Case Law Details
Regional Oilseeds Growers Co-operative Societies Union Ltd. Vs JCIT (ITAT Bangalore)
The Regional Oilseeds Growers Co-operative Societies Union Ltd. recently found its appeal dismissed by the ITAT Bangalore concerning the jurisdiction of the authority who passed the assessment order. The order, dated 18th July 2023, was remanded to the Tribunal by the Karnataka High Court for further verification.
The appeals stem from a previous order by the Karnataka High Court, specifically ITA No. 30/2019, where the Court directed the Tribunal to scrutinize whether an order under section 120(4)(b) of the Income Tax Act had been issued. The Tribunal’s reevaluation was to be confined to the assessment years 2012-13 and 2013-14.
The arguments presented by both sides revolved around the absence of an order under section 120(4)(b), which, according to the appellant, rendered the assessment order passed by the JCIT (Joint Commissioner of Income Tax), Davengare, without jurisdiction. On the contrary, the respondent relied on Notification No. 267/2001 to assert that the JCIT was authorized to exercise the powers and functions of the Assessing Officer.
The Tribunal analyzed the provisions of the Income Tax Act, particularly section 120(4)(b), and emphasized the limitations on challenging the jurisdiction of the authority who passed the assessment order, as outlined in section 124(3). The Tribunal referred to judicial precedents, including the decision of the Allahabad High Court in CIT vs. British India Corporation Ltd., and concurred that jurisdictional disputes cannot be raised after the completion of assessment proceedings.
In light of the statutory limitation and judicial precedents, the Tribunal dismissed the appellant’s challenge to the jurisdiction of the assessing authority, noting that the challenge was raised after the prescribed time limit. Consequently, the Tribunal held the issue remitted by the High Court against the assessee for the relevant assessment years.
The ITAT Bangalore’s decision highlights the significance of adhering to statutory time limits for challenging jurisdictional matters in tax assessments.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
Present appeals arises out of the order dated 18.07.2023 by Hon’ble Karnataka High Court in ITA No. 30/2019. The Hon’ble Karnataka High Court has remanded the following issues to this Tribunal for necessary verification
2. The Hon’ble High Court as per para 9 has directed this Tribunal to verify and examine if there was an order u/s. 120(4)(b) of the Act. The Hon’ble High Court has also specified that the remand order shall be limited only to A.Ys. 2012-13 and 2013-14. The observations of the Hon’ble High Court are reproduced as under for the sake of convenience.
“8. We have carefully considered rival contentions and perused records.
9. Admittedly, the assessee’s case falls within the range headed by the JCIT. The JCIT had further a vacated the case to the AO. The assessment order has been
passed by the JCIT himself. In this factual matrix, the ITAT has remitted the matter to the AO to examine whether there was an order under Section 120(4)(b) of the Act. In our considered view, the ITAT itself could have examined the aspect of JCIT’s jurisdiction. Therefore, the matter requires reconsideration in the hands of the ITAT. Hence, the following;
ORDER
(i) Appeal is allowed in part;
(ii) Assessment orders for A.Ys.2010-11 and 201112 are quashed;
(iii) The first question of law is answered in favour of the assessee and against the Revenue;
(iv) Without expressing any opinion on merits on questions No.2 and 3, the matter is remitted to the ITAT to pass a fresh order wholly uninfluenced by the observations made in the impugned order;
(v) Remand order passed by the ITAT shall be limited only so far as A.Ys.2012-13 and 2013-14; and
(vi) All contentions kept open including the contentions raised in this appeal.
No costs.”
We have perused the submissions advanced by both sides in the light of records placed before us.
2.1. The Ld.AR and Ld.DR has furnished the written submissions and supportive documents vide paper book dated 01.12.2023 and 04.12.2023 respectively. The submissions of the Ld.AR are reproduced as under:
2.2. Per contra, the submissions of the Ld.DR are as under:
3. The contentions raised by the Ld.AR is that in the absence of order u/s.124(b), the assessment order passed by the Ld.AO is without jurisdiction. Before us, the Ld.AR submitted that, there is no order under section 120(4)(b) of the Act, so as to confer jurisdiction on the JCIT, Davengare to frame the impugned assessment. It was submitted that in absence of order under section 120(4)(b) read with section 2(7A) of the Act, the JCIT, Davengare cannot exercise the power and perform the functions of the Assessing Officer. The assessment thus framed by the JCIT Davengare is without jurisdiction and unsustainable.
3.1. According to the assessee, it is incumbent under the scheme of statute to vest the JCIT, Davengare, u/s 120(4)(b) of the Act to exercise or perform all or any of the powers and functions of Assessing Officer under the Act.
3.2. On the contrary, the Ld.DR vehemently relied on Notification No. 267/2001 dated 17.09.2001 in support of the contention that the Joint Directors of Income Tax shall exercise the powers and functions of the AO in respect of territorial area or persons or class of persons in respect of which such Joint Commissioner of Income Tax are authorised by the Commissioner of Income Tax. 3.3. The Ld.DR in the paper book at page 14 has placed the Notification No.267/2001 dated 17.09.2001 wherein it is directed by the CBDT u/s.120(4)(b) that the JCIT or the JDIT shall exercise the powers and functions of the assessing officers in respect of territorial area or persons or classes of persons or incomes or classes of income or cases, or classes of cases, in respect of which such JCIT are authorised by the CIT vide CBDT Notification No.S.O.732(E) dated 31.07.2001, S.O.880(E) dated 14.09.2001, S.O.881(E) dated 14.09.2001, S.O.882(E) dated 14.09.2001 and S.O.883(E) dated 14.09.2001 published in the Gazette of India, Part II, Section 3, sub-section (ii), Extraordinary. It is an admitted position as observed by Hon’ble High Court in para 9 that the case of the assessee falls within the range headed by the JCIT and that the JCIT had allocated the case to the assessing officer.
3.4. To examine the above contentions raised by both sides, we consider it appropriate to firstly extract section 2(7A) of the Act which reads as under:
“2(7A) Assessing Officers
(7A) “Assessing Officer” means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;”
3.5. A plain reading of the aforesaid provision would show that it is in two parts;
- The first part provides that Assessing Officer means the “Assistant Commissioner” or “Deputy Commissioner” or “Assistant Director” or “Deputy Director” or “Income Tax Officer” who is vested with the relevant jurisdiction by virtue of directions or orders issued under section 120(1) or 120(2) or any other provision of this Act.
- The second part provides that Assessing Officer means the “Additional Commissioner” or “Additional Director” or “Joint Commissioner” or “Joint Director” who is directed under section 120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under this Act.
3.6. In other words, Assessing Officer inter alia means, a “Assistant Commissioner” or “Deputy Commissioner” or “Assistant Director” or “Deputy Director” or “Income Tax Officer” who is who is vested with the relevant jurisdiction by virtue of directions or orders issued under section 120(1) or 120(2) ; or; is directed under section 120(4)(b) of the Act to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer under the Act. This interpretation also derives strength from the provisions contained in section 120(4) (b) of the Act which reads as under:
“120. Jurisdiction of income-tax authorities
(4) Without prejudice to the provisions of sub-sections (1) and (2) , the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein,-
(b) empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by [an Additional Commissioner or] [an Additional Director or] a Joint Commissioner [[ or a Joint Director, ]] and, where any order is made under this clause, references in any other provision of this Act, or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such [Additional Commissioner or] [Additional Director or] Joint Commissioner [[ or a Joint Director, 1] by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply.”
3.7. It will be seen that the said provision provides that Board may by general or special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director and where any order is made under this clause, reference in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or a Joint Director by whom, the powers and functions are to be exercised or performed under such order and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply.
(Emphasis supplied)
3.8. Further on perusal of the provisions of section 120(1) to 120(3), we note that the income tax authorities shall exercise all or any of the powers and perform all or any functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. Thus section 120(1) stipulates that powers and functions of an income tax authority shall be confined and restricted to the powers and functions conferred or assigned by Board under the Act. Further section 120(2) enables the Board u/s 120(1) to even authorize an income tax authority to issue an order in writing for exercise of powers and function by subordinate income tax authorities. In other words, section 120(2) does not in any manner provide that CIT can authorize an Additional Commissioner of Income Tax to perform the functions and, exercise the powers of an Assessing Officer.
3.9. Now coming to the present facts of the case. The JCIT has assumed concurrent jurisdiction for the years under consideration by virtue of Notification no.276/2001 dated 17/09/2001. the said notification and the Notification no.30 [f.no.187-13-2002-ITA-I]dated 04/02/2003 issued under section 120(1) of the Act by the CBDT makes this position further clear. Thus in our opinion as observed by us in the para 3.7. above, as the Board by general/special order and subject to such conditions, restrictions or limitations as may be specified therein empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director and where any order is made under this clause, reference in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or a Joint Director by whom, the powers and functions are to be exercised or performed under such order and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply.
3.10 There is one more aspect which needs to be emphasised herein regarding Section 120(3) that provides for issuing directions or orders under sub clause (1) and sub clause (2), the Board shall consider the territorial area, persons or class of persons, incomes or classes of income and cases or classes of cases. As regards the notification no. 267/2001 dated 17.9.2001 we notice that such notification by CBDT u/s 120(4)(b) of the Act directs that Joint Commissioner of Income Tax or Joint Director shall exercise the power and function of an Assessing Officer in respect of specified cases in respect of which such Joint Commissioner or authorized by Commissioner of Income Tax vide CBDT notification dated 14.9.2001 and 31.7.2001.
Now coming to section 120(4) which is a without prejudice class and provides that the Board may in general or by special order subject to certain restrictions/conditions/limitations may authorise the Principal Director General or Director General to perform the functions of any other Income Tax authority as may be assigned to him by the Board.
In sub clause (b) of clause (4), the Board further empowers Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner to issue orders in writing that the powers and functions conferred on such officer by the Board as the case may be by assigning to the assessing officer shall also include Additional Commissioner or Joint Commissioner, Additional Director or Joint Director. In the present facts the notification No.276 comes to rescue of the revenue and we do not find any merit in the arguments advanced by the ld.DR on this issue.
We have also perused the provisions of section 124 wherein the jurisdiction of assessing officers have been considered under the act. For the sake of convenience, section 124 has been reproduced as under:
“Jurisdiction of Assessing Officers.
124. (1) Where by virtue of any direction or order issued under sub-section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction—
(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and
(b) in respect of any other person residing within the area.
(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Principal Director General or Director General or the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner; or where the question is one relating to areas within the jurisdiction of different Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners, by the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify.
(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer—
(a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry 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 115WE or sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier;
(b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier;
(c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under subsection (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.
(4) Subject to the provisions of sub-section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made.
(5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120.”
3.11 Further, the section 120(4) is in respect of the directions or orders issued u/s.120(1) or (2) and casts a limitation of the assessee to challenge the jurisdiction of the authority who has passed the assessment order within a period of one month, sub clause (3) of 124 of the act is very clear on this limitation expressed by the legislature.
Hon’ble Allahabad High Court in case of CIT vs. British India Corporation Ltd. reported in (2011) 337 ITR 64 has held that the question of jurisdiction of the assessing authority cannot be disputed after the completion of the assessment proceedings. The facts in the case were that assessee filed its return of income for the assessment year 1974-75 which was processed by the Assessing Officer, namely, Income Tax Officer, Central Circle-I, Kanpur who completed the assessment under section 143(3)/144B of the Act on September 7, 1977 after making certain additions and disallowances to the returned income. On appeal assessee contended that the assessing authority had no jurisdiction to pass the assessment order inasmuch as the assessment file stood transferred from Income Tax Officer, Central Circle-I, Kanpur to the Inspecting Assistant Commissioner Range-D, Kanpur by the order dated July 1, 1977 and thus the assessment order by the Income Tax Officer was void-ab-initio. The Tribunal allowed the appeal on the ground that the Income Tax Officer, Central Circle-I had no jurisdiction in view of the transfer order dated July 1, 1977 transferring the case to the Inspecting Assistant Commissioner. The Hon’ble High Court held as under:
“18. It is reasonable to deduce that the question of jurisdiction of the assessing authority cannot be disputed after the completion of the assessment proceedings. Alternatively, if such a question arises, the said question can be addressed by the Commissioner or the Board, as the case may be, in view of sub-section (4) of section 124 and this by necessary corollary excludes the jurisdiction of the first appellate authority or the court.”
Recently, the Hon’ble Karnataka High Court in case of Adarsh Developers vs DCIT reported in (2024) 158 taxman.com 81 also have concurred that the same view in respect of the challenge of jurisdiction of the assessing authority who has passed the assessment order to be limited to one month.
3.12 Coming to the present facts of the case, the assessee has raised this challenge in the first round of appeal before this Tribunal when this issue had already become time barred by virtue of the provisions of section 124(3). We therefore do not find any merit in the contentions raised by the assessee at this juncture belatedly.
Accordingly the issue remitted by Hon’ble High Court for necessary verification is held against the assessee for the years under consideration.
In the result, the appeals filed by the assessee on this issue stands dismissed.
Order pronounced in the open court on 30th January, 2024.
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