SHRI SHRI SUDHIR KUMAR AGRAWAL, DURG, DURG(CG) V. THE INCOME TAX OFFICER, WARD-2(2), BHILAI, BHILAI(CG)

ITA 158/BIL/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0620 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Question of law; Cost of acquisition; Competent authority
• Section: 143(3); 142(1); 292BB; 143(2); 192

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.158/RPR/2017 Ǔनधा[रण वष[ / Assessment Year : 2012-13 Sudhir Kumar Agrawal, Prop. of M/s. R.C. Agrawal & Co. H No.28, Malviya Nagar, Durg (C.G.) PAN : ACGPA8265P .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-2(2), Bhilai (C.G.) ......Ĥ×यथȸ / Respondent Assessee by :Smt. Laxmi Sharma, CA S/shri Sunil Kumar Agrawal & Vimal Agrawal, CA Revenue by :Shri G. N. Singh, Sr. DR स ु नवाई कȧ तारȣख / Date of Hearing : 26.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 17.10.2022 2 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 10.01.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.03.2015 for assessment year 2012-13. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld. AO in taking the share of the assessee in sold property at 50% instead of 11% as claimed by the assessee. 2. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld. AO of taking sale consideration of Rs.2,69,43,000/- in place of Rs.2,61,00,000/- (i.e. actual sale consideration) in computing the long term capital gain u/s.48. 3. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld. AO of not allowing the claim of stamp duty expense of Rs.22,83,000/- in computing the long-term capital gain u/s.48. 4. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld. AO of not allowing the claim of cost of acquisition and cost of improvement totalling to Rs.30,04,144/- incurred in different years, in computing the long-term capital gain u/s.48. 5. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld.AO of not allowing the claim of Rs.14,75,197/- u/s.54F made by the assessee. 6. That the ld CIT(A) has erred in facts as well as in law, in not adjudicating the matter regarding the claim of home loan interest of Rs.17,51,509/- u/s.24(b) under the head income from house 3 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 property, in spite of having all the material on records and referring the matter to the file of the A.O. 7. That the ld. CIT(A) has erred in facts as well as in law, in confirming the action of the ld. AO in increasing house property income from 11% to 50%. 8. The assessee craves leave to add, urge, alter, modify and withdraw any ground/grounds before or at the time of hearing of the appeal.” The assessee has also raised before us an additional ground of appeal, as under: “1. On the facts and circumstances of the case and in law, the ld. AO i.e. ITO-2(2) Bhilai has passed order u/s.143(3) dt.30-3-2015 who was not having pecuniary jurisdiction to make assessment u/s.143(3) for A.Y.2012-13 since ‘returned income’ shown at Rs.19,07,440 as per CBDT Instruction No. 1/2011 dt. 31.01.11 which is binding on IT authorities u/s.119; assessment made u/s.143(3) DT. 30.03.2015 BY ‘non jurisdictional A.O’ is invalid, bad in law, non-est and is liable to be quashed.” 2. Succinctly stated, the assessee who is engaged in the business of trading in fans, tyres & electronic items had e-filed his return of income for A.Y 2012-13 on 29.03.2013, declaring an income of Rs.19,07,440/-. Subsequently, the case of the assessee was selected for scrutiny assessment and notice u/s.143(2) of the Act dated 24.09.2013 was issued by the Dy. CIT-1, Bhilai. 3. Notice u/s.142(1) of the Act, dated 20.08.2014 fixing the hearing of the case for 26.08.2014 was thereafter received by the assessee from the Dy. CIT, Circle-1, Bhilai. Subsequent thereto the assessee was in receipt of notice(s) u/s.143(2) and u/s.142(1), dated 03.03.2015 from the Income-Tax 4 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 Officer, Ward-2(2), Bhilai a/w. a query letter of even date. Thereafter, the Income-Tax Officer, Ward-2(2), Bhilai framed the assessment vide his order passed u/s.143(3), dated 30.03.2015 determining the income of the assessee at Rs.35,59,694/- a/w. Long term capital gain (LTCG) of Rs.1,34,71,500/- on transfer of certain land. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) who after deliberating at length on the multiple issues therein involved partly allowed the same. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. Before proceeding any further we shall first deal with the maintainability of the additional ground of appeal that has been raised before us. Ostensibly, the assessee by raising the additional ground of appeal has sought our indulgence for adjudicating the sustainability of the assessment order passed by the Income-Tax Officer, Ward-2(2), Bhilai u/s.143(3), dated 30.03.2015. It is the claim of the assessee that as the Income-Tax Officer, Ward-2(2), Bhilai pursuant to the CBDT Instruction No.1/2011, dated 31.01.2011 was not vested with the pecuniary jurisdiction over the case of the assessee for the year under consideration i.e AY 2012- 13, therefore, the impugned assessment so framed by him cannot be 5 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 sustained. As the adjudication of the aforesaid issue involves purely a question of law which would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 7. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 8. As the assessee has assailed the validity of the jurisdiction assumed by the Income-Tax Officer, Ward-2(2), Bhilai for framing the impugned assessment, therefore, we shall first deal with the same. It is claim of the Ld. Authorized Representative (for short “AR”) for the assessee that as the Income-Tax Officer, Ward-2(2), Bhilai was not vested with the pecuniary jurisdiction over the case of the assessee for the year under consideration, therefore, the assessment order passed by him u/s.143(3) dated 30.03.2015 cannot be sustained and is liable for being struck down on the said count 6 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 itself. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that the CBDT Instruction No.1/2011, dated 31.01.2011 w.e.f 01.04.2011 [F.No.187/12 /2010-IT(A-I)] had revised the monetary limits and specified the pecuniary jurisdictions which would be vested with the Assessing Officers i.e. ITOs /ACs/DCs. It was submitted by the Ld. AR that pursuant to the CBDT Instruction No.1/2011, dated 01.04.2011 that was applicable to the case of the assessee for the year under consideration i.e. A.Y 2012-13 wherein notice u/s.143(2) was issued on 24.09.2013, the pecuniary jurisdiction in a case of a non-corporate assessee located in a mofussil area was on the basis of returned income split into two parts, viz. (i). a non-corporate assessee with an income declared upto Rs.50 lacs would fall within the jurisdiction of the Income-Tax Officer (ITO); and (ii) a non- corporate assessee with an income declared above Rs.15 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. 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 2012-13, declaring an income of Rs.19,07,440/-, therefore, pursuant to the aforesaid CBDT Instruction No.1/2011 (supra) the jurisdiction over his case was vested with the Dy. CIT, Circle-1, Bhilai. It was submitted by the Ld. AR that though the notice u/s. 143(2), dated 24.09.2013 was rightly issued by the 7 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 Dy. CIT, Circle-1, Bhilai i.e. the A.O who was vested with the requisite jurisdiction over the case of the assessee, but the assessment thereafter had wrongly been framed by the Income-Tax Officer, Ward-2(2), Bhilai i.e. an officer who pursuant to the aforesaid CBDT Instruction No.1/2011 (supra) was beyond doubt divested of his jurisdiction over the case of the assessee for the year under consideration. It was averred by the Ld. AR that now when the assessment order u/s.143(3), dated 30.03.2015 had been passed by the Income-Tax Officer, Ward-2(2), Bhilai, an officer who was not vested with jurisdiction over the assessee’s case for the year under consideration, therefore, the same 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 could not be sustained and were liable to be struck down had relied on a host of judicial pronouncements as under: Sr. No. Particulars 1. Anderson Printing House PL (2021)134 taxmann.com 4(Kol-Trib), dated. 28-10- 2021 2. Hirak Sarkar (2021) ITA No.850/Kol/2019 (Kol-Trib), dated.12-8-2021 3. Bhagyalaxmi Conclave PL (2021) ITANo.2517/Ko1/2019 (Kol-Trib) dated 03- 02-2021 4. Hillman Hosiery Mills PL(2021) ITA No.2634/Ko1/2019 (Kol-Trib),dated 12- 01-2021 5. Khirod Kumar Pattnaik (2020) ITA No.380/Ctk/2019 (Ctk-Trib) dated 10-12- 2020. 8 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 6. Arti Securities & Services (2020) ITANo.553/Lkw/2018 (Luck-Trib) 06-11- 2020 7. Dipti Sahana (2020) ITA No.2202/Ko1/2019 (Kol-Trib) dt. 29-05-2020 8. Proficient Commodities Pvt. Ltd. (2020) ITA 1346/Ko1/2016 (Kol-Trib) dated 18-3-20 9. Shaikh Akhtar Hossain (2020) ITA No.2572/Ko1/2019 (Kol-Trib) dated 18-03- 2020. 10. Soma Roy (2020) ITA No.462/Kol/2019 (Kol-Trib) dt. 08-01-2020. 11. Sukumar Ch. Sahoo (2017) 60 ITR (T) 225 (Kol-Trib) dt.27-09-2017 12. Krishnendu Chowdhury (2017) 78 taxmann.com 89 (Kol-Trib) date18-11-2016 9. It was further submitted by the Ld. AR that as the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011 was binding on the department, therefore, there was no escape from the same on its part to justify the assessment framed by an officer who pursuant to the said binding instruction was not vested with the requisite jurisdiction for framing the assessment in the case of the assessee. The Ld. AR in support of his aforesaid contention that the CBDT Circulars/Instructions are without choice binding upon the department had relied on the judgments of the Hon’ble Supreme Court in the case of UCO Bank Vs. CIT (1999) 237 ITR 9 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 889(SC) and Commissioner of Customs Etc. Vs. Indian Oil Corporation Ltd & Anr. (2004) 267 ITR 272 (SC). On a specific query by the bench as to whether the 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 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)/142(1), dated 03.03.2015 by the Income-Tax Officer, Ward-2(2), Bhilai, 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 howeverwas not the issue involved in the present case, therefore, the assessee remained under no obligation to have called in question the jurisdiction of the Income-Tax Officer, Ward-2(2), Bhilai on receipt of notice(s) u/ss.143(2)/142(1), dated 03.03.2015 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, 10 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 by the Ld. AR that as in the present case the assessment had been framed by a non-jurisdictional A.O, therefore, the same de hors lack of inherent jurisdiction with the latter was invalid and non-est, and thus, liable to be struck down on the said count itself. 10. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the A.O having the requisite jurisdiction over the case of the assessee i.e. Dy. CIT, Circle-1, Bhilai had rightly issued notice u/s.143(2) of the Act, dated 24.09.2013, which thereafter had culminated into an order u/s.143(3), dated 30.03.2015, therefore, no infirmity did emerge from the same. Adverting to the fact that while for the assessment proceedings were initiated by the Dy. CIT, Circle-1, Bhilai vide notice issued u/s.143(2), dated 24.09.2013 but assessment was thereafter framed by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s.143(3) dated 30.03.2015, it was submitted by the Ld. DR that as both the officers were 11 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 vested with concurrent jurisdiction over the assessee, therefore, the assessment having been validly framed could not be struck down as had been canvassed by the assessee’s counsel. 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 returns Upto Rs.20 lacs Above Rs.30 lacs Upto Rs.30 lacs Above Rs.30 Lacs Non-corporate returns Upto Rs.15 lacs Above Rs.15 lacs Upto Rs.20 lacs Above Rs.20 lacs 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 12 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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) 13 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 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 14 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 15 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 from the date on which he was served with the notice(s) u/ss.143(2) and 142(1), dated 03.03.2015, therefore, it was not permissible for him to challenge the same for the first time in the course of the proceeding before the tribunal. Having given a thoughtful consideration to the aforesaid claim of the ld. DR we are unable to persuade ourselves to subscribe to the same. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of “territorial jurisdiction” of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. On the other hand sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143. In sum and substance, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub-section (3) of Section 124 is confined to a case where the assessee objects to the assumption of territorial jurisdiction by the A.O, and not otherwise. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Tax 16 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 Appeal Nos. 19 to 30 of 2017, dated 05.04.2021 and that of the Hon’ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR492 (Guj.). In the aforesaid cases the Hon’ble High Courts have held that as Section 124 of the Act pertains to 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 17 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 of OSL Developers (p) Ltd. Vs. ITO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise Vs. ACIT (2021) 187 ITD 111 (Gau.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee’s objection to the validity of the jurisdiction assumed by the Income-Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124 would not assist the case of the revenue. 15. We shall now deal with the contention of the Ld. DR that as both the officers in question i.e. Dy. CIT, Circle-1, Bhilai and the Income Tax Officer, Ward-2(2), Bhilai as per sub-section (5) of Section 120 were vested with concurrent jurisdiction over the assessee, therefore, initiation of the assessment proceedings by the Dy. CIT, Circle-1, Bhilai vide notice issued u/s.143(2) dated 24.09.2013, which thereafter had culminated into an assessment framed by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s.143(3), dated 30.03.2015 does not suffer from any infirmity. In our considered view the aforesaid contention of the Ld. DR is absolutely misplaced and in fact devoid and bereft of any merit. As the aforesaid CBDT Instruction No.1/2011, dated 31.01.2011 exclusively vests the pecuniary jurisdiction over the case of the assessee for the year under 18 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 consideration i.e. A.Y.2012-13 with the ACs/DCs, therefore, in our considered view despite vesting of concurrent jurisdiction with the Income- Tax Officer, Ward-2(2), Bhilai and the Dy. CIT, Circle-1, Bhilai the assessment in his case for the year under consideration could only have been framed by the Dy. CIT, Circle-1, Bhilai. Neither is there any reason discernible from the orders of the lower authorities nor demonstrated before us by the ld. DR which would by any means justify framing of the assessment vide impugned order u/s 143(3), dated 30.03.2015 by the Income-Tax Officer, Ward-2(2), Bhilai. Apart from that, we find that as per the mandate of sub-section (1) of section 127 of the Act, where a case is to be transferred by authorities therein specified from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him, then he is under an obligation to record his reasons for doing so after giving the assessee a reasonable opportunity of being heard in the matter wherever it is possible to do so. For the sake of clarity sub-section (1) of Section 127 is culled out as under: “(1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal 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 19 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.” On a careful perusal of the aforesaid mandate of law, it transpires, that even in a case where jurisdiction over the case of an assessee that is vested with one A.O (having concurrent jurisdiction over the case of the assessee) is to be transferred to another A.O (having concurrent jurisdiction over the case of the assessee), even then the authority specified under sub-section (1) of Section 127 is obligated to record his reasons for doing so. Considering the 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. 20 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 21 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 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 returns Upto Rs.20 lacs Above Rs.30 lacs Upto Rs.30 lacs Above Rs.30 Lacs Non- corporate returns Upto Rs.15 lacs Above Rs.15 lacs Upto Rs.20 lacs Above Rs.20 lacs 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. 22 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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 Officers (whether with or without concurrent jurisdiction) also subordinate to him. 7. 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 Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ACIT which was beyond his jurisdiction and the same is therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not have any pecuniary jurisdiction to frame the 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. The relevant part of the order dated 03.02.2021 passed in ITA No.2517/Kol/2019 and Others is reproduced as under: "5.2. The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, in ITA No. 2634/Kol/2019, order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid down in a number of other decisions of the ITAT, Kolkata Bench on this issue. 5.3. Kolkata "B" Bench of the Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd.(supra) held as follows: "10. In this case, the ITO Ward-3(3), Kolkata, issued notice u/s 143(2) of the Act on 04/09/2014. In reply, on 22/09/2014, the assessee wrote to the ITO, Ward-3(3), Kolkata, stating that he has no jurisdiction over the assessee. Thereafter on 31/07/2015, the DCIT, Circle-11(1), Kolkata, had issued notice u/s 142(1) of the Act to the assessee. The DCIT, Circle-11(1), Kolkata, completed assessment u/s 143(3) of the Act on 14/03/2016. The issue is whether an assessment order passed by DCIT, Circle-11(1), Kolkata, is valid as admittedly, he did not issue a notice u/s 143(2) of the Act, to the assessee. This issue is no more res-integra. This Bench of the Tribunal in the case of Soma Roy vs. ACIT in ITA No. 462/Kol/2019; Assessment Year 2015- 23 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 16, order dt. 8th January, 2020, under identical circumstances, held as under:- "5. After hearing rival contentions, I admit this additional ground as it is a legal ground, raising a jurisdictional issue and does not require any investigation into the facts. The ld. 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:- 24 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 "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 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 25 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 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. 18. As we have quashed the assessment framed by the A.O for want of valid assumption of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the other grounds that have been raised by the 26 Shri Sudhir Kumar Agrawal, Durg Vs. ITO, Ward-2(2), Bhilai ITA No. 158/RPR/2017 assessee before us qua the sustainability of the addition on the merits of the case, which, thus, are left open. 19. In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 17 th October, 2022 **SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-II, Raipur (C.G) 4. The Pr. CIT-II, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur.