Karan Motors Pvt. Ltd. Vs DCIT (ITAT Delhi)
Addl. CIT Can’t Act as AO Without 120(4)(b) Empowerment – ITAT Quashes Assessment; Absence of Jurisdictional Order Fatal – ₹20 Cr Additions Collapse
In appeal by Assessee, Delhi ITAT dealt with validity of assessment framed u/s 143(3) by Addl. CIT,
Assessee, engaged in manufacturing automobile spare parts, had filed return declaring loss of ₹5.66 crore. During assessment, AO made additions of nearly ₹20 crore. Before ITAT, Assessee raised an additional legal ground that assessment was void ab initio since Addl. CIT had no jurisdiction under law to act as AO without valid empowerment u/s 120(4)(b) read with s. 2(7A).
Assessee had repeatedly sought copy of jurisdictional orders passed u/s 127 or u/s 120(2)/(4)(b) through departmental requests & RTI applications. However, no such document was ever furnished. Even before Tribunal, Revenue could not produce any order conferring jurisdiction on Addl. CIT. On the contrary, RTI replies revealed that records of AY 2014-15 assessment were “not available”. Tribunal relied on its earlier decision in Nasir Ali Vs. Addl. CIT (ITA No. 1285/Del/2018, 25.09.2019), affirmed by Delhi High Court, which held that in absence of valid order u/s 120(4)(b), Addl. CIT cannot exercise powers of AO & assessment so framed is without jurisdiction. Mere mention in assessment order of jurisdiction transfer is insufficient unless supported by statutory authorization. Applying the same ratio, ITAT quashed the assessment as illegal & void ab initio for lack of jurisdiction. Liberty was granted to Revenue to seek restoration if it is later able to produce a valid order u/s 120(4)(b) conferring jurisdiction. Since assessment itself was quashed, other grounds on merits were left open as academic.
