaid limits by an amount of Rs. 5 lacs to ensure that the workload is equitably distributed amongst the assessing officers after recording reasons in this regard. In compliance to the aforesaid instructions a communication was issued on 13.05.2011 by the CCIT, Raipur and the limits are reduced by 5 lacs, accordingly, the limit for declared income/loss referred to in the Instruction No. 1/2011 by the CBDT has been reduced to Rs. 15 lacs instead of Rs. 20 lacs for corporate returns, effective from 01.06.2011. As nothing is brought on record by the revenue, it can be safely observed that there was no further communication / clarification or instruction issued by the CCIT, Raipur in this respect, thus, the Instruction dated 30.05.2011 shall apply its applicability in the present case. 13. Apropos, the contention raised by the Ld. Sr. DR that the case of assessee is under the jurisdiction of ACIT-2(1), Raipur, we observed that the notification issued by the JCIT, Range-2 dated 15.11.2014 clearly states that the cases of persons being registered under the Companies Act, 1956 having their registered office falling within the territorial jurisdiction of ITO-Jagdalpur are to be assessed by ACIT-2(1), Raipur. Further, there is a 12 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur rider in the said notification that the income / loss of such assessee’s should be above Rs. 15 lacs. Since the returned income of the assessee as per ITR filed, copy of which is placed before us at page no. 47-49 of the APB, is declared at “0” (Zero) i.e., NIL, which is less than Rs. 15 Lacs, therefore, the notification issued by JCIT, Range-2, Raipur dated 15.11.2014 does not suggest that the assessment in the present case is under the jurisdiction of ACIT, Range-2(1), Raipur. We, therefore, are of the considered view that the contention raised by the Ld. Sr. DR cannot be acceded to, therefore, the same cannot rescue the case of revenue. 14. On the aforesaid aspect, we find substance in the contention raised by the Ld. AR that the assessment has been framed by the Ld. ACIT, Circle-2(1), Raipur without jurisdiction as he does not hold jurisdiction over the case of assessee being lacks authority to do so, on account of the instructions issued by CBDT and further communicated by the CCIT (referred to supra). Under the identical facts and circumstances, the issue in hand has been deliberated at length and was decided by this tribunal in the case of ACIT vs. M/s Rajdhani Jewellers and Gems Pvt. Ltd. in ITA No. 79/RPR/2020 for the AY 2015-16 vide order dated 24.01.2024, wherein the relevant findings of the tribunal are extracted hereunder to be adopted in the present matter: 13 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 21. We have considered the rival submissions, perused the material available on record and the case laws. Admittedly, in the present case the mandatory notice u/s 143(2) for initiating the assessment proceedings was issue by ITO Ward 1(1) vide notice dated 13.04.2016, who at relevant point of time was not vested with valid jurisdiction over the case of the assessee, since the cases having declared income above Rs.15,00,000/- in the case of corporate assessee’s are under the jurisdiction of ACIT/DCIT, whereas the assessee’s returned income was a loss of Rs.(43,88,925/-), which as discussed hereinabove is more than Rs.15 Lac, since the income includes losses or the losses are at par with income. 22. For the sake of clarity, regarding the violation in adhering to the instruction of CBDT vide instruction no. 1/2011 dated 31.01.2011, we may note that, in the instruction no. 01/2011, the limits in terms of income declared for assigning the cases to AO’s have been revised, the limits prescribed by CBDT for corporate returns was further reduced from Rs.20 Lac to Rs.15 Lac by the Ld. CCIT, Raipur (in exercise as directed by the CBDT vide instruction no. 6/2011 dated 08.04.2011), vide communication dated 30.05.2011, effective from 01.06.2011, to revisit the limits decided by CBDT in order to adjust the same by an amount up to Rs.5 lacs to ensure that the work load is equitably distributed amongst the Assessing Officers after assigning reason. Copy of the communication dated 30.05.2011 issued by Ld. CCIT, Raipur, is extracted as under, for the completeness of facts: 14 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 15 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur 23. In view of aforesaid CBDT’s instructions followed by communication by the Ld. CCIT, Raipur, it is held that the first notice u/s 143(2) issued by the ITO Ward-1(1), Raipur, was clearly against the mandate of instructions issued. Regarding, the subsequent notice u/s 143(2) issued by the jurisdictional AO i.e., ACIT-4(1),Raipur on 28.07.2017, the same cannot be considered as a valid notice, which was issued beyond the specified date under the provisions of Sec. 143(2), which was expired on 30.09.2016. 15. In backdrop of aforesaid observations, respectfully following the decision of coordinate bench of ITAT, Raipur, in the case of M/s Rajdhani Jewells (supra), which has not been contradicted of rebutted by the revenue taking support from any judicial pronouncement or by way of producing any material, evidence or submission to dislodge the aforesaid decision, adverting to the facts of the instant case, wherein admittedly, the assessment u/s 143(2) has been framed by the ACIT-2(1), Raipur, on 12.12.2019, who was not vested with valid jurisdiction over the case of the assessee, also the notice u/s 143(2) dated 09.08.2018 was issued by ACIT, Circle-2(1), Raipur, having no authority to do so, being ineligible as per communication by the CCIT dated 30.05.2011, which was issued incompliance and adherence to the Instructions No. 1 & 6/2011 issued by CBDT. Further, there is no evidence brought on record by the revenue that, a valid notice u/s 143(2) was ever issued by the Jurisdictional AO i.e., ITO- Jagdalpur, in substance, the assessment framed on the foundation of an 16 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur invalid notice u/s 143(2) is liable to be struck down. In view of such facts and circumstances, the assessment order framed u/s 143(3) dated 12.12.2019 cannot survive. 16. We, therefore, in terms of our aforesaid observations, are of the considered view that assessment order passed u/s 143(3) dated 12.12.2019 by ACIT, Circile-2(1), Raipur, on the basis of proceedings initiated vide an invalid notice issued u/s 143(2) dated 09.08.2018 by ACIT, Circle-2(1), Raipur, who was not vested with valid jurisdiction over the case of the assessee, in contravention to the instructions issued by the CBDT and further communication by the CCIT, Raipur, cannot be sustained and therefore, the same is liable to be quashed, thus, we do so. 17. Since we have quashed the assessment for want of valid assumption of jurisdiction by the AO, therefore, we refrain from adverting to and to deal with the grounds of appeal raised by the assessee in the present appeal, which, therefore, are left open. 18. In the result appeal of the assessee stands allowed, in terms of our aforesaid observations. 17 ITA No. 539/RPR/2024 BMS Tradewings Pvt. Ltd., Jagdalpur vs. ACIT-1(1), Raipur Order pronounced in the open court on 30/06/2025. Sd/- (PARTHA SARATHI CHAUDHURY) Sd/- (ARUN KHODPIA) Ɋाियकसद˟ / JUDICIAL MEMBER लेखासद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 30/06/2025 Vaibhav Shrivastav आदेशकीŮितिलिपअŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकरअपीलीयअिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ/ The Appellant- BMS Tradewings Pvt. Ltd., Jagdalpur 2. ŮȑथŎ/ The Respondent-ACIT-1(1), Raipur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीयŮितिनिध, आयकरअपीलीयअिधकरण,रायपुर/ DR, ITAT, Raipur 5. गाडŊफाईल / Guard file. // सȑािपत Ůित True copy // "