M/s. Dalippur Construction (P) Ltd., Lucknow V. Income Tax Officer-I(2), Lucknow

ITA 204/LKW/2012

• Counselvise Citation: 20423714 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K RAM
• Keywords: Period of limitation; Validity of assessment; Time period of passing order
• Section: 143(3); 142(1); 27; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.204/LKW/2012 ASSESSMENT YEAR:2007 - 08 INCOME TAX OFFICER - 1(2), LUCKNOW. VS M/S DALIPUR CONSTRUCTION (P) LTD. 6, SAPRU MARG, LUCKNOW. PAN:AABCD3559K (RESPONDENT) (APPELLANT) SHRI P. K. KAPOOR, C.A. APPELLANT BY SHRI R. K. RAM, D. R. RESPONDENT BY 26/09/2014 DATE OF HEARING 28 /11/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 19/12/2011 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. APART FROM MERIT, THE ASSESSEE HAS RAISED AN ISSUE REGARDING JURISDICTION OF THE ASSE SSING OFFICER AS PER GROUND NO. 1, 2 & 3, WHICH ARE REPRODUCED BELOW: 1. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ' IT APPEARS THAT THE ISSUE OF VALIDITY OF JURISDICTION HAS BEEN RAISED IN AN ATTEMPT TO SOMEHOW IMPART A LEGAL INFIRMITY, WHERE NONE EXISTS, TO THE ASSESSMENT, AFTER IT HAS BEEN MADE ON THE LINES NOT EXPECTED OR ANTICIPATED AND LIKED BY THE APPELLANT' AND IN OVERRULI NG THE 'APPELLANT'S' OBJECTION TO THE VALIDITY OF ASSESSMENT ORDER DATED 29.12.2009 AS PASSED BY '1X0 - 1(2), LUCKNOW'. 2. BECAUSE ON A DUE CONSIDERATION OF THE MATERIAL AND INFORMATION ON RECORD, AS ALSO THE INFORMATION CONTAINED IN THE REMAND REPORT, [THA T HAS BEEN CALLED FOR BY THE 'CIT(A)'], PARTICULARLY THAT; 2 ( A ) THE REGULAR ASSESSMENT PROCEEDINGS HAD BEEN INITIATED BY THE INCOME - TAX AUTHORITY OF THE RANK OF 'DY. CIT, RANGE - I, LUCKNOW'; ( B ) SUCH AN 'INCOME - TAX AUTHORITY' WAS DIVESTED OF THE JURISDICTION TO ACT AS ASSESSING OFFICER IN THE CASE OF THE 'APPELLANT' ONLY, IN TERMS OF ASSIGNMENT OF JURISDICTION BY THE ADDL CIT, RANGE - I, LUCKNOW, IN FAVOUR OF 'ITO - 1(2), LUCKNOW'; ( C ) THERE WAS NO OCCASION FOR THE 'APPELLANT' TO OBJECT TO THE 'ASSIGNING OF JURISDICTION', A S MADE BY THE LD. ADDITIONAL CIT, IN FAVOUR OF 'ITO - 1(2), LUCKNOW', AS THE 'APPELLANT' WAS NOT AWARE OF ANY SUCH ASSIGNMENT; ( D ) SUBSEQUENT NOTICE UNDER SECTION 143(2) DATED 5.11.2009 AS ISSUED BY 'IXO - 1(2), LUCKNOW' WAS BEYOND THE LIMITATION PERIOD PRESCRIBED UNDER THE LAW; THE 'CIT(A)' WAS OBLIGED UNDER THE LAW TO HOLD THAT THE DY. CIT, RANGE - 1, LUCKNOW CONTINUED TO HOLD JURISDICTION OF ASSESSING OFFICER AND THERE BEING NO VALID TRANSFER OF JURISDICTION; THE ASSESSMENT ORDER DATED 29.12.2009 [AS MADE BY 'IT O - 1(2), LUCKNOW'] WAS BAD IN LAW. 3. BECAUSE THE ISSUE OF INHERENT LACK OF JURISDICTION AT THE END OF 'ITO - 1(2), LUCKNOW', CAN BE RAISED AT ANY STAGE AND VIEW TO THE CONTRARY AS HAS BEEN TAKEN BY THE 'CIT(A)' IS WHOLLY ERRONEOUS AND ON A CORRECT APPRECIAT ION OF THE LEGAL POSITION, THE ASSESSMENT ORDER DATED 29.12.2009 WAS LIABLE TO BE QUASHED AS VOID - AB - INITIO. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE BEFORE US THAT IN THE PRESENT CASE, THE PROCEEDINGS WERE INITIATED BY DY.CIT, RANGE - 1, LUCKNOW BY WAY OF ISSUE OF NOTICE U/S 143(2) ON 27/10/2008 AND VARIOUS OTHER SUCH NOTICES WERE ISSUED BY THE SAME OFFICER UP TO 13/10/200 9 AND FOR THE FIRST TIME, NOTICE U/S 143(2) WAS ISSUED BY INCOME TAX OFFICER, RANGE - 1(2), LUCKNOW ON 05/11/2009 AND THEREAFTER , THE ASSESSMENT ORDER WAS PASSED BY INCOME TAX OFFICER, RANGE - 1(2), LUCKNOW U/S 143(3) ON 29/12/2009. HE FURTHER SUBMITTED THAT FROM THESE FACTS, IT IS APPARENT THAT THE PROCEEDINGS WERE INITIATED BY A SENIOR OFFICER I.E. DY. CIT, RANGE - 1 AND IT WAS COMPLETED 3 BY A SUBORDINATE OFFICER I.E. INCOME TAX OFFICER, RANGE - 1(2), LUCKNOW. HE FURTHER SUBMITTED THAT UNDER THESE FACTS, THE ISS UE REGARDING JURISDICTION OF THE ASSESSING OFFICER IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION RENDERED IN THE CASE OF ACIT VS. CALICO TRENDS IN I.T.A. NO.759/LKW/10 DATED 23/05/2014 IN ASSESSMENT YEAR 2007 - 08. HE SUBMITTED A CO PY OF THE TRIBUNAL DECISION AND OUR ATTENTION WAS DRAWN TO PARA 17 OF THE TRIBUNAL DECISION. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT IN THE PRESENT CASE THE JURISDICTION WAS ASSIGNED T O INCOME TAX OFFICER, RANGE - 1(2), LUCKNOW BY ADDL. CIT, RANGE - 1, LUCKNOW AND THEREFORE, THIS TRIBUNAL DECISION IS NOT APPLICABLE. 5. IN THE REJOINDER, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT AS PER SECTION 127 OF THE ACT, ADDL. CIT DOES NOT HAVE THE POWERS TO TRANSFER THE JURISDICTION FROM ONE OFFICER TO OTHER OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARA NO. 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5. FIRST OF ALL I WILL TAKE UP GROUNDS 1, 2 AND 3 WHEREIN THE APPELLANT HAS CHALLENGED THE VALIDITY OF EXERCISE OF JURISDICTION BY THE AO WHO COMPLETED THE ASSESSMENT. THE APPELLANT CONTENDS THAT THE DCIT, RANGE - 1 WHO INITIATED THE ASSESSMENT PROCEEDINGS HAD THE LAWFUL JURISDICTION OVER ITS CASE WHILE THE ITO - 1(2), LUCKNOW WH O COMPLETED THE ASSESSMENT NEVER GOT VESTED WITH JURISDICTION OVER ITS CASE AS NO ORDER CONFERRING SUCH JURISDICTION ON HIM WAS PASSED. THE APPELLANT CLAIMS THAT DUE TO THIS LACK OF VALID JURISDICTION THE ENTIRE ASSESSMENT PROCEEDINGS GOT VITIATED. THE APP ELLANT EMPHASIZED THAT THE PROCEEDINGS WERE TAKEN UP BY THE I.T.O. - 1(2) TOWARDS THE FAG END OF LIMITATION IMPLYING LACK OF FAIR REASONABLE OPPORTUNITY. THE APPELLANT FURNISHED SEQUENTIAL DETAILS OF NOTICES ISSUED U/S 143(2) AND 142(1) BY THE DCIT - RANGE - L A ND THE ITO - I(2). 4 5.1 IN HIS REMAND REPORT THE ITO - I(2), LUCKNOW STATED THAT THE JURISDICTION WAS DULY ASSIGNED BY THE ADDL.CIT RANGE - L, LUCKNOW AND THAT THE APPELLANT NEVER QUESTIONED THE EXERCISE OF JURISDICTION BY HIM. 5.2 ON A CAREFUL CONSIDERATION OF FACTS I FIND THAT THE ITO - I(2), LUCKNOW, PROCEEDED WITH THE ASSESSMENT PROCESS IN PURSUANCE OF THE JURISDICTION ASSIGNED TO HIM BY THE ADDL. CIT. IF THE APPELLANT HAD ANY OBJECTIONS TO THE ASSIGNMENT OF JURISDICTION, IT COULD HAVE RAISED THE ISSUE AT THE MATERIAL POINT OF TIME. THE APPELLANT CHOSE NOT TO OBJECT TO THE ASSIGNMENT OF JURISDICTION AND ITS EXERCISE BUT EVEN ACTUALLY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. IT IS NOT THE CASE OF THE APPELLANT THAT IT HAD TO BE A WILLING PARTICIPANT IN PROCEE DINGS WHICH IT KNEW TO BE NOT VALID. IT APPEARS THAT THE ISSUE OF VALIDITY OF JURISDICTION HAS BEEN RAISED IN AN ATTEMPT TO SOMEHOW IMPART A LEGAL INFIRMITY, WHERE NONE EXISTS, TO THE ASSESSMENT, AFTER IT HAS BEEN MADE ON THE LINES NOT EXPECTED OR ANTICIPA TED AND LIKED BY THE APPELLANT. I DO NOT FIND MUCH SUBSTANCE IN THESE GROUNDS. I FURTHER NOTICE THAT THE ITO - I(2), TOOK UP THE PROCEEDINGS BY ISSUE OF NOTICE U/S 143(2) ON 05.11.2009 WHICH WERE FURTHER FOLLOWED BY NOTICES ON 23.11.2009 AND 30.11.2009. IT T HEREFORE, CANNOT BE SAID THAT THE PROCEEDINGS WERE TAKEN UP AT THE FAG END OF LIMITATION IN AN ATTEMPT TO SUGGEST THAT A FAIR AND REASONABLE OPPORTUNITY WAS NOT GRANTED BY THE ITO - I(2), LUCKNOW. A REASONABLE OPPORTUNITY NEEDS TO BE ALLOWED AS A FACT AND TH E APPELLANT CAN NOT PRESCRIBE A TIME FRAME TO CONSTITUTE WHAT IT CHOOSES TO CALL A FAIR OPPORTUNITY. 5.3 IN VIEW OF THE DISCUSSION ABOVE GROUNDS NO. 1, 2 AND 3 ARE DISMISSED. 7. NOW WE ALSO FEEL IT ALSO PROPER TO REPRODUCE PARA 17 OF THE TRIBUNAL DECISION RENDERED IN THE CASE OF CALICO TRENDS (SUPRA). THE SAME IS AS UNDER: 17. WE ALSO FIND FORCE IN THE CONTENTIONS OF THE DEPARTMENT WITH REGARD TO THE JUDGMENTS REFERRED TO BY THE LD. COUNSEL FOR THE ASS ESSEE AS IN ALL THOSE CASES, THE PROCESS WAS INITIATED BY THE AUTHORITIES HIGHER IN RANK AND IT WAS COMPLETED BY THE AUTHORITIES LOWER IN RANK, WHEREAS THE FACTS IN THE INSTANT CASE ARE OTHERWISE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IF THE PROCE SS OF ASSESSMENT IS INITIATED BY AN AUTHORITY LOWER IN RANK AND ASSESSMENT WAS COMPLETED BY AN AUTHORITY HIGHER IN 5 RANK, THE ASSESSMENT WOULD BE VALID IN THE EYES OF LAW, AS THE OBJECT OF CONFERRING CONCURRENT JURISDICTION IS TO EMPOWER THE SENIOR OFFICER TO SUPERVISE THE FUNCTIONING OF THE JUNIOR OFFICERS EFFECTIVELY AND WHENEVER THEY FEEL THAT THE INTERVENTION IN THE ASSESSMENT BEING FRAMED BY THE JUNIOR OFFICER IS CALLED FOR, THEY CAN SEIZE WITH THE MATTER AND COMPLETE THE ASSESSMENT. IN THE INSTANT CAS E ALSO, THE ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE UNDER SECTION 142(1) AND 143(2) OF THE ACT BY THE ACIT AND DCIT AND ASSESSMENT WAS COMPLETED BY THE JCIT, HAVING CONCURRENT JURISDICTION AND WE FIND NO ILLEGALITY THEREIN. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD AND WE CONFIRM THE SAME AND REJECT GROUNDS NO.1 & 2 OF THE APPEAL OF THE ASSESSEE. 7.1 FROM THE ABOVE PARA FROM THE ORDER OF THE TRIBUNAL, WE FIND THAT IN THIS CASE, IT WAS H ELD BY THE TRIBUNAL THAT IF THE PROCESS OF ASSESSMENT IS INITIATED BY AN AUTHORITY LOWER IN RANK AND ASSESSMENT WAS COMPLETED BY AN OFFICER HIGHER IN RANK, THE ASSESSMENT IS VALID IN THE EYE S OF LAW. IN THE SAME CASE, THE TRIBUNAL HAS REFERRED TO THE JUDG MENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF VALVOLINE CUMMINS LIMITED VS DEPUTY COMMISSIONER OF INCOME - TAX [2008] 307 ITR 103 (DEL) AND THEREAFTER , IT IS OBSERVED BY THE TRIBUNAL THAT IN THIS CASE , THE PROCESS WAS INITIATED BY THE AUTHORITY HI GHER IN RANK BUT THE SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY JUNIOR IN RANK. HENCE, IT IS SEEN THAT IN CASE WHERE THE PROCESS WAS INITIATED BY THE AUTHORITY HIGHER IN RANK BUT SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY JUNIOR IN RANK, THE ACTION OF THE JUNIOR AUTHORITY IS NOT PROPER IN THE EYES OF LAW AS PER THIS JUDGMENT OF HON'BLE DELHI HIGH COURT AND ONLY IN A CASE WHERE THE ACTION IS INITIATED BY AN AUTHORITY JUNIOR IN RANK BUT SUBSEQUENT ACTION IS BY AN AUTHORITY SENIOR IN RANK, THE TRIBUNAL HE LD THAT SUCH ACTION OF THE SENIOR AUTHORITY IS VALID. HENCE, IN THE PRESENT CASE, WHERE THE ACTION WAS INITIATED BY AN AUTHORITY HIGHER IN RANK AND SUBSEQUENT PROCESS WAS COMPLETED BY JUNIOR AUTHORITY, THE ACTION OF THE ASSESSING OFFICER IN PASSING THE AS SESSMENT ORDER IS NOT VALID IN THE EYES OF LAW. 6 8. REGARDING THIS STAND OF CIT(A) AND THE ARGUMENT OF LEARNED D.R. OF THE REVENUE THAT JURISDICTION WAS DULY ASSIGNED BY ADDL. CIT, RANGE - 1, LUCKNOW, WE FIND FORCE IN THE SUBMISSIONS OF LEARNED A.R. OF THE AS SESSEE THAT SUCH ASSIGNMENT OF JURISDICTION FROM ONE OFFICER TO OTHER OFFICER CANNOT BE DONE BY ADDL. CIT AS PER THE PROVISIONS OF SECTION 1 2 7 OF THE ACT BECAUSE AS PER THE PROVISION S OF THIS SECTION, THIS POWER IS AVAILABLE EITHER TO DIRECTOR GENERAL OR C HIEF COMMISSION ER OR COMMISSIONER AND THEREFORE, THIS ACTION OF ADDL. CIT OF TRANSFERRING JURISDICTION FROM D CIT TO INCOME TAX OFFICER IS NOT VALID AND PROPER IN THE EYES OF LAW. HENCE, BY RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN THE CASE OF CALICO TRENDS (SUPRA) AND IN TURN FOLLOWING THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF VALVOLINE CUMMINS LIMITED (SUPRA), WE HOLD THAT IN THE PRESENT CASE, THE INCOME TAX OFFICER WARD - 1(2), LUCKNOW WAS NOT HAVING VALID JURISDICTION AND THEREFO RE, WE QUASH THE ASSESSMENT ORDER PASSED BY HIM. THESE GROUNDS OF THE ASSESSEE ARE ALLOWED. 9. IN VIEW OF OUR ABOVE DECISION ON THE LEGAL ISSUE, THE OTHER GROUNDS RAISED BY THE ASSESSEE ON MERIT O F VARIOUS ADDITIONS DO NOT CALL FOR ANY ADJUDICATION. 10. I N THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /11/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR