DCIT, Central Circle - 1(2), Kolkata , Kolkata V. Shri Sudhir Kumar Gupta , Nagpur

ITSSA 26/KOL/2018

AI Insights

The case involves an appeal by the Deputy Commissioner of Income-tax, Central Circle-1(2), Kolkata against Sudhir Kumar Gupta, concerning an assessment order for the assessment year 2011-12. The assessment was initially contested due to issues related to the service of notices and the validity of the assessment order itself. The Income Tax Appellate Tribunal (ITAT) in Kolkata found that it did not have jurisdiction over the case, as the assessment order was passed by an officer in Haryana. The Tribunal referenced decisions by the Supreme Court and the Bombay High Court to support its conclusion that the appropriate jurisdiction for the appeal would be where the assessment was originally made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125007 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-09-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 24-04-2018
• Other Referred Cases: PCIT Vs. ABC Papers Ltd., MSPL Ltd. Vs. PCIT & Ors
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Condonation of delay; Documents seized
• Section: 132; 142(1); 153A; 195; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER IT(SS)A No.26/Kol/2018 Assessment Year: 2011-12 Deputy Commissioner of Income- tax, Central Circle-1(2), Kolkata. Vs. Sudhir Kumar Gupta 401, Bhagyalaxmi Apartment, Plot No. 58, Randas Peth, Nagpur (PAN: AACPG5081B) (Appellant) (Respondent) Present for: Appellant by : Shri Abhijit Kundu, CIT DR Respondent by : Shri Subash Agarwal, Advocate Date of Hearing concluded on : 06.09.2023 Date of Pronouncement : 06.09.2023 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. CIT(A)-20, Kolkata vide ITBA Appeal No. CIT(A) Kolkata- 20/10409/2013-14 dated 31.01.2018 passed against the assessment order by DCIT, circle, Yamuna Nagar u/s.144/153A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 31.03.2013, for AY 2011-12. 2. Grounds raised by the revenue are reproduced as under: “1. That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the explanation furnished by the assessee before him regarding seized documents without giving reason ignoring the fact that the same explanation was not accepted during the search of the assessee and no such explanation was filed before the A.O during assessment proceedings. 2 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 2. That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in believing the explanations of the assessee that the seized papers were not related to him ignoring the fact that these documents were found and seized from the possession of the assessee during search and hence, the order passed by him is in violation of provision of Section 292C of the I.T Act. 3. That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the explanation of the assessee on seized document that was not furnished before the A.O without giving opportunity to the A.O to examine the same under the provision of Section 292C and furnishing his comments.” 3. In addition to the above grounds, we find that assessee has moved an application under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 (hereinafter referred to as “ITAT Rules”) for raising additional plea in order to defend the impugned order. Through this application under Rule 27, assessee has raised the following two issues, namely – (i) For that the Ld. CIT(A) ought to have held that the assessment was made without service of notice u/s. 153A and 143(2), hence, the assessment order was not valid in the eyes of law. (ii) For that the Ld. CIT(A) ought to have held that there was no service of notice by affixture or such service was invalid in law, hence, the entire assessment order was liable to be cancelled/quashed.” 4. Brief facts as culled out from records are that a search and seizure action u/s. 132 of the Act was conducted on Abhijit Group, based at Nagpur, on 18.01.2011. Assessee was an employee-CEO of the said group. Ld. AO had issued notice u/s. 153A on 18.03.2013 for the impugned year which is the year of search. Assessee was required to file the return on or before 25.03.2013. The said notice was issued from the office of Dy. Commissioner of Income-tax, Circle, Yamuna Nagar, Jagadhri (Haryana). Assessee had filed his original return u/s. 139 of the Act on 20.09.2011 reporting total income of Rs.26,29,609/-. The address mentioned in his return is “1082, Daggan Street, Jagadhri, Yamunanagar, Haryana-135003”. On 3 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 26.03.2013, Ld. AO issued notice u/s. 143(2) requiring the assessee to attend his office on 28.03.2013. He also issued notice u/s. 142(1) of the same date along with a questionnaire/show cause notice fixing the date of hearing on 28.03.2013. Through this show cause notice, ld. AO required the assessee to show cause as to why the expenditure and investment of Rs.13,65,59,457/- should not be treated as income from undisclosed sources and be added to the total income for tax purpose and initiating penalty proceeding under the provisions of the Act. 4.1. Assessee contended that he had never received notices issued by the Ld. AO. According to the Ld. AO, service of the aforesaid notice was effected by affixture at the last known address of the assessee. In this respect copies of these notices along with orders for service through affixtures containing statement of the Notice Server that the assessee was not found at the said address and the persons staying there refused to accept the notices were placed on record. 4.2. Ld. AO completed the assessment ex part qua the assessee by making the addition as proposed in his show cause notice. Assessment order is dated 31.03.2013 passed u/s. 144/153A of the Act by the Dy. Commissioner of Income-tax, Circle Yamuna Nagar, Jadhari, Haryana-135001. In the said assessment order, address of the assessee noted by the Ld. AO is “1082, Daggan Street, Jagadhri, Yamunanagar, Haryana-135003” (Abhijit Group of cases). 4.3. After passing of the said assessment order, case of the assessee was centralised by transferring it from ACIT, Circle Yamuna Nagar to DCIT, CC-II, Kolkata by passing an order u/s. 127 of the Act w.e.f. 15.04.2013. The said order passed u/s. 127 of the Act, is after the 4 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 passing of assessment order by Ld. DCIT, Circle Yamuna Nagar on 31.03.2013. 4.4. Assessee had filed his first appeal against the impugned assessment order before the Ld. CIT(A), Panchkula. Since the case of the assessee was transferred to Kolkata jurisdiction w.e.f. 15.04.2013, appeal filed was transferred from Ld. CIT(A), Panchkula to Ld. CIT(A), Central-III, Kolkata. The first appellate order is passed from the office of Commissioner of Income Tax Appeals-20, Kolkata, dated 31.01.2018 whereby appeal of the assessee is allowed on the quantum issues. 4.5. Revenue is in appeal before the Tribunal. The said appeal is filed with a delay of 19 days for which a petition for condonation of delay is placed on record wherein reasons for the delay have been explained to be in respect of administrative issues owing to transfer of case from DCIT, Circle, Yamuna Nagar, Jagadhri to Kolkata and its centralisation. 5. Before embarking upon the grounds of appeal taken by the revenue and the application moved by the assessee under Rule 27, we note that the impugned assessment order is passed by the Ld. AO located at Jagadhri in the office of Dy. Commissioner of Income-tax, Circle Yamuna Nagar (Haryana) 135001. In a recent decision by the Hon’ble Supreme Court in the case of PCIT Vs. ABC Papers Ltd. (2022) 141 taxmann.com 332 (SC), it is held that where even if case of an assessee was transferred in exercise of power u/s. 127, High Court within whose jurisdiction AO passed assessment order would continue to exercise due jurisdiction of appeal. According to the Hon’ble Supreme Court, the appropriate High Court for disposal of the appeal 5 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 would be the one where the case was assessed by the AO. Relevant extract from the said judgment is reproduced as under: “35.2 We will first deal with the order passed by the Assessing Officer, Delhi dated 30-12-2010, against which an appeal was decided by ClT (Appeals) - IV, New Delhi on 16-2-2012, against which the ITAT, New Delhi disposed of an appeal on 11-5-2017, against which an appeal was filed in the High Court of Punjab & Haryana which it disposed of by order dated 7-2-2019, against which Civil Appeal No. 4252 of 2022 was tiled before this Court. The said Civil Appeal is dismissed by holding the order dated 7-2-2019 passed by the High Court of Punjab & Haryana, with a direction that the appropriate High Court for disposal of the appeal would be the High Court of Delhi as the case was assessed by the Assessing Officer, Delhi.” [emphasis supplied by us by underline] 5.1. Keeping the aforesaid judgment in view, fact in the present appeal by the revenue is that it is filed before the Kolkata Bench “B” of the ITAT though the assessment order is passed by the Ld. AO at the office of DCIT, Circle Yamuna Nagar, Circle Jagadhri, Haryana which does not fall with the jurisdiction of ITAT, Kolkata benches. 6. We are constrained to transfer the present appeal from the Kolkata Bench of ITAT to the proper jurisdiction based on the location of AO passing the impugned order by taking into consideration the order of Hon’ble High Court of Bombay in the case of MSPL Ltd. Vs. PCIT & Ors in Writ Petition (L) No. 3856 of 2020 dated 21.05.2021. In this case, the Hon’ble Bombay High Court had an occasion to deal with the power to transfer pending appeal from one bench to another between the Tribunal, whether outside the headquarters in another state or from one bench to another bench within the same headquarters. 6.1. While dealing with this issue, Hon’ble Court analysed section 255 of the Act, more particularly sub-section (5) and (6) and arrived a a conclusion that sub-section (5) cannot be interpreted in such a broad manner to clothe the President of the Tribuna, the jurisdiction to 6 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 transfer a pending appeal from one bench to another bench outside the headquarters in any state. According to the Hon’ble High Court in, sub-section (6) of section 255, no power is discernible that an order on the administrative side can be passed by the President, transferring live appeal from one bench to another bench that too in a different state outside the headquarters. 6.2. Relevant extracts in this respect are reproduced below: “37. From a careful analysis of section 255, more particularly sub-section (5) thereof, it is not discernible as to how power of, the President to transfer a pending appeal from one Bench to another Bench outside the headquarters in a different State can be said to be traceable to this provision. What sub section (5) says is that the Tribunal shall have power to regular its own procedure and that of its various Benches while exercising its powers or in the discharge of its functions. This includes notifying the places at which the Benches shall hold their sittings e.g., a particular Bench at Mumbai may hold its sittings at, say, Thane for a particular period for administrative reasons. This provision cannot be interpreted in such a broad manner to clothe the President of the Tribunal the jurisdiction to transfer a pending appeal from one Bench to another Bench outside the headquarters in another State. 38. We have also noticed from sub section (6) that a proceeding before the Tribunal shall be deemed to a judicial proceeding within the meaning of sections 193, 196 and 228 of the Indian Penal Code and it shall also be deemed to be a civil court for the purpose of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898. Therefore, there is no manner of doubt that a proceeding before the Tribunal is a judicial proceeding and for certain limited purpose it is deemed to be a civil court. Question for consideration is when an appeal 'or a bunch of appeals are being heard by a Bench of the Tribunal in one State, can an order on the administrative side be passed by the President transferring a live appeal from one Bench to another Bench that too in a different State outside the headquarters? In our opinion, no such power is discernible in section 255 of the Act. Reading or conferring such a power would amount to interference in a judicial proceeding of the Tribunal.” 6.3. Further, Hon’ble High Court dealt with Rule 4 of the ITAT Rules which have been framed in exercise of the powers conferred by sub- section (5) of section 255 of the Act, to regulate the procedure of the Tribunal and the procedure of the Benches of the Tribunal. Hon’ble Court analysed the said Rule (4) of the ITAT Rules and found that as per sub-section 4(1), a Bench shall hear and determine such appeals 7 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 and the applications made under the Act, as the President may, by general or special order direct. According to it, sub-rule (1) empowers the President to direct hearing of the appeal by a Bench by a general or special order. In reference to sub-rule (2), it stated that where there are two or more Benches of the Tribunal working at any head quarter; when there are multiple Benches in a headquarter, the President or, in his absence the Senior Vice President etc. may transfer an appeal or an application from one of such Benches to any other. According to the Hon’ble High Court, sub-rule (2) is more specific which deals with transfer of an appeal or application from one Bench to another Bench within the same head quarter. To explain, this Hon’ble Court gave an example as to “in Mumbai the number of benches is 12 and in Bangalore, the number of benches is three. Thus, this provision can be invoked to transfer an appeal from one Bench in Mumbai and to another Bench in Mumbai or from one Bench in Bangalore to another Bench in Bangalore. But this provision cannot be invoked to transfer a pending appeal from one Bench under one headquarter to another Bench in a different headquarter.” Hon’ble Court also referred to Rule 13 and 28 of the ITAT Rules to point out that original jurisdiction of the Bench is determined by the location of the office of the AO. Relevant extracts of this rule from the said judgment is reproduced as under: “40. The Tribunal rules have been framed in exercise of the powers conferred by sub section (5) of section 255 of the Act to regulate the procedure of the Appellate Tribunal and the procedure of the Benches of the Tribunal. Since the order dated 20.08.2020 has been passed under rule 4 of the Tribunal Rules, the same is extracted hereunder: - “Power of Bench. 4.(1) A Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. 8 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 (2) Where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the Senior Vice- President/Vice-President of the concerned zone or, in his absence, the seniormost member of the station present at the headquarters may transfer an appeal or an application from anyone of such Benches to any other." 41. From an analysis of rule 4 as extracted above, we find that as per sub rule (1), a Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. Sub rule (2) says that where there are two or more Benches of the Tribunal working at any headquarters, the President or, in absence, the senior Vice President or Vice President of the concerned zone or in his absence the seniormost member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other. While sub rule (1) empowers the President to direct hearing of appeals by a Bench by a general or special order, sub rule (2) is more specific. It deals with a situation where there are more than two Benches of the Tribunal at any headquarter; when there are multiple Benches in a headquarter, the President or, in his absence the senior Vice President etc. may transfer an appeal or an application from one of such Benches to any other. Meaning thereby that it is a transfer of an appeal or an application from one Bench to another Bench within the same headquarters. For example, in Mumbai the number of Benches is twelve and in Bangalore, the number of Benches is three. Thus, this provision can be invoked to transfer an appeal from one Bench in Mumbai to another Bench in Mumbai or from one Bench in Bangalore to another Bench in Bangalore. But this provision cannot be invoked to transfer a pending appeal from one Bench under one, headquarter to another Bench in a different headquarter. 42. While on the Tribunal Rules, we may also refer to rules 13 and 28. Who may be joined as respondent in an appeal by the assessee is dealt with in rule 13. In an appeal by an assessee under sub-section (1) of section 253, the concerned Assessing Officer shall be made a respondent to the appeal. Concerned Assessing Officer would mean the Assessing Officer who had passed the assessment order from which the appeal to the Tribunal arises. As per rule 28, Tribunal has the power to remand an appeal to the authority from whose order the appeal has been preferred or to the concerned Assessing Officer with such directions as the Tribunal may think fit. 43. Standing Order has, been made in pursuance of sub rule (1) of rule 4 of the Tribunal Rules. Standing Order provides for hearing of appeals and applications by different Benches of the Tribunal. In other words, it provides for the territorial jurisdiction of the different Benches. It is seen therefrom that the three Benches of the Tribunal at Bangalore have jurisdiction over the entire State of Karnataka, excluding the districts of Belgaum, Mangalore, Karwar and North Kanara over which the Panaji Bench has jurisdiction. In so far the Benches at Mumbai are concerned, those have jurisdiction over Mumbai City, Mumbai Suburban and Thane Districts of Maharashtra. Clause 4 is interesting and it says that the ordinary jurisdiction of the Bench will be determined not by the place of business or residence of the assessee but by the location of the office of the Assessing Officer.” 9 IT(SS)A No.26/Kol/2018 Sudhir Kumar Gupta, AY: 2011-12 7. Considering the judgment of the Hon’ble Supreme Court in the case of ABC Ltd. (supra) as well as the decision of Hon’ble High Court of Bombay in the case of MSPL Ltd. (supra), we find that the present appeal by the revenue is under improper jurisdiction, owing to the fact that impugned assessment order dated 31.03.2013, is passed by Ld. DCIT, Circle-Yamuna Nagar, Jagardhi, Haryana-135001. Accordingly, this present appeal is dismissed with the liberty to the Revenue to file a fresh appeal before the appropriate bench of the Tribunal having jurisdiction over the assessee along with petition for condonation of delay caused on this account. The period exhausted on account of filing the present appeal and its present disposal may be considered for condonation of delay in disposing the appeal, if filed by the revenue before the appropriate bench of ITAT having jurisdiction over the assessee. 8. In the result, appeal of the Revenue is dismissed as indicated above. Order is pronounced in the open court on 06th September, 2023 Sd/- Sd/- (Sanjay Garg) (Girish Agrawal) Judicial Member Accountant Member Dated: 06th September, 2023 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent:. 3. CIT(A)-20, Kolkata 4. CIT 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata