Citation Codes

Equivalent Citations

citation codes

Case Number

ITA 31/RPR/2022

Disposition

in part

Attorney(S)

Acts

u/s.36(1)(iii) and u/s.37(1) of the IT Act, 1961.
Sec. 143(3) of the Income-tax Act, 1961 (in short 'the Act')
Rule 34(4) of the Appellate Tribunal Rules, 1963

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Smart Summary

Case Summary — Income Tax Appellate Tribunal, Raipur Bench ("SMC")

Factual and Procedural Background

This appeal arises from ITA No.31/RPR/2022 (Assessment Year 2010-11) filed by Shri Chowaram Dhiwar (the assessee) against the order of the Commissioner of Income-Tax (Appeals), NFAC, Delhi dated 22.11.2021, which in turn arose from assessment framed by the Assessing Officer (A.O.) under Section 143(3) (read with Section 147) dated 31.03.2015. The assessee, a trader in foreign liquor, had originally filed return of income on 30.09.2010 declaring income of Rs. 9,47,500.

The initiating sequence: the Dy. CIT-1(1) observed a discrepancy between purchases shown in profit & loss account (Rs.4,22,48,477) and purchases per TCS certificate (Rs.4,71,85,928), and initiated reassessment proceedings under Section 147. A notice under Section 148 dated 18.06.2013 was issued by Dy. CIT-1(1). The assessee requested by letter dated 05.07.2013 that the original return be treated as the return in response to the Section 148 notice. Notices under Section 142(1) dated 28.11.2013 and 10.12.2013 were issued and not fully complied with.

Assessment under Sections 143(3)/147 was framed on 31.03.2015 by ITO, Ward-1(2), Raipur determining income at Rs. 32,37,950 after additions: (i) suppressed gross profit on estimated sales Rs. 8,99,546; (ii) disallowance of bank interest/commission charges Rs. 4,00,000; and (iii) disallowance of interest claim under Sections 36(1)(iii) and 37(1) Rs. 9,90,902. The assessee appealed to the CIT(A), which upheld the assessment; the assessee then appealed to the Tribunal.

Procedural matters at the Tribunal: the appeal was 29 days time-barred; the assessee applied for condonation of delay, which the Tribunal granted on account of an inadvertent omission (failure to deliver signed Form 36) despite timely payment of fees on 02.02.2022. The Tribunal admitted additional grounds of appeal which raise pure questions of law.

Legal Issues Presented

Whether the notice issued under Section 148 dated 18.06.2013 by Dy. CIT-1(1) (DCIT-1(1)) was valid when, according to CBDT Instruction No.1/2011 (effective 01.04.2011), the pecuniary jurisdiction in the assessee's case vested with the ITO (i.e. whether the officer who issued the reopening notice had jurisdiction).
Whether an assessment framed by the jurisdictional officer (ITO-1(2), Raipur) on the basis of a Section 148 notice originally issued by a non‑jurisdictional officer is sustainable (i.e., whether the subsequent assessment can be treated as valid continuation of proceedings initiated by a non‑jurisdictional officer).
Admission of additional grounds of appeal that raise pure questions of law — whether such grounds can be admitted despite being raised for the first time before the Tribunal.
Other subsidiary issues raised in the grounds (e.g., alleged lack of a speaking order when framing reassessment, estimation of sales and gross profit, additions for personal expenses and disallowance of interest) — although the Tribunal's primary focus was the jurisdictional issue.

Arguments of the Parties

Appellant's Arguments

The Dy. CIT-1(1) who issued the Section 148 notice on 18.06.2013 did not have pecuniary jurisdiction to issue the notice in view of CBDT Instruction No.1/2011 (effective 01.04.2011) which assigned non-corporate returns with declared income up to Rs.15 lakhs in mofussil areas to ITOs (the assessee declared Rs.9,47,500); therefore the notice was invalid.
The assessment dated 31.03.2015 framed by ITO-1(2), Raipur could not be sustained because it was framed on the basis of the notice issued by the non-jurisdictional Dy. CIT-1(1); the jurisdictional officer (ITO-1(2)) never issued a valid Section 148 notice of his own.
The additional grounds raised involve pure questions of law and should be admitted (relied on National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC)).
Other substantive pleas: AO erred in estimating sales and gross profit without basis; additions for personal expenses and interest disallowances were incorrect — though the Tribunal did not adjudicate these after deciding the jurisdiction issue.

Respondent's Arguments (Revenue)

The Department relied on the orders of the lower authorities and contended there was no infirmity in framing assessment by ITO-1(2) on the basis of the Section 148 notice dated 18.06.2013.
No specific factual material was placed to show that the officer who issued the notice had been properly vested with jurisdiction at the relevant time or that a lawful transfer under Section 127/129 validated the subsequent action.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC)	Admitting additional grounds of appeal that raise pure questions of law may be allowed even if raised for the first time before the Tribunal.	Used to justify admission of additional grounds of appeal involving purely legal questions that required no further factual verification.
Ashok Devichand Jain v. Union of India, W.P. No.3489 of 2019 (Bombay High Court), order dated 08.03.2022	If pecuniary jurisdiction vested with one officer and a different (non-jurisdictional) officer issues Section 148 notice, such notice is bad and can be quashed.	Relied upon as supporting authority for the proposition that a notice issued by an officer who lacked jurisdiction cannot validate subsequent proceedings and the notice must be quashed.
Pavan Morarka v. ACIT-2 (2022) 136 taxmann.com 2 (Bombay High Court)	A reopening notice issued by an officer without jurisdiction cannot be treated as the origin of valid proceedings; a subsequent notice by the jurisdictional officer cannot be treated as a continuation if the original notice was invalid.	Cited to reinforce that assessment framed by a jurisdictional AO on the basis of a non‑jurisdictional AO's notice is not sustainable.
Pr. Commissioner of Income Tax-II v. Mohd. Rizwan, Prop. M/s M.R. Garments Moulviganj, ITA No.100 of 2015 (Allahabad High Court) dated 30.03.2017	Where a notice under Section 148 was issued by an officer who had no jurisdiction at the relevant time, the notice is invalid and consequent assessment can be quashed.	Referred to as a supporting precedent where the High Court treated such notices as invalid and upheld quashing of assessment for want of valid assumption of jurisdiction.
MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad High Court)	If jurisdiction of the A.O. was transferred before issuance of Section 148 notice by him, the notice would be without jurisdiction.	Referred to illustrate a similar principle — that transfer of jurisdiction before issuance of notice renders the notice invalid.
M/s. Adarsh Rice Mill v. ITO, Ward-1(1), ITA No.84/RPR/2022 (ITAT, SMC Bench, Raipur) dated 29.11.2022	ITAT SMC Bench earlier applied the principle that notice issued by a non-jurisdictional A.O is unsustainable.	Used as a Tribunal precedent with similar facts to support quashing of assessment in present case.
Pankajbhai Jaysukhlal Shah v. ACIT, Circle-2 (2019) 110 taxmann.com 51 (Gujarat High Court); ACIT v. Pankajbhai Jaysukhlal Shah [2020] 120 taxmann.com 318 (SC)	When a notice under Section 148 is issued by an officer who did not have jurisdiction, the notice can be quashed; the High Court's order was upheld by the Supreme Court.	Invoked to show higher court support for quashing of notices issued by non‑jurisdictional officers and to underscore the binding nature of that outcome.
Shreyansh Bothra v. ITO-2(1), Bhilai, ITA No.114/RPR/2019 dated 16.12.2022 (ITAT, SMC Bench)	SMC Bench observation that assessment framed on basis of notice issued by a non-jurisdictional officer is not sustainable.	Cited as recent internal Tribunal authority consistent with the view adopted in the present case.

Court's Reasoning and Analysis

The Tribunal proceeded in a structured manner:

Delay and Admission of Grounds: The Tribunal first considered condonation of 29 days' delay in filing the appeal. On the facts — admitted inadvertent omission to deliver a signed Form 36 despite timely payment of fees — the Tribunal exercised discretion to condone the delay. The Tribunal also admitted additional grounds that raised pure questions of law, relying on the principle in National Thermal Power Co. Ltd. v. CIT.
Factual Foundation on Jurisdictional Assignment: The Tribunal extracted and reproduced CBDT Instruction No.1/2011 (dated 31.01.2011) which revised monetary limits effective 01.04.2011, assigning non-corporate returns in mofussil areas with declared income up to Rs.15 lakhs to ITOs. The assessee declared income below that threshold and was located in a mofussil area; thus, the pecuniary jurisdiction at the relevant time vested with the ITO (specifically ITO-1(3) at the time of issuance of the notice, later transferred to ITO-1(2) w.e.f. 15.11.2014).
Sequence of Events and Material Facts: The Dy. CIT-1(1) issued the Section 148 notice on 18.06.2013. The assessment was ultimately framed by ITO-1(2) on 31.03.2015 but without that ITO having issued a fresh Section 148 notice — instead proceeding on the basis of the earlier notice that the Tribunal found was issued by a non‑jurisdictional officer.
Application of Precedents: The Tribunal examined a line of High Court and Tribunal decisions cited in the order which hold that a Section 148 notice issued by an officer who did not have jurisdiction is invalid and that subsequent proceedings by the jurisdictional officer, taken solely on the basis of such a prior invalid notice, cannot be sustained as a lawful continuation. The Tribunal considered authorities from Bombay High Court, Allahabad High Court, Gujarat High Court (and the Supreme Court's upholding of the Gujarat High Court in the Pankajbhai case), as well as recent decisions of the SMC Bench of the ITAT.
Conclusion on Jurisdiction: On the undisputed facts and applying the cited authorities, the Tribunal concluded that the Dy. CIT-1(1) who issued the notice was not vested with jurisdiction under CBDT Instruction No.1/2011 and therefore the notice dated 18.06.2013 was invalid. Consequently, the ITO-1(2) who framed the assessment on the basis of that notice could not be said to have validly assumed jurisdiction. The Tribunal found this to be a fatal lapse and held that the assessment so framed was devoid of legal force.
Consequential Treatment of Other Issues: Having quashed the assessment for want of valid assumption of jurisdiction, the Tribunal refrained from adjudicating other substantive contentions raised by the assessee and left them open.

Holding and Implications

Holding:

THE APPEAL IS ALLOWED AND THE ASSESSMENT FRAMED UNDER SECTIONS 143(3)/147 DATED 31.03.2015 IS QUASHED FOR WANT OF VALID ASSUMPTION OF JURISDICTION.

Direct consequences and implications:

The assessment for Assessment Year 2010-11 as framed by ITO-1(2), Raipur on 31.03.2015 is quashed and the appeal of the assessee is allowed in terms of the Tribunal's observations.
Because the Tribunal's decision rests on the jurisdictional defect (invalid Section 148 notice issued by a non‑jurisdictional officer), the Tribunal did not decide the other substantive contentions on merits; those contentions remain open for future consideration if proceedings are validly initiated.
The order relies upon and applies existing judicial precedent; the Tribunal did not purport to lay down a new legal principle but followed prior High Court and Supreme Court reasoning on the legal effect of notices issued by non‑jurisdictional officers.

Disposition: Appeal allowed. Order pronounced on 28.12.2022 by Shri Ravish Sood, Judicial Member, ITAT, Raipur ("SMC" Bench). Copy directed to the appellant, respondent, CIT(A), Pr. CIT and departmental representatives as noted in the order.

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Shri Chowaram Dhiwar, Raipur v. Income Tax Officer-1(2), Raipur

आयकर अपील य अ धकरण यायपीठ "एक-सद य" मामला रायपुर म

IN THE INCOME TAX APPELLATE TRIBUNAL

RAIPUR BENCH "SMC", RAIPUR ी रवीश सूद, या यक सद य के सम

BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER

आयकर अपील स.ं/ ITA No.31/RPR/2022 नधारण वष / Assessment Year : 2010-11 Shri Chowaram Dhiwar

Sector 01, New Rajendra Nagar, Raipur (C.G.)-492 006

PAN : AKPPD8741C

.......अपीलाथ / Appellant बनाम / V/s.

The Income Tax Officer-1(2), Raipur (C.G.)

…… यथ / Respondent

Assessee by : Shri Sunil Kumar Agrawal, CA Revenue by : Shri Gitesh Kumar, Sr. DR सुनवाई क तार ख / Date of Hearing : 21.12.2022 घोषणा क तार ख / Date of Pronouncement : 28.12.2022

आदेश / ORDER

PER RAVISH SOOD, JM

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 22.11.2021, 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 31.03.2015 for the assessment year 2010-11. The assessee has assailed the impugned order on the following grounds of appeal:

"1. On the facts and circumstances of the case, the various observations made by the AO against the assessee and ultimate addition in the impugned assessment, unsubstantiated on the strength of evidence brought against the assessee, being opposed to fact and law on various grounds, such assessment and consequential levy kindly be struck down from its root. Without prejudice to above, the ld. AO erred on facts and in law in framing assessment u/s.147 of the IT Act, 1961.

2. On the facts and circumstances of the case, the ld. AO has erred in framing the assessment order u/s147 without passing speaking order about any disagreement, if any, with the explanation/contentions given by the assessee for the reason recorded.

3. On the facts and circumstances of the case, the ld. AO has erred in estimating the sales at Rs.11,00,00,000 as against the sales shown as per audited accounts at Rs.9,97,97,240, without mentioning any basis for that.

4. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs.8,99,546 by applying the GP rate @ 6% (as against GP shown as per audited accounts at Rs.57,00,454) on such estimated sales and doing this, again, the, AO has not mentioned any basis.

5. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs.4,00,000 on account of expenses of personal nature u/s.37(1) of the IT Act, 1961.

6. On the facts and circumstances of the case, the ld. AO has erred in making addition of Rs.9,90,902 on account of disallowance on interest u/s.36(1)(iii) and u/s.37(1) of the IT Act, 1961.

7. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing."

Also the assessee has raised additional grounds of appeal which reads as under:

"Additional Gr.No.1:

"1. On the facts and circumstances of the case and in law, reasons recorded & notice issued u/s.148 by DCIT-1(1), Raipur on 18-6-13 is invalid, non-est, as she was not having pecuniary jurisdiction as on 18-6-13, since, CBDT Instruction No.1/11 dt.31- 1-11 was applicable from 1-4-11, is binding on IT authorities u/s119; in absence of a valid notice issued u/s148 by ITO-1(2), Raipur (`jurisdictional AO') who framed the assessment u/s. 147 rws.143(3) dt.31-3-15; initiation of reassessment u/s148 would be invalid, non-est and thereby, consequential assessment made u/s 147 rws.143(3) dt.31- 3- 15 would also be invalid, non-est and is liable to be quashed; Additional Gr.No.2:

"2. On the facts and circumstances of the case and in law, assessment made u/s.147 rws.143(3) dt.31-3-15 is invalid, non-est on the count that ld. AO has not issued notice u/s143(2) which is sine qua non for making assessment u/s147 rws.143(3); in absence of mandatory notice u/s143(2), assessment made u/s.147 rws.143(3) would be invalid, non-est and is liable to be quashed."

Additional Gr.No.3

"3. On the facts and circumstances of the case and in law, ld AO has not made addition on the very basis of the reasons recorded, on which, the reopening has been made; ld AO has made addition on independent issue which is not forming part

of the reasons recorded; reopening is without jurisdiction & is liable to be quashed."

2. As the present appeal is time barred by 29 days, therefore, the Ld. Authorized Representative (for short 'AR') for the assessee has taken me through an application a/w. affidavit filed by the assessee explaining the reasons leading to the same. It was submitted by the Ld. AR that the delay involved in filing of the appeal had occasioned due to the inadvertent failure on the part of the assessee to deliver the duly signed Form 36 to his counsel, despite having deposited the appeal fees of Rs.10,000/- in the government treasury within the stipulated time period, i.e, on 02.02.2022. On the other hand the ld. Departmental Representative (for short "D.R") had objected to the seeking of condonation of delay by the assessee. I have given a thoughtful consideration to the reasons leading to the delay in filing of the present appeal, and is of the considered view that as the delay involved in filing of the same had occasioned due to an inadvertent omission on the part of the assessee, which, he had fairly admitted, therefore, the same in all fairness merits to be condoned.

3. As the assessee by raising the aforesaid additional grounds of appeal has assailed the validity of the jurisdiction that was assumed by the ITO-1(2), Raipur for framing the assessment u/s.143(3), dated 31.03.2015, which being a purely legal issue would not require looking

any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. The aforesaid view that where an additional ground of appeal involving purely a question of law requiring no further verification of facts is raised before the Tribunal, though for the first time, then, the same merits admission is supported by the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC).

4. Succinctly stated, the assessee who is engaged in the business of trading in foreign liquor had filed his return of income for A.Y 2010- 11 on 30.09.2010, declaring an income of Rs. 9,47,500/-. Observing, that as against the purchases of Rs.4,22,48,477/- disclosed by the assessee in his profit & loss a/c those as per the TCS certificate were Rs. 4,71,85,928/-, the Dy. CIT-1(1) initiated proceedings u/s 147 of the Act, Page 2 of APB. Notice u/s 148 of the Act, dated 18.06.2013 was issued by the Dy. CIT-1(1), Raipur, Page 1 of APB. In compliance, the assessee vide his letter dated 05.07.2013 requested that his original return of income filed on 30.09.2010 be treated as that filed in compliance to notice u/s 148 of the Act, Page 3 of APB. Copy of the reasons to believe thereafter were at the assessee's request made available to him by the A.O. Notice(s) u/s 142(1), dated 28.11.2013 and 10.12.2013 were issued by the Dy. CIT-1(1), Raipur., which, as is

discernible from the assessment order were not fully complied with by the assessee.

5. Assessment u/ss. 143(3) (sic. 143(3)/147), dated 31.03.2015 was thereafter framed by the ITO- Ward 1(2), Raipur vide his order passed u/ss. 143(3)(sic) , dated 31.03.2015, determining the income of the assessee at Rs. 32,37,950 after making certain additions /disallowances, viz. (i). addition of suppressed gross profit on estimated sales: Rs. 8,99,546/-; (ii). disallowance out of bank interest/commission charges: Rs. 4,00,000/-; and (iii). disallowance of the assessee's claim for deduction of interest expenditure u/ss. 36(1)(iii) and 37(1) of the Act: Rs. 9,90,902/-.

6. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without any success.

7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.

8. At the very outset of the hearing of the appeal, the Ld. Authorized Representative (for short 'AR') for the assessee assailed the validity of the jurisdiction that was assumed by the A.O, i.e., ITO, Ward-1(2), Raipur for framing of the impugned assessment u/s.143(3)(sic), dated 31.03.2015. It was the claim of the Ld. AR that as the A.O having

jurisdiction over the case of the assessee, i.e., ITO, Ward-1(2), Raipur had framed the impugned assessment without issuing any notice u/s.148 of the Act, therefore, the assessment order so passed by him u/ss.143(3)(sic) dated 31.03.2015 could not be sustained and was liable to be struck down on the said count itself. It was averred by the Ld. AR that as the assessment framed u/ss.143(3)(sic), dated 31.03.2015 was framed by the ITO, Ward-1(2), Raipur, i.e., the jurisdictional officer not on the basis of any notice u/s.148 of the Act issued by him but on the basis of that issued by the Dy. CIT-1(1), Raipur on 19.06.2013, therefore, the impugned assessment could not be sustained for want of valid assumption of jurisdiction on his part. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that pursuant to the CBDT Instruction No.1/2011, dated 31.01.2011 that was applicable w.e.f. 01.04.2011, the existing monetary limits for assigning cases to ITOs and DCs/ACs stood revised. It was averred by the Ld. AR that as per the CBDT Notification 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 upto Rs.15 lac in his return of income was to be assigned to the ITOs. It was submitted by the Ld. AR that the pecuniary jurisdiction over the case of the assessee was vested with the ITO-1(3), Raipur, which pursuant to restructuring/reallocation of territorial jurisdiction over the case of

the assessee who was based in Village Kanki, P.O.-Kharora was transferred from the ITO-1(3), Raipur to ITO-1(2), Raipur. On the basis of the aforesaid facts, it was submitted by the Ld. AR that though the jurisdiction over the case of the assessee was initially vested with the ITO-1(3), Raipur, which thereafter vide Notification No.1/2014-15 dated 15.11.2014 was transferred to ITO-1(2), Raipur but notice u/s.148, dated 18.06.2013 was wrongly issued by the DCIT-1(1), Raipur. It was submitted by the Ld. AR that though the assessment u/ss.143(3)(sic) dated 31.03.2015 was, thereafter, framed by the ITO- 1(2), Raipur i.e. jurisdictional officer, but he had proceeded with and framed the impugned assessment on the basis of notice u/s.148 dated 19.06.2013 that was issued by the DCIT-1(1), Raipur, i.e., a non jurisdictional officer. In sum and substance, it was the claim of the Ld. AR that as the ITO-1(2), Raipur had framed the impugned assessment u/ss.143(3)(sic) dated 31.03.2015 on the basis of notice u/s.148 dated 19.06.2013, which was issued by the DCIT-1(1), Raipur i.e. an officer who at the relevant point of time had no jurisdiction over the case of the assessee, therefore, de-hors issuance of a valid notice u/s.148 of the Act, the impugned assessment so framed u/ss.143(3)/147 dated 31.03.2015 could not be sustained and was liable to be struck down on the said count itself.

9. Per contra, the Ld. Departmental Representative ( for short 'DR') relied on the orders of the lower authorities. It was averred by the Ld. DR that as the assessment u/ss.143(3)(sic) dated 31.03.2015 had been framed by the ITO-1(2), Raipur on the basis of notice u/s.148 dated 19.06.2013, therefore, no infirmity did emerge therefrom.

10. I 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.

11. Ostensibly, the proceedings u/s.147 of the Act were initiated by the DCIT-1(1), Raipur, Page 2 of APB. Notice u/s.148 18.06.2013 was issued by the DCIT-1(1), Raipur. Assessment u/s.143(3)(sic. 143(3)/147) was, thereafter, framed by the ITO-1(2), Raipur. Admittedly, it is a matter of fact borne from record that the CBDT vide Instruction No. 1/2011, dated 31.01.2011 had, inter alia, revised the existing monetary limits for assigning cases to ITOs and DCs/ACs. For the sake of clarity, I 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 me)

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 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 upto Rs.15 lacs in his return of income is to be assigned to the

ITO's. As the assessee had in compliance to notice u/s.148 of the Act,

dated 18.06.2013 requested vide his letter dated 05.07.2013 that his original return of income disclosing an income of Rs.9,47,500/- that was filed on 30.09.2010 be treated as a return filed in compliance to the aforesaid notice, 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. As is discernible from the records, the aforesaid request of the assesee vide his letter dated 05.07.2013 that his original return of income disclosing an income of Rs.9,47,500/- be treated as a return u/s.148 of the Act was accepted by the A.O, who, thereafter, had framed assessment vide his order passed u/s.143(3)(sic), dated 31.03.2015, therein taking the income of the assessee as originally returned as the base figure while arriving at the assessed income.

12. On the basis of the aforesaid facts, I am of the considered view, that as stated by the Ld. AR, and, rightly so, as per the CBDT Instruction No.1/2011, dated 31.01.2011 the jurisdiction over the case of the assessee who is located in a mofussil area i.e. Raipur and had

in compliance to the notice u/s.148, dated 18.06.2013 filed a non- corporate return on 05.07.2013 for the year under consideration, i.e., A.Y.2010-11 declaring an income of Rs.9,47,500/- was vested with the ITO, Ward 1(3), Raipur [which w.e.f. 15.11.2014 was transferred to ITO-1(2), Raipur]. Although notice u/s. 148, dated 18.06.2013 was issued within the stipulated time period, however, the same was issued by the DCIT-1(1), Raipur, i.e., an A.O who pursuant to the CBDT Instruction No.1 of 2011, dated 31.01.2011 was not vested with jurisdiction over the case of the assessee for the year under consideration. On the other hand as the ITO, Ward-1(3), Raipur [succeeded by ITO, Ward-1(2), Raipur w.e.f. 15.11.2014] who as per the aforesaid CBDT Instruction (supra) was at the relevant point of time vested with the exclusive pecuniary jurisdiction over the case of the assessee for the year under consideration had not issued any notice u/s. 148 of the Act, and had proceeded with on the basis of the notice u/s.148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional Officer, therefore, no valid jurisdiction could have been assumed by him for framing the impugned assessment vide order passed u/s.143(3)(sic), dated 31.03.2015.

13. On the basis of my aforesaid deliberations, I am in agreement with the Ld. AR that the ITO-1(2), Raipur could not have validly

assumed jurisdiction and framed the assessment vide his order passed u/s.143(3)(sic), dated 31.03.2015 on the basis of the notice issued u/s. 148 dated 18.06.2013 by the DCIT-1(1), Raipur i.e. a non jurisdictional A.O. The aforesaid view of mine is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Ashok Devichand Jain Vs. UOI in W.P. No.3489 of 2019, dated 08.03.2022. In the said case the Hon'ble High Court by referring to the CBDT Instruction No.1 of 2011, dated 31.01.2011, had observed, that as the pecuniary jurisdiction over the case of the assessee before them who had returned an income of Rs.64.34 lacs was vested with the DCs/ACs, therefore, the notice issued u/s.148 of the Act by the ITO who during the year under consideration had no pecuniary jurisdiction over the assessee's case was bad in the eyes of law. Considering the aforesaid lapse in the assumption of jurisdiction the Hon'ble High Court had quashed the notice that was issued by the ITO u/s.148 of the Act. Also, I find that a similar view had been taken by the Hon'ble High Court of Bombay in the case of Pavan Morarka Vs. ACIT-2, (2022) 136 taxmann.com 2 (Bombay). It was observed by the Hon'ble High Court that as the A.O at Delhi who had issued notice u/s.148 of the Act had no jurisdiction over the case of the assessee who was being assessed at Mumbai, therefore, the subsequent reopening notice that was issued by the A.O at Mumbai after the case of the assessee was transferred to his

jurisdiction could not be held to be in continuation of the proceedings which were initiated by the A.O at Delhi. To sum up, it was observed by the Hon'ble High Court that if an A.O who had issued notice u/s.148 was not vested with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non- jurisdictional A.O. Also, a similar view had been taken by the Hon'ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case before the Hon'ble High Court notice u/s.148 was issued by the ITO-(IV)(1), Lucknow who at the relevant point of time had no jurisdiction over the case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s.148 of the Act, therefore, the Hon'ble High Court treating the notice u/s 148 issued by the ITO-(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O. Apart from that, a similar view had earlier been taken by the Hon'ble High Court of Allahabad in the case of MI

Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon'ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s.148 of the Act by him, therefore, the notice so issued by him would be without jurisdiction. Also, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench, Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No.84/RPR/2022, dated 29.11.2022. Further, a similar view had been taken by the Hon'ble High Court of Gujarat in the case of Pankajbhai Jaysukhlal Shah Vs. ACIT, Circle-2 (2019) 110 taxmann.com 51 (Guj.). In the said case, though the A.O who had jurisdiction over the case of the assessee had recorded the 'reasons to believe' but notice u/s.148 of the Act was issued by another officer, therefore, the notice so issued u/s.148 of the Act was quashed by the Hon'ble High Court. At this stage, I may herein observe, that the aforesaid order of the Hon'ble High Court had thereafter been upheld by the Hon'ble Supreme Court in the case of ACIT, Circle-1 Vs. Pankajbhai Jaysukhlal Shah[2020] 120 taxmann.com 318 (SC). Also, I find that a similar view had been taken by a "SMC" Bench of this Tribunal in its recent order passed in the case of Shreyansh Bothra Vs. ITO-2(1), Bhilai, ITA No.114/RPR/2019, dated 16.12.2022, wherein, it was observed as under:

"11. Controversy involved in the present appeal in the backdrop of the aforesaid factual matrix boils down to the solitary aspect, i.e., as to whether or not the assessment framed by the ITO, Ward-2(1), Bhilai vide order passed u/ss.143(3)/147 dated 25.03.2016 on the basis of notice issued u/s.148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. a non-jurisdictional A.O is sustainable in the eyes of law?

12. As observed by me hereinabove, the assessment proceedings in the case of the assessee were initiated by the ITO, Ward-1(1), Raipur vide notice u/s.148 dated 23.03.2015. Subsequently, the ITO, Ward-1(1), Raipur had transferred the case record of the assessee on 12.05.2015 to ITO, Ward-2(1), Bhilai. The ITO, Ward-2(1), Bhilai had, thereafter, on the basis of notice u/s.148 dated 23.03.2015 (supra) proceeded with and framed the assessment vide his order u/ss.143(3)/147 dated 25.03.2016. Ostensibly, the ITO, Ward-2(1), Bhilai, i.e., jurisdictional officer had not issued any notice u/s.148 of the Act but had acted upon that as was issued by the ITO, Ward- 1(1), Raipur i.e. a non-jurisdictional officer on 23.03.2015. At this stage, I may herein observe that it is not the case of the department that the jurisdiction over the case of the assessee was transferred from ITO, Ward-1(1), Raipur to ITO, Ward-2(1), Bhilai vide an order passed by the appropriate authority u/s.127 of the Act. Also, no material had been placed before me by the Ld. DR which would reveal that as the ITO, Ward-1(1), Raipur at the time of issuance of notice u/s.148 dated 23.03.2015 was duly vested with the jurisdiction over the case of the assessee, which, thereafter, had validly been transferred to the ITO, Ward-2(1), Bhilai, therefore, as per Section 129 of the Act the assessment framed by the latter on the basis of notice u/s.148 dated 23.03.2015 issued by the ITO, Ward-1(1), Raipur could not be faulted with.

13. On the basis of the aforesaid facts, I am of the considered view that as stated by Mr. R.B Doshi, the Ld. AR, and, rightly so, the framing of the impugned assessment u/ss.143(3)/147 dated 25.03.2016 by the ITO, Ward-2(1), Bhilai on the basis of notice issued u/s. 148 dated 23.03.2015 by the ITO, Ward-1(1), Raipur i.e. an officer who at the relevant point of time was not vested with jurisdiction over the case of the assessee, was devoid and bereft of any force of law. I find that involving identical facts a similar issue had came up before the Hon'ble High Court of Bombay in the case of Ashok Devichand Jain Vs. UOI in W.P. No.3489 of 2019, dated 08.03.2022. In the case before the Hon'ble High Court as the notice u/s.148, dated 30.03.2019 was issued by the ITO, Ward 12(3)(1), Mumbai, i.e.,

a non-jurisdictional Officer, therefore, on a writ petition filed by the assessee assailing the validity of the jurisdiction that was assumed by the A.O for reopening of its case on the basis of the aforesaid impugned notice, the Hon'ble High Court had quashed the notice issued u/s.148 of the Act, 30.03.2019 for the reason that the same was issued by an A.O who at the relevant point of time had no jurisdiction over the assessee- petitioner. Also, I find that a similar view had been taken by the Hon'ble High Court of Bombay in the case of Pavan Morarka Vs. ACIT-2, (2022) 136 taxmann.com 2 (Bombay). It was observed by the Hon'ble High Court that as the A.O at Delhi who had issued notice u/s.148 of the Act had no jurisdiction over the case of the assessee who was being assessed at Mumbai, therefore, the subsequent reopening notice that was issued by the A.O at Mumbai after the case of the assessee was transferred to his jurisdiction could not be held to be in continuation of the proceedings which were initiated by the A.O at Delhi. To sum up, it was observed by the Hon'ble High Court that if an A.O who had issued notice u/s.148 was not vested with jurisdiction over the case of the assessee, then, the subsequent notice issued by the jurisdictional A.O could neither be construed as a notice issued in continuation of the earlier proceedings, nor any valid assessment u/ss. 143(3)/147 of the Act could be framed on the basis of such notice issued by the non-jurisdictional A.O. Also, a similar view had been taken by the Hon'ble High Court of Allahabad in the case of Pr. Commissioner of Income Tax-II Vs. Mohd. Rizwan, Prop. M/s. M.R Garments Moulviganj, Lucknow, ITA No. 100 of 2015 dated 30.03.2017. In the case before the Hon'ble High Court, notice u/s.148 was issued by the ITO-(IV)(1), Lucknow who at the relevant point of time had no jurisdiction over the case of the assessee, as the same was already transferred to ITO-V(2), Lucknow. Thereafter, as the ITO-V(2), Lucknow proceeded with and framed the assessment without issuing any notice u/s.148 of the Act, therefore, the Hon'ble High Court treating the notice u/s 148 issued by the ITO-(IV)(1), Lucknow as invalid upheld the quashing of the assessment by the Tribunal for want of valid assumption of jurisdiction by the jurisdictional A.O., i.e, ITO- (IV)(1), Lucknow. Apart from that, a similar view had earlier been taken by the Hon'ble High Court of Allahabad in the case of MI Builders (P) Ltd. (2014) 349 ITR 271 (Allahabad). It was observed by the Hon'ble High Court that as the jurisdiction of the A.O was transferred before issuance of notice u/s.148 of the Act by him, therefore, the notice so issued would be without jurisdiction. Further, I find that similar view in a case involving identical facts had been taken up by the ITAT, SMC Bench,

Raipur in the case of M/s. Adarsh Rice Mill Vs. ITO, Ward-1(1), ITA No.84/RPR/2022, dated 29.11.2022.

14. Considering the aforesaid position of law, I find substance in the claim of the Ld. AR that the assessment framed in the case of the present assessee by the ITO-2(1), Bhilai vide his order passed u/ss.143(3)/147, dated 25.03.2016 on the basis of notice u/s.148 of the Act, dated 23.03.2015 issued by the ITO-1(1), Raipur ,i.e., a non jurisdictional A.O, being devoid and bereft of any of force of law cannot be sustained and is liable to be vacated on the said count itself. Thus, the Ground of appeal No.1 ( to the extent relevant) is allowed in terms of the aforesaid observations."

14. On the basis of my aforesaid deliberations, I am of the considered view that as the assessment framed in the case of the present assessee by the ITO-1(2), Raipur vide order u/s.143(3)(sic) dated 31.03.2015 on the basis of notice u/s.148 dated 18.06.2013 issued by the DCIT-1(1), Raipur i.e. a non-jurisdictional A.O, is devoid and bereft of any force of law, therefore, the same cannot be sustained and is liable to be struck down on the said count itself. Accordingly, the impugned assessment framed by the ITO-1(2), Raipur u/s.143(3)(sic), dated 31.03.2015 is quashed for want of valid assumption of jurisdiction on his part.

15. As I have quashed the assessment framed by the A.O u/s.143(3) (sic, u/ss.143(3)/147), dated 25.03.2016 for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and therein adjudicating the other contentions that have been raised by the Ld. AR

as regards the validity of the jurisdiction assumed by the A.O, which, thus, are left open.

16. In the result, appeal of the assessee is allowed in terms of the aforesaid observations.

Order pronounced under Rule 34(4) of the Appellate Tribunal Rules, 1963 by placing the details on the notice board. Sd/-

(रवीश सूद /RAVISH SOOD)

या यक सद य/JUDICIAL MEMBER

रायपुर / Raipur; दनांक / Dated : 28^thDecember, 2022 ####SB

आदेश क त ल प अ े षत / Copy of the Order forwarded to :

1. अपीलाथ / The Appellant.

2. यथ / The Respondent.

3. The CIT(Appeals)-1, Raipur (C.G.)

4. The Pr. CIT-1, Raipur (C.G.)

5. वभागीय त न ध, आयकर अपील य अ धकरण, "एक-सद य" बच, रायपुर / DR, ITAT, "SMC" Bench, Raipur.

6. गाड फ़ाइल / Guard File.

आदेशानुसार / BY ORDER, // True Copy //

नजी स चव /Private Secretary आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.

Shri Chowaram Dhiwar, Raipur v. Income Tax Officer-1(2), Raipur

Case Summary — Income Tax Appellate Tribunal, Raipur Bench ("SMC")

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's Arguments (Revenue)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Shri Chowaram Dhiwar, Raipur v. Income Tax Officer-1(2), Raipur

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