DY. COMMISSIONER OF INCOME TAX (EXMP), GHAZIABAD V. HAPUR PILKHUWA DEVELOPMENT AUTHORITY, HAPUR

ITA 5148/DEL/2024

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314415 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL SINGH
• Assessee Lawyers: KAPIL GOEL
• Keywords: Competent authority
• Section: 147; 148; 142(1); 11; 12A; 12

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 5148/DEL/2024 A.YR. : 2013-14 DCIT (EXEMPTION), ROOM NO. 105, 1ST FLOOR, CGOH, KAMLA NEHRU NAGAR, GHAZIABAD Vs. HAPUR PILKHUWA DEVELOPMENT AUTHORITY PREETI VIHAR, DELHI ROAD, UTTAR PRADESH (PAN: AAALH0051L) (Appellant) (Respondent) Date of hearing : 01.05.2025 Date of pronouncement : 07.05.2025 ORDER PER SHAMIM YAHYA: AM This appeal filed by the Revenue is directed against the order dated 27.08.2024 passed by the NFAC, New Delhi in relation to assessment year 2013-14 on the following grounds:- i) The Ld. CIT(A) has erred in law and facts in cancelling the assessment order that in first para of the assessment order it is clearly mentioned that on change of incumbent, another notice u/s. 142(1) dated 19.02.2016 was issued to the assessee fixing the date for compliance on 25.02.2016, in compliance to these notices, Shri Manoj Kumar Jain, FCA/ Authorised Representative of the assessee, attended the proceedings and furnished details / explanations. The case was discussed with him. Assessee by Dr. Kapil Goel, Adv. Department by Shri Surender Pal Singh, CIT(DR) 2 ii) The Ld. CIT(A) has erred in law and facts in cancelling the assessment order that the assessee has not raised objection during the assessment proceedings and appears on 25.02.2016 and 04.03.2016 in consequence of notices issued u/s. 142(1) dated 19.02.2016. iii) The Ld. CIT(A) has erred in law and facts in cancelling the assessment order without considering the merit of the case. 2. Brief facts of the case are that the assessee company is engaged in development work on behalf of the State of UP. The assessee is registered under section 12A of the Act. The assessee filed its return of income on 27.09.2013 declaring NIL total income by claiming the income exempt as per the provisions of section 11 & section 12 of the Act. The case of the assessee was selected for scrutiny under CASS statutory notices u/s. 143(2) and section 142(1) of the Act were issued and served upon the assessee which were replied by the assessee. AO proceeded to compute the income of the assessee by noting as under:- “The AO added a sum of Rs. 16,70,62,031/- being the amount credited to the “Infrastructure Fund” and carried to the Balance Sheet instead of crediting to the Income & Expenditure Account by the appellant. The AO further computed the profit from sale of properties by the appellant during the relevant year at Rs. 15,48,64,803/- based on cost of properties determined in AY 2012-13 on failure of the appellant to provide such cost to the AO. Thus, the AO made a total addition of Rs. 32,19,26,834/- (Rs. 16,70,62,031/- plus Rs. 15,48,64,803/-) to the declared income over expenditure of Rs. 1,98,70,965/- which was also treated by the 3 AO to be taxable in the hands of the appellant. AO thus assessed the total income of the appellant for the year at Rs. 34,17,97,800/-. 3. Against the above order, assessee preferred the appeal before the CIT(A), who vide his order had allowed the appeal of the assessee on the jurisdictional issue, by cancelling the jurisdiction and deleted the additions. The relevant findings of the Ld. CIT(A) in this regard reads as under:- “7. It is seen from the assessment order that there has been a change of incumbent and upon such change a notice u/s 142(1) dated 19/02/2016 was issued. The impugned assessment order has been passed by Joint Commissioner of Income Tax, Exemption Range, Gaziabad. From Letter dated 13.11.2014, issued by DGIT, (Exemptions), New Dehi vide F No.DGIT(E)/2014-15/1416, it is seen that cases involving income declared up to Rs. 10.00 crore in Mofussil (Non- Metro) places shall be assessed by ITO and cases involving income declared above Rs. 10.00 crore shall be assessed by AC/DCIT w.e.f. 15/11/20014. Vide point no.2, the said Letter dated 13.11.2014, issued by DGIT, (Exemptions), New Dehi also says that:- \"2. In addition, CIT(E) may transfer cases u/127 so as to achieve equitable distribution of work load without causing administrative inconvenience and technical difficulties\" The appellant contends that as per CBDT notification, only DCIT (Exemption) and ITO (Exemption) are empowered to make the assessment meaning thereby JCIT/ Additional CIT (Exemption) are not empowered to do assessment proceedings under section 120 of the Act and consequently, order passed by JCIT Exemption Range, Gaziabad is without jurisdiction. 8. In the instant appellate proceedings, while elaborating Ground No.2 of Appeal, the appellant states under:- \"Earlier Appellant is assessed by Additional CIT, Range-2 Ghaziabad. Later on, powers of Range Heads to make the assessment was withdrawn by CBDT and case were transferred DCIT/ACIT 4 having jurisdiction over the appellant and first notice for selection of case under scrutiny on 16/09/2014 was issued by ACIT-Circle-2 Ghaziabad. (Copy of notice is enclosed and marked as Annexure - A). CBDT vide notification dated 15/11/2014, exercising the powers under section 120 of the Income Tax Act, 1961 created Chief Commissioner of Income tax (Exemption), Commissioner of Income tax (Exemption) and various Exemption Circle/ ITO offices. Copy of notification is enclosed and marked as Annexure - D) Chief Commissioner of Income tax (Exemption vide order dated 15.11.2014 further assigned the cases between DCIT/ACIT and ITO. (Copy of order issued by CCIT-Exemption is enclosed and marked as Annexure - E). Appellant falls under the jurisdiction of Commissioner of Income Tax (Exemption) Lucknow. On the basis of jurisdiction order passed by CBDT, assessment for A.Y. 2012-13 was completed by DCIT-Circle (Exemption) Ghaziabad. Assessment proceedings for A. Y. 2013-14 i.e. year under consideration was initiated by ACIT-Circle-2 Ghaziabad as stated above. Subsequently, notice under section 142(1) of the Act was issued by DCIT-Circle Exemption Ghaziabad. (Copy of notice is enclosed and marked as Annexure - B). On 19/02/2016, a notice under section 142(1) of the Act was issued by Joint Commissioner of Income tax (Exemption Range), Ghaziabad. (Copy of notice is enclosed and marked as Annexure - C). On 16/03/2016, assessment order had been passed by JCIT(Exemption), Ghaziabad. Which is without jurisdiction and null and void. As per CBDT notification, only DCIT (Exemption) and ITO (Exemption) are empowered to make the assessment meaning thereby JCIT/ Additional CIT (Exemption) are not empowered to do assessment proceedings under section 120 of the Act. In this connection, reliance is placed on following case laws:- * City Garden v. Income-tax Officer, Ward-1, Sri Ganganagar (2012] 21 taxmann.com 373 (Jodh.) Hon' ble JODHPUR BENCH of ITAT. 5 * M.I. Builders (P.) Ltd. v. Income-tax Officer, 1(1), Lucknow [2008] 115 ITD 419 (LUCK.) The above judgment has been affirmed In the case of Commissioner of Income-tax v. M.I. Builders (P.) Ltd (2014) 349 /TR 271 Hon ble Allahabad High Court (jurisdictional High Court)\" 9. It is not clear from the assessment order, as to whether the case of the appellant was transferred by CIT(E) to JCIT Exemption Range, Ghaziabad by an order passed u/s 127 of the Act. Accordingly, a remand report was called from the AO on this matter requisitioning copy of order u/s 127 of the Act the contents of which are reproduced below:- \"1.In this case the appellant has contended that Assessment order passed by JCIT(Exemptions), Gaziabad is without jurisdiction in view of Letter dated 13.11.2014, issued by DGIT, (Exemptions), New Dehi vide F No. DGIT(E)/2014-15/1416, which states that cases involving income declared up to Rs. 10.00 crore in Mofussil (Non- Metro) places shall be assessed by ITO and cases involving income declared above Rs. 10.00 crore shall be assessed by AC/DCIT w.e.f. 15/11/20014 and in the instant case, the order has been passed by JCIT(Exemptions) who is not empowered at all to make assessment. 2. Further, the said Letter dated 13.11.2014, issued by DGIT, (Exemptions), New Dehi vide point no.2 therein says that:- \"2.In addition, CIT(E) may transfer cases u/127 so as to achieve equitable distribution of work load without causing administrative inconvenience and technical difficulties\" 3. You are directed to offer your comments on above contention of the appellant. A copy of Order u/127 if any should also be attached.\" The AO has not submitted his remand report in spite of reminder from this office. 10. The case of the appellant is covered by the decision of Co- ordinate Bench of ITAT Kolkata in the case of Hirak Sarkar vs. ACIT, Circle-23(1). Hooghly in ITA No. 850/Kol/2019 for AY 2011-12 dated 6 12.08.2021. The operative part of the said judgment is reproduced as under:- \"8. A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from ITO, Ward-23(3), Hooghly to ACIT, Circle-23(1), Hooghly. Even, there is no document on the file that the ACIT, Circle-23(1), Hooghly had ever recorded any reasons to form belief that the income of the assessee has escaped assessment nor did he issue any notice u/s 147 of the Act. On the other hand, the ITO, Ward-23(3), Hooghly had recorded the reasons for reopening of the assessment and had issued notice u/s 148 of the Act, but did not proceed further with the framing of assessment. Under the circumstances, the assessment framed by ACIT, Circle-23(1), Hooghly, is bad in law on two counts, firstly he did not have any pecuniary jurisdiction to frame the assessment and secondly, he himself did not form any befief that the income of the appellant has escaped assessment nor did he issue notice u/s 148 of the Act which was sine qua non to assume jurisdiction to frame to assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal in ITA No.2517/Kol/2019 and Others vide order dated 03.02.2021, wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. ….” (Emphasis added) 11. In the case of the appellant, the appellant contends that Notice u/s 143(2) of the Act was issued to the appellant by DCIT(Exemptions) on 16.09.2014, Further notice u/s 142(1) was also issued by DCIT (Exemptions) on 16.11.2015 along with detailed questionnaire. The assessment order says “….and thereafter upon change of incumbent, another notice u/s 142(1) dated 19.02.2016 was 7 issued to the appellant fixing the date for compliance on 25.02.2016.” and thus, assessment order is silent about issuance of fresh notice u/s 143(2) upon change of incumbent and also about passing of order u/s 127 of the Act. The appellant vide statement of facts to the appeal memorandum states \"JCIT Exemptions Ghaziabad issued notice under section 143 2 and 142 1 of the Act\" From the above, one thing is clear that initially DCIT(Exemptions) commenced the assessment proceedings and thereafter, the case was taken up by JCIT(Exemptions) and finally, the order was passed by him. On the issue of fresh notice u/s 143(2) upon change of incumbent, the appellant says it was issued by JCIT(Exemptions) but the assessment order is silent on this issue. 12. In this case, the appellant has not raised the question of validity of jurisdiction before the AO in assessment proceedings and participated in assessment proceedings and thus it is important to examine as to whether provisions of section 292BB comes to the rescue of the department. Hon'ble Supreme Court in the case of CIT vs. Laxman Das Khandelwal [2019] 108 taxmann.com 183 (SC), on this issue has held as follows:- “9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the appellant. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. 8 It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself.\" (Emphasis added) 13. in view of the fact that there was a change in jurisdiction of the case of the appellant from DCIT(Exemptions) to JCIT(Exemptions), Ghaziabad, and the revenue has failed to bring/show any evidence that any order u/s 127 of the Act was passed for such transfer of jurisdiction, the assumption of jurisdiction by JCIT(Exemptions), Ghaziabad is not valid. 14. In view of the above facts and circumstances of the case and also in view of settled legal position as discussed above I hereby hold that order passed by JCIT(Exemption), Ghaziabad is without jurisdiction and deserves to be cancelled.” 4. Against the above order, Revenue is in appeal before us. 5. We have heard both the parties and perused the records. Ld. DR has submitted that he would argue the case on the merits of the case, because the AO has passed a reasonable order. However, Ld. AR for the assessee stated that Ld. CIT(A) has cancelled the assessment order on the jurisdiction issue itself and has not gone into the merits of the case, hence, he submitted that this appeal need not be adjudicated on merits. Upon careful consideration, we find considerable cogency in the aforesaid submissions of the Ld. Counsel for the assessee. We note that Ld. CIT(A) has passed the correct order and hence given a finding that there was change in jurisdiction of the case from DCIT (Exemptions) to JCIT (Exemptions), Ghaziabd and Revenue has failed to bring/ show any evidence that any order u/s. 127 of the Act was passed for such transfer of jurisdiction. Hence, he held that assumption of jurisdiction by JCIT (Exemptions), Ghaziabad is not valid. This finding of the Ld. CIT(A) remained uncontroverted. In this view of the matter, we hold the case law relied by the Ld. CIT(A), Delhi and the findings of the Ld. CIT(A) and are quite correct, 9 therefore, we do not find any infirmity therein, hence, no interference is required on our part. Accordingly, we uphold the Ld. CIT(A)’s finding wherein, it was held that assumption of jurisdiction by JCIT (Exemptions), Ghaziabad is not valid and deserve to be cancelled. We hold and direct accordingly. 6. In the result, appeal filed by the revenue stands dismissed. Order pronounced on 07/05/2025. Sd/- (SUDHIR PAREEK) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER “SRBHATNAGAR” Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "