Invalid Assumption of Jurisdiction by AO: CIT Cannot Revise Assessment Order

Smt. Aruna Tiwari Vs PCIT (ITAT Raipur)

In the case of Smt. Aruna Tiwari Vs. PCIT, the ITAT Raipur examined whether the Commissioner of Income Tax (CIT) could revise an assessment order based on an invalid assumption of jurisdiction by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act. The tribunal concluded that such an order is null and void, making it ineligible for revision.

The case pertains to the revision of an assessment order passed under section 143(3) of the Income Tax Act (IT Act). The central issue in the case is whether the Commissioner of Income Tax (CIT) had a valid jurisdiction to pass an order under section 263 of the IT Act to revise the assessment order, which was considered null and void in the eyes of the law.

The tribunal, in this case, ruled in favor of the assessee (Smt. Aruna Tiwari) and held that the original assessment order passed under section 143(3) was null and void due to an invalid assumption of jurisdiction by the Assessing Officer (AO). Consequently, the CIT did not have the authority to revise an assessment order that was already non-existent in the eyes of the law.

The tribunal cited previous judgments, including the case of Krishna Kumar Saraf vs. CIT, to support its decision that an invalid assessment order cannot be the basis for legally valid proceedings. The ITAT (Income Tax Appellate Tribunal) Delhi and Chandigarh Benches had also taken similar views in their respective cases, which further strengthened the tribunal’s conclusion.

It was mentioned that the order of the tribunal was subsequently approved by the Hon’ble High Court of Bombay in ITA No. 1168/2017, but the revenue department did not further appeal it, making the tribunal’s decision final.

Based on its findings, the tribunal quashed the order passed by the CIT under section 263 of the IT Act, as it was based on an invalid assumption of jurisdiction and the original assessment order was considered null and void.

FULL TEXT OF THE ORDER OF ITAT RAIPUR

The present appeal filed by the assessee is directed against the order passed by the Pr. Commissioner of Income Tax, Raipur-1 (for short ‘Pr. CIT’) u/s. 263 of the Income-tax Act, 1961 (for short ‘Act’), dated 28.03.2021, which in turn arises from the order passed by the A.O. u/s.143(3) of the Act, dated 29.11.2017 for A.Y. 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:

“GROUND NO. I

1. That the ex-parte Revision Order passed by the Learned Pr. Commissioner of Income Tax-1, Raipur (‘the Ld. PCIT’) under section 263 of the Income Tax Act, 1961 (‘the Act’) is highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law. It is prayed that the Revision Order passed under section 263 of the Act may please be cancelled/set-aside on this ground alone.

GROUND NO. II

2. That the Revision Order passed by the Ld. PCIT under section 263 of the Act is highly unjustified, bad in law, without jurisdiction & void ab initio since, the Ld. PCIT has grossly erred in concluding that the Learned Assessing Officer (‘the Ld.AO’) has failed to carry out the necessary enquiries and investigation in relation to the issues which pertains to the material already on record. Hence, it is prayed that the Order passed by the Ld. PCIT under the provisions of section 263 of the Act may please be cancelled & quashed in limine.

GROUND NO.III

3. On the facts and in the circumstances of the case as well as in law, the Ld. PCIT has grossly erred in setting aside the assessment order passed by the Ld.AO under section 143(3) of the Act on 29.11.2017 with direction to make fresh assessment on specified issues by holding that the said order is erroneous in so far as it is prejudicial to the interest of the revenue. The Ld. PCIT has failed to appreciate that the said assessment order has been passed by the Ld.AO after conducting necessary & diligent enquiries and conscious application of mind & deliberation to the material on record and hence, it is prayed that the order passed under section 263 of the Act being highly unjustified and not in accordance with the provisions of law, may please be cancelled.

GROUND NO. IV

4. That the Appellant craves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal.”

2. Although the registry has pointed out that the present appeal involves a delay of 351 days but on perusal of the records a/w. specific claim of the assessee in her memorandum of appeal, the aforesaid period of delay is found to be covered by the order of the Hon’ble Supreme Court of India in Suo Moto Writ Petition (Civil) No.3 of 2020 dated 23.03.2020, which was thereafter modified vide further order(s) dated 08.03.2021, 27.04.2021, 23.09.2021 and 10.01.2022, as per which for the purpose of limitation the period from 15.03.2020 to 28.02.2022 was to be excluded. Therefore, observing that the present appeal had been filed well with the limitation period, we admit the same.

2.1 Succinctly stated, the facts involved in the present case which will have a strong bearing on the adjudication of the same are for the sake of clarity are culled out in a chronological manner, as under:

3. After culmination of the assessment proceedings by the ITO, Ward- 4(1), Raipur vide his order passed u/s.143(3) of the Act dated 29.11.2017, the Pr. CIT, Raipur-1 vide his order passed u/s.263 of the Act dated 28.03.2021, observed that as the A.O had failed to both carry out necessary verification and apply his mind while framing the assessment, thus, the order passed by him u/s.143(3) of the Act dated 29.11.2017 was rendered as erroneous in so far it was prejudicial to the interest of the revenue for the following reasons:

“1. The assessee has purchased land at Mana, Raipur jointly with Pinki Sachdev. The total value of the land including stamp duty, registry charges and other expenses was for Rs.1,28,07,000/- out of which assessee’s component was for Rs.64,03,500/-. The mode of investment for assessee’s component was through cheque of Rs.37,00,000/- which was paid by Narendera Tiwari (husband) and balance amount of Rs.27,03,500/- through cash paid by assessee herself. The assessee has claimed that the payment of Rs.37,00,000/-was made by her husband namely Narendra Tiwari directly to the seller. On perusal of the bank statement of Narendra Tiwari, it is found that Narendra Tiwari has made payments of Rs. 37,00,000/-to the seller on 05.09.2014. However, on the same date, a sum of Rs. 17,00,000/- has been transferred from account of the assessee to the account of Narendra Tiwari. Further, on perusal of account of the assessee, it is found that an amount of Rs.17,00,000/- has been credited from the account of Narendra Tiwari bearing other account no. 30773576559. The account statement of that account of Narendra Tiwari is not kept on record. Hence, it is not verifiable why the assessee has taken transfer of amount of Rs.17,00,000/- from his husband, further transferred back to him and later on her husband paid the advanced to the seller. Since, it is could not be verifiable whether there is any cash deposits in that account of Narendra Tiwari. Hence, the source of that investment of Rs.17,00,000/- as claimed by the assessee has not enquired completely.

2. In respect of gift of Rs.14,00,000/-the assessee has not submitted the gift deed. Further, on perusal of cash book of Narendra Tiwari, it is found that withdrawal of Rs.13,00,000/- has been made from bank account bearing A/c No. 30773576559. But as stated above, the account statement of said account is kept on record, hence the genuineness of the gift deed claimed by the assessee is not explained.

3. It is also found that the assessee has purchased land at Badgaon, Raipur and the source of investment has been claimed from cash received of Rs.13,00,000/- from Narendra Tiwari HUF and cheque payment. The said amount has been claimed to be received as contribution received from HUF for purchase of land. But the financial credential of the HUF is not commensurate with the amount claimed by the assessee. Hence, the said amount of Rs.13,00,000/-remained unexplained.

4. In respect of self-assessment tax paid for A.Y.2014-15 paid during the year, it is found that the assessee has paid SA Tax for Rs.12,68,160/- on 31.03.2015. But on perusal of the bank statement kept on record i.e. SBI and Jila Sahkari Bank Ltd. no such transaction are being reflected in these accounts. On perusal of balance sheet, it is found that the assessee has maintained four accounts during the year. But the statement of bank account maintained at SBI (KCC) and Vijaya Bank was submitted by the assessee. Hence, the all-transaction pertaining to the bank account were not verified by the AO.”

Accordingly, the Pr. CIT set-aside the assessment order to the file of the A.O with a direction to adjudicate the issues afresh after conducting necessary enquiries and affording a reasonable opportunity of being heard to the assessee.

4. Aggrieved the assessee has assailed the order passed by the Pr. CIT, Raipur-1 u/s.263 of the Act dated 28.03.2021 in appeal before us.

5. We 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.

6. The Ld. Authorized Representative (for short ‘AR’) for the assessee at the very outset assailed the validity of the jurisdiction assumed by the Pr. CIT u/s.263 of the Act. It was submitted by the Ld. AR that as the assessment order passed by the A.O u/s.143(3) of the Act dated 29.11.2017 which was sought to be revised was in itself invalid and non-est in the eyes of law, therefore, the Pr. CIT by revising such non-est order had exceeded his jurisdiction u/s.263 of the Act. Elaborating on his contention, it was averred by the Ld. AR that the ITO, Ward-4(1), Raipur i.e. Jurisdictional A.O had framed the assessment vide his order passed u/s. 143(3) of the Act dated 29.11.2017 without issuing any notice u/s.143(2) of the Act. Carrying his contention further, it was submitted by the Ld. AR that as the notice u/s.143(2) of the Act dated 19.09.2016 was issued by the ITO, Ward-2, Rewa, i.e., a non-jurisdictional A.O, therefore, the assessee vide her letter dated 19.10.2016 (supra) had objected to the jurisdiction that was assumed by him and had requested that her case records a/w. documents be transferred to the Jurisdictional A.O i.e. ITO, Ward-2(1), Raipur (under Commissioner of Income Tax, Raipur). It was further submitted by the Ld. AR that the order u/s.143(3) of the Act dated 29.11.2017 had been passed by the ITO, Ward-4(1), Raipur to whom the case was transferred by ITO, Ward-2(1), Raipur pursuant to the massive restructuring/reallocation of the territorial jurisdictions of the AO’s that was carried out by the Jt. Commissioner of Income Tax, Range-4, Raipur vide Notification No. 1/2014­15, dated 15.11.2014, without issuing any notice u/s.143(2) of the Act. It was, thus, the claim of the Ld. AR that as the assessment in the case of the assessee had been framed by the A.O i.e ITO, Ward4(1), Raipur de-hors any notice u/s.143(2) of the Act, therefore, the assessment framed by him u/s.143(3) of the Act, dated 29.11.2017 was in itself invalid in the eyes of law. The Ld. AR in support of his aforesaid contention had relied on a host of judicial pronouncements.

7. Carrying his contention further, it was submitted by the Ld. AR that now when the assessment order passed by the A.O u/s.143(3) of the Act dated 29.11.2017 was in itself invalid, therefore, the Pr. CIT had wrongly assumed jurisdiction and revised such non-est order in exercise of jurisdiction u/s.263 of the Act. The Ld. AR in order to support his aforesaid contention had relied on the following judicial pronouncements:

(i) Pr. CIT Vs. Badal Prakash Jindal HUF & Ors, ITA Nos.8, 7, 9 & 10 of 2023 dated 02.03.2023 (Orissa HC)

(ii) Maruti Clearn Coal & Power Ltd. Vs. Pr. CIT-1, Raipur, ITA No.55/RPR/2021 dated 31.10.2022

(iii) Pradeep Dattatraya Banginwar Vs. Pr. CIT-2, Nagpur, ITA No.28/NAG/2021 dated 06.04.2022

(iv) M/s. Classic Flour & Food Processing Pvt. Ltd. Vs. CIT-4, ITA No.764 to 766/Kol/2014 dated 05.04.2017.

8. Per contra, the Ld. Departmental Representative (for short ‘DR’) rebutting the contentions advanced by the Ld. AR, submitted that the ITO, Ward-4(1), Raipur had validly assumed jurisdiction and framed the assessment vide his order passed u/s.143(3) of the Act dated 29.11.2017. Rebutting the contentions advanced by the Ld. AR as regards invalid assumption of jurisdiction by the A.O, i.e. in absence of valid notice u/s.143(2) of the Act, the Ld. DR had filed before us his written submissions, which for the sake of clarity are culled out as under:

“In the present case, the case of the assessee was selected for scrutiny through CASS for the year under consideration under the category of Limited Scrutiny and u/s.143(2) of the Act was issued on 19.09.2016 by the Income Tax Officer, Rewa. Further a letter was issued by the then AO on 30.09.2016 making compliance in connection with the assessment proceeding for A.Y. 2015-16.

2. In compliance to the said letter dated 30.09.2016, the assessee has made reply on 19.10.2016 for transfer of her case to ITO, Ward-2(1), Raipur by claiming that she is filing her return of income at the address H. No. 762, C/o Sh. Narendra Kumar Tiwari, Sunder Nagar, Raipur-492 001 from many years. The reply of the assessee is annexed as Annexure-A.

3. After considering the claim and reply of the assessee the case was transferred by ITO, Ward-2, Rewa to ITO, Ward-2(1), Raipur on 04.08.2017. The case was further transferred to ITO-4(1), Raipur from ITO, Ward-2(1), Raipur as the jurisdiction over the case was lying with ITO-4(1), Raipur as per order dated 15.11.2014 passed by the Joint Commissioner of Income Tax, Range-4, Raipur.

4. Further, the assessment proceeding was completed by the ITO-4(1), Raipur after issuing notice u/s.142(1) of the Act. During assessment proceeding, the assessee has made reply on time to time and finally, the assessment order u/s.143(3) of the Act was passed on 29.11.2017 after assessing the income at Rs. 2,70,490/- as equal to the return income.

5. It is pertinent to mention here that the assessee has not raised any objection during assessment proceeding regarding issuance of notice u/s.143(2) by the then assessing officer i.e. ITO-Ward-2, Rewa. The assessee has itself requested to transfer the case to ITO-2(1), Raipur and the same was transferred to the AO.

6. Later on audit objection was raised by the ITO-(IAP), Raipur regarding source of investment towards property made during the year. Accordingly, the case of the assessee was reviewed by the PCIT-1, Raipur as per provision of section 263 of the Act. The Hon’ble PCIT-1, Raipur passed the order u/s 263 setting aside the case for passing a fresh order, thereafter, the assessment order u/s 143(3) r.w.s. 263 read with section 144B of the Act was passed on 29.03.2022 assessing the total income at Rs.93,62,150/-.

7. Further, appeal was filed by the assessee before Hon’ble ITAT, Raipur against the order u/s 263 of the Act passed by the PCIT-1, Raipur which is pending till date.

4. During appellate proceeding, it has been observed that the assessee has contested on the matter of jurisdiction over the case and comment has been sought by the JCIT, ITAT, Raipur. The point wise report on the issues raised by the assessee before Hon’ble ITAT, Raipur are as under:-

4.1 Comments on jurisdiction over the case in view of section 124, 120, and 2(7A) of the Act:- The AO has proper jurisdiction over the assessee in view of the section 124, 120 and section 2(7A) of the Act due to the following reasons:-

4.1.1 It is submitted that the assessee has herself requested for transferring the case to the ITO-2(1), Raipur vide reply dated 19.10.2016. The case was further transferred to ITO – 4(1), Raipur having the jurisdiction over the assessee as per order u/s 120 of the Act passed by the JCIT, Range-4, Raipur dated 15.11.2014. Thus, the AO has rightly assumed the jurisdiction over the assessee for passing the order u/s. 143(3) of the Act.

4.1.2 It is also pertinent to mention here that notice u/s 143(2) of the Act was issued to the assessee on 19.09.2016 and the assessee filed the application for transferring her case to Raipur. After considering the application of the assessee, the case was transferred to Raipur. Further, the assessment was completed by the AO i.e. ITO-4(1), Raipur and assessee has not raised any objection in respect of issuance of notice u/s. 143(2) by the Jurisdictional AO i.e. by the ITO-4(1), Raipur. Thus, the assessee is not entitled to call in question the jurisdiction as per provision of section 142(3) of the Act. For sake of convenience, the said section is reproduced below:-

“Section: 124(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 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 subsection (2) of section 143 or after the completion of the assessment, whichever is earlier”

In the present case, the assessee has not raised objection in respect of issuance of notice by jurisdictional assessing officer during assessment proceeding, therefore, the assessee has no right to call in question of jurisdiction of the AO in respect of issuance of notice u/s.143(2) after completion of assessment proceeding for a long time.

4.1.3 Further, in case of any change in the jurisdiction of AO or for desired change in AO’s jurisdiction, he has to request jurisdictional Pr. CIT an application under section 127 for transfer from one assessing officer to other in view of his convenience. Merely change in PAN data base or filling of ITR other than the jurisdiction assessing officer is not sufficient to justify his claim of self-assumed territorial jurisdiction. The AO as well as the assessee has no legal rights for change of jurisdiction of the cases unless it is convenient to tax administration or convenient to the assessee also. If both the tax administrator convenient to tax and recovery and assessee are comfortable with the jurisdiction, the notice issued and served is valid in view of principle of natural justice. In the present case, the assessee has only replied to the AO not to the PCIT for transfer his case to Raipur.

4.1.4 Further, the jurisdiction can be conferred only by notification u/s.120(1) and 120(2) of the Act only and said section mandates also to furnish correct jurisdiction of the assessee while filing his ITR. On going through the e-filing history of the assessee, it is very interesting to note that the assessee himself has reported his different jurisdictional AO even after having the same set of residential address. The details of AO shown in its ITR for various assessment year are tabulated below:-

From the above, it is evident that the assessee herself has shown her jurisdictional AO as Ward-1(1), Raipur from A.Y. 2011-12 to 2014-15 and Ward-2(1) for A.Y. 2015-16. Further, the assessee has shown his jurisdictional AO as Ward-2, Rewa for A.Y. 2016-17 for which return was filed on 07.12.2016. It is also pertinent to mention here that the notice u/s 143(2) was also issued by the ITO, Ward-2, Rewa in year 2016. Thus, the ITO, Ward-2, Rewa has rightly assumed the jurisdiction for issuance of notice u/s 143(2) of the Act.

4.1.5 It is important to mention here that the assessee is well informed for the jurisdictional assessing officer of his case as he is filing his ITR for past many years. Further, he attended assessment proceedings through the authorized representative. The authorized representatives are very experienced and have through knowledge of income tax law and procedure. He is well aware of the jurisdiction over the case and remedial action for correction and rectification of jurisdictional issue. During the entire assessment proceedings the assessee as well as the learned counsel for the reasons best known to them, have also not objected the validity of the notice and assessment proceedings in the case. The Act has protected the liberty of choosing his jurisdiction or furnish objection on jurisdictional issues under section 124 of the Act He has sufficient opportunities and time to object validity of proceedings and issuance of statutory notices. Therefore objection on jurisdictional issue furnished after completion of assessment proceedings and after 263 proceeding at this stage cannot be said out of omission or ignorance of law and procedure.

4.1.6. In the present, the case the assessment proceeding u/s 143(3) was completed as on 29.11.2017. The assessee had neither challenged the jurisdiction before AO during the assessment proceeding nor before PCIT during proceeding u/s 263 of the Act. Thus, it is evident that the assessee has challenged the jurisdiction only in order to escape from tax liability on account of issue arisen during review proceeding. Further, the provisions of Section 124(3) are very clear. Where the appellant is of the view that the jurisdiction is not justifiable, the appellant is free to challenge the same before the AO and after objecting the same, the case was transferred to Raipur. Further, if the assessee was in the opinion that notice u/s 143(2) was not issued by the jurisdictional AO, the same was also to be objected during assessment proceeding. But where the appellant does not exercise such an option, it cannot be questioned later on. The same observation was made by the Hon’ble High Court of Delhi in the case of Abhishek Jain vs Income Tax Officer, Ward-55(1), New Delhi (WRIT PETITION (CIVIL) No. 11844/2016) that “As far as territorial or pecuniary jurisdictions are concerned, objection should be taken at the earliest possible opportunity and /or before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stands on a different footing.” Thus, the ground of the assessee regarding jurisdiction at this junction are infructuous and to be dismissed.

4.1.7 The issue of jurisdiction was also considered by the various appellate courts in various cases which are discussed as under:-

“4.1.7.1 In the case of Hindustan Transport Co vs IAC, 189 ITR 326 (Allahabad), the Hon’ble HC dealt extensively with the various provisions of the Act and held that the allocation of jurisdiction is a measure of administrative convenience. In such a situation, the concept of jurisdiction cannot be imported and, certainly, not in the sense of invalidating the resultant action on account of the defect in the exercise of functions. The Legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has, therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in section 124(5)(a), the right is lost as.; soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture.

4.1.7.2 In the case of CIT vs Siri Paul Oswal, [2007] 293 ITR 273 (Punjab & Haryana), it was held by Hon’ble HC that a distinction has to be made between a situation when there is inherent lack of jurisdiction and a situation where jurisdiction is irregularly assumed and plea of want of jurisdiction can be waived by a party. In the latter situation, the question arises whether party who could waive the plea of jurisdiction, raised such a plea and whether such a party had been prejudiced on account of erroneous assumption of jurisdiction. The present case, the assessee participated in assessment proceedings by the Assessing Officer to whom assessment proceedings under the Income-tax Act were transferred and who exercised jurisdiction to assess wealth-tax also with the participation of the assessee without any objection by the assessee. If the assessee had raised an objection, the proceedings could have been transferred back to the concerned Wealth-tax Officer. The Assessing Officer having proceeded further and assessment having been finalised, plea of lack of jurisdiction could not be raised for the first time in appeal, without showing error in the order on the merit and without showing any prejudice to the assessee by exercise of jurisdiction by the Assessing Officer.”

4.1.7.3. In Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, the apex court in relation to the question of jurisdiction of the Tribunal under the Motor Vehicles Act has made the observation that “A distinction, however, must be made between a jurisdiction with regard to the subject-matter of the suit and that of territorial and pecuniary jurisdiction. Whereas in the case falling within the former category the judgment would be a nullity, in the latter it would not be.”

4.1.7.4. In the case of Kiran Singh v. Chaman Paswan, AIR 1954 SC 340, wherein a distinction has been drawn between a jurisdiction with regard to the subject matter of the suit and that of territorial and pecuniary jurisdiction. It has been held that a decree or judgment passed by a court having no territorial or pecuniary jurisdiction is not a nullity but at the most it is an irregularity and such a judgment and decree cannot be set aside by higher court while exercising appellate or revisional jurisdiction unless a prejudice which has been caused to the appellant is established.

4.1.7.5. In the case of CIT vs All India Children Care & Educational Development Society, [2013] 357 ITR 134 (Allahabad), the Hon’ble Allahabad HC has held that Tribunal is not a competent authority to adjudicate upon jurisdiction of Assessing Officer when it is not raised before Assessing Authority. Such a decision has been arrived at after looking at various judicial precedents and provisions of law including S.124. Similar view had been held in various judicial decisions including (i) Subhash Chander v. CIT [2008] 166 Taxman 307, P & H HC, (ii) 25 taxmann.com 464 (Jodhpur ITAT), Vaishali Builders & Colonizers vs Addl. CIT [2012], (iii) ACIT vs Punjab Urban Development Authority, Mohali, [2014] 42 taxmann.com 160 (Chandigarh-Trib.) and various other decisions.

4.1.7.6. On the contrary, the case of CIT vs SS Ahluwalia, [2014] 46 taxmann.com 169 (Delhi), is more appropriate and relevant. In this case, the Hon’ble Delhi HC has laid down several propositions including (i) Sections 120, 124 and 127 recognize flexibility and choice, both with the assessee and the authorities i.e., the Assessing Officer before whom return of income could be filed and assessment could be made. The Assessing Officer within whose area an assessee was carrying on business, resided or otherwise income had accrued or arisen, has jurisdiction. Similarly, the Assessing Officer also has authority due to class of income or nature and type of business. The Act, therefore, recognized multiple or concurrent jurisdictions. (ii) Provisions of section 124 ensure and prevent two assessments by different assessing officers, having or enforcing concurrent jurisdiction. There cannot be and the Act does not envisage two assessments for the same year by different officers. (Reassessment order can be by a different officer). (iii) Each year is separate and distinct year and in case the assessee shifts his residence or place of business or work etc. Assessing Officer of place where the assessee has shifted or otherwise, will have jurisdiction and it is not necessary that an order under section 127 should be passed. This, however, does not mean that the Assessing Officer where the returns of income were earlier filed ceases to have jurisdiction, provided the assessee has residence in his area, place of business, class, income etc. Residence can mean permanent residence as well as current or temporary residence of some permanence. (iv) The question of jurisdiction or the place of filing has to be examined each year with reference to provisions of section 124.

Section 124 provides flexibility and postulates multiple and concurrent jurisdiction including filing of return and where the assessee has permanent or current residence or where he has sole/only source of income. (v) An assessment order passed without making reference to Commissioner/Commissioners under Section 124 is not a nullity for want of jurisdiction but it results in irregularity which can be rectified by order of remit and directing the Assessing Officer to continue with the proceedings from the stage where the error had occurred.

4.1.8. In the present case, the assessee not challenged the issue of issuance of notice by jurisdictional AO before the AO and PCIT. Even the assessee was having sufficient opportunity during assessment proceeding as well as during the review proceeding. Thus, it clearly indicates that the assessee had not come with clean hands for raising an additional issue of challenging jurisdiction before the Hon’ble ITAT. Thus, the assessee has suppressed the fact before the AO as well as before PCIT. It indicates that the assessee has not approached to the Hon’ble ITAT on the issue of jurisdiction over the case with clean mind, clean heart and clean objective therefore, the this ground is liable to be dismissed in limine. The Hon’ble High Court of Karnataka in the case of Ratnachudamani s. Utnal Vs. Income Tax Officer (2004) 269 ITR 272 dismissed the writ as the petitioner had not approached the Court with clean hands and held that the petitioner has intentionally and deliberately suppressed the material facts. If the petitioner wants any relief at the hands of this court, he has to approach the court with clean hands and it is duty cast on the petitioner to state the true facts and make out a case.

Similarly the Indore Bench of the Madhya Pradesh High Court in the case of Ajit Kumar Pitaliya v. Income Tax Officer (2008) 318 ITR 0182 dismissed the appeal of the assessee in limine for failure to come with clean hands and held that he must come to the court with clean hands. The Doctrine of Clean Hands is riot only applicable to the High Court and Apex Court but also before other courts and judicial forum. The Hon’ble Apex Court in the case of Ramjas Foundation v. Union of India 85 others in Civil Appeal No. 6662 of 2004 removed the misconception that these principles (Doctrine of Clean Hands) are only applicable to Writs & SLPs before the Apex Court and High Courts. The Phrase “but also to the cases instituted in others courts and judicial forums” This judgment lays down the principle that it is obligatory for a petitioner/appellant/applicant to approach any court or judicial forum with clean hands or face the ire of the courts/judicial forums who will not hesitate in applying the doctrine of clean hands and rejecting his appeal/revision.”

9. The Ld. AR had filed his rejoinder with respect to the aforesaid observations of the A.O, which for the sake of clarity is culled out as under:

10. Considering the rival contentions of the Ld. Authorized Representatives of both the parties, we shall now deal with the two-fold issues involved in the present appeal, viz. (i) maintainability of the claim of the assessee as regards the validity of the order passed by the Pr. CIT, Raipur-1 u/s 263 of the Act, dated 28.03.2021, i.e as the order passed by the A.O u/s.143(3) dated 29.11.2017 was in itself invalid and non-est, therefore, no valid jurisdiction could have been assumed by the Pr. CIT for revising the same u/s.263 of the Act; and (ii) the maintainability of the claim of the assessee that the assessment framed by the A.O, i.e. ITO, Ward-4(1), Raipur in absence of any notice u/s.143(2) of the Act could not be sustained and was liable to be struck down.

11. Before dealing with the claim of the Ld. AR that the A.O, i.e. ITO, Ward-4(1), Raipur had framed the assessment vide his order passed u/s. 143(3) of the Act dated 29.11.2017 without issuing any notice u/s.143(2) of the Act, we are of the considered view that certain relevant facts which will have a material bearing on the adjudication of the said issue requires to be clarified.

12. Albeit, it is the claim of the Ld. DR that as the assessee had as per the mandate of sub-section (3) to Sec. 124 of the Act failed to call in question within a period of one month the jurisdiction of the A.O, i.e. ITO, Ward-2, Rewa on receipt of notice u/s.143(2) of the Act dated 19.06.2016 from him, therefore, she was precluded from challenging the validity of the assessment that was framed by the ITO, Ward-4(1), Raipur on the basis of the aforesaid notice, but we are unable to persuade ourselves to subscribe to the same. We, say so, for the reason that as stated by the Ld. AR and, rightly so, the assessee on receipt of notice u/s.143(2) of the Act dated 19.09.2016 from the ITO, Ward-2, Rewa, Page 4-5 of APB, had well within the stipulated time period i.e. vide his letter dated 19.10.2016, Page 7 of APB objected to the notice u/s 143(2), dated 19.06.2016 issued by ITO, Ward-2, Rewa. It was stated by the assessee in her letter dated 19.10.2016 that as she during the year under consideration as well as in the preceding years had filed her returns of income based on the Raipur address, viz. “ No.762, C/o. Shri Narendra Kumar Tiwari, Sunder Nagar, Raipur (C.G.)-492 001”, therefore, her case records a/w. other document relating to the same may be transferred to her jurisdictional A.O i.e. ITO, Ward-2(1), Raipur (under Commissioner of Income Tax, Raipur). Although, the A.O in his “written submission” had claimed that the assessee vide her aforesaid letter dated 19.10.2016 had only requested for transferring of her case to ITO, Ward-2(1), Raipur but we are afraid that the facts as they so remain are not so. On a bare perusal of the aforesaid letter dated 19.10.2016, it can safely be gathered that the assessee on receipt of notice u/s.143(2) of the Act dated 19.09.2016 from the ITO, Ward-2, Rewa had in clear and unequivocal terms objected to the assumption of jurisdiction by the said officer and submitted before him that as the jurisdiction over her case, as in the past, remained with the ITO, Ward-2(1), Raipur, therefore, her case records a/w. other documents may be transferred to him. We, thus, in terms of our aforesaid observations are of the considered view that the assessee as per the mandate of clause (a) of sub-section (3) of Section 124 of the Act – had well within the stipulated time period objected to the notice issued u/s.143(2) of the Act, dated 19.08.2016 by the ITO, Ward-2, Rewa.

13. Adverting to the material fact, i.e. as to whether the jurisdiction over the case of the assessee as claimed by her was vested with the ITO, Ward-4(1), Raipur, we find that the same can safely be gathered by referring to the facts as had been culled out by the A.O in his “Written Submission”, as under:

On a careful perusal of the aforesaid details, it can safely be gathered, that the assessee during the year under consideration as well as in the preceding and succeeding years was filing her returns of income with the address, viz. “H. No.762, C/o. Shri Narendra Kumar Tiwari, Sunder Nagar, Raipur (C.G.)-492 001”. On being queried as to on what basis the ITO, Ward-2, Rewa was shown as the A.O of the assessee in her return of income for A.Y.2016-17, it was submitted by the Ld. AR that the same had been taken by default and the assessee had no control over the same. We find on a perusal of the jurisdictional history of the assessee as was filed before us that the same over the years had remained as under:

Apropos the aforesaid details, we are unable to fathom that as to on what basis the jurisdiction over the case of the assessee was vide Transfer order No.104001987254/dated 17.11.2011 transferred from ITO, Ward-2(4), Raipur (old) to ITO, Ward-2, Rewa (new).

14. Admittedly, as stated by the A.O in his “Written Submissions” (placed on our record) the jurisdiction over the case of the assessee as per order of the Jt. Commissioner of Income Tax, Range-4, Raipur dated 15.11.2014 was transferred from ITO, Ward-2(1), Raipur to ITO, Ward-4(1), Raipur. As is discernible from the assessment order and the “Written Submissions” of the A.O, the ITO Ward-2, Rewa pursuant to the letter/objection dated 19.10.2016 filed by the assessee with him had transferred her case records on 04.08.2017 to ITO, Ward-2(1), Raipur. Apart from that, as observed by the A.O in his “Written Submissions”, on the basis of the order passed by the Jt. Commissioner of Income Tax, Range-4, Raipur dated 15.11.2014 the  ITO, Ward-2(1), Raipur had transferred the case records of the assessee to ITO, Ward-4(1), Raipur. It is, thus, a matter of an admitted fact borne from record that the jurisdiction over the case of the assessee on the date on which notice u/s.143(2) of the Act, dated 19.06.2016 was issued remained with the ITO, Ward-4(1), Raipur. For the sake of clarity and in order to dispel all doubts the relevant extract of the “Written Submissions” of the A.O are culled out, as under:

“3. After considering the claim and reply of the assessee the case was transferred by ITO, Ward-2, Rewa to ITO, Ward-2(1), Raipur on 04.08.2017. The case was further transferred to ITO-4(1), Raipur from ITO, Ward-2(1), Raipur as the jurisdiction over the case was lying with ITO-4(1), Raipur as per order dated 15.11.2014 passed by the Joint Commissioner of Income Tax, Range-4, Raipur.”

(emphasis supplied by us)

15. Ostensibly, now when the jurisdiction over the case of the assessee on 19.09.2016 (supra) was vested with the ITO, Ward-4(1), Raipur, therefore, there is substance in the claim of the Ld. AR that the notice issued u/s.143(2) of the Act by the ITO, Ward-2, Rewa, i.e. a non-jurisdictional officer was devoid and bereft of any force of law. We had in order to dispel all doubts as to whether or not the assessee had at any stage in any way either resided or carried out any business; or had ever sought an amendment in her PAN details on the basis of any address at Rewa, had called for her PAN details a/w. an “affidavit” supporting the factual position. In compliance, the assessee had filed an “affidavit” dated 17.04.2023 (placed on record), wherein it was claimed by her that she had been filing her income tax returns since A.Y.1999-2000 with the office of the Income Tax Department, Raipur with the address “H. No.762, Sunder Nagar, Raipur (C.G.) and had neither changed nor applied for any change in her address in the PAN database with the Income Tax Department. Further, it is deposed by her that on receipt of notice u/s.143(2) of the Act dated 19.09.2016 from ITO, Ward-2, Rewa (M.P) she had objected to the same. Also, the assessee had filed her PAN Profile which reads as under:

(emphasis supplied by us)

16. On the basis of the aforesaid facts, we find substance in the claim of the Ld. AR that as the jurisdiction over her case at the stage of issuance of notice u/s.143(2) of the Act dated 19.09.2016 was admittedly vested with the ITO, Ward-4(1), Raipur, therefore, in absence of any notice issued by the  latter u/s. 143(2) of the Act, the assessment framed by him vide his order  passed u/s.143(3) of the Act dated 29.11.2017 could not be sustained and  is liable to be struck down on the said count itself. Our aforesaid conviction that issuance of a valid notice u/s.143(2) of the Act is a sine-qua-non for framing of the assessment is supported by the judgments of the Hon’ble Supreme Court in the cases of ACIT & Anr. Vs. Hotel Blue Moon [2010] 321 ITR 362 (SC) and CIT Vs. Laxman Das Khandelwal (2019) 417 ITR 325 (SC).

17. At this stage, we may herein observe that a similar issue as in the present case before us had come up for adjudication before the ITAT, Raipur in the case of Hari Singh Chandel Vs. ITO, Ward-2(2), ITA No.287/RPR/2019 wherein after deliberating at length the Tribunal had held as under:

“11. Adverting to the notice u/s.143(2) of the Act, dated 01.08.2012 that was issued by the Income-Tax Officer, Ward-1(2), Jabalpur, it was submitted by the Ld. AR that as the said notice was issued by a non-jurisdictional Assessing Officer, therefore, the same was non-est and had no existence in the eyes of law. The Ld. A.R in order to buttress his claim that the territorial jurisdiction in the case of the assessee was vested with the Income-Tax Officer, Ward-2(2), Bilaspur had drawn our attention to the copy of the return of income that was filed by the assessee for the year under consideration i.e. A.Y. 2011-12, wherein his address was mentioned as “Govt. B.D Mahant Hospital, Champa, Janjgir, Chattisgarh, Pin-497671”. Our attention was also drawn by the Ld. AR to the returns of income that were filed by the assessee for the preceding years i.e. AY 2007-08 to AY 2010-11 with the Income-Tax Officer, Ward-2(2), Bilaspur. In sum and substance, it was the claim of the Ld. AR that as the Assessing Officer i.e. the Income-Tax Officer, Ward-2(2), Bilaspur who was vested with jurisdiction over the case of the assessee had failed to issue a notice u/s. 143(2) within the stipulated time period i.e. up to 30.09.2012, therefore, the assessment thereafter framed by him u/s. 143(3) of the Act, dated 12.03.2014 could not be sustained and was liable to be struck down. The Ld. A.R on a specific query by the bench that as to whether the assessee as per the mandate of sub-section (3) of Section 124 of the Act had called in question the jurisdiction of the Assessing Officer within a period of one month from the date on which he was in receipt of notice(s) u/s.143(2) and u/s. 142(1) of the Act from the Income-Tax Officer, Ward-1(2), Jabalpur, answered in negative. Elaborating on the reasons for not calling in question the jurisdiction of the Income-Tax Officer, Ward-1(2), Jabalpur, it was submitted by the Ld. AR that as the said officer did not fall within the meaning of “Assessing Officer” u/s. 2(7A) of the Act, therefore, the very basis for triggering the provisions of sub-section (3) of Section 124 were not satisfied. It was the claim of the Ld. AR that the obligation cast upon the assessee to call in question the jurisdiction of the Assessing Officer as per sub-section (3) to Section 124 of the Act would only come into play where the notice was received from either of the authority contemplated in Section 2(7A) of the Act, i.e, who was either vested with the relevant jurisdiction by virtue of any directions or orders issued under sub­section (1) or sub-section (2) of Section 120 of the Act or any other provision of the Act; or any such authority who is directed under clause (b) of sub-section (4) of Section 120 to exercise or perform all or any of the powers and perform all or any of the functions conferred on, or assigned to, an Assessing Officer under the Act. It was submitted by the Ld. AR that as in the present case the assessee was in receipt of notice u/s.143(2) of the Act, dated 01.08.2012 from the Income-Tax Officer, Ward-1(2), Jabalpur, who did not fall within the meaning of “Assessing Officer” as defined in Section 2(7A) of the Act, therefore, no obligation was cast upon the assessee to have questioned his jurisdiction on receipt of the same. The Ld. AR in support of his aforesaid contention had relied on a host of judicial pronouncements. It was further submitted by the Ld. AR that as the Income-Tax Officer, Ward-1(2), Jabalpur by no means could be brought within the definition of “Assessing Officer” exercising concurrent jurisdiction over the case of the assessee under subsection (5) of Section 120 of the Act, therefore, issuance of notice by him u/s. 143(2) of the Act could not be justified and saved on the said count.”

Also, we find that a similar view had been taken by various judicial forums, as under:

“i) PCIT v. Nopany & Sons [2022] 136 taxmann.com 414 (Cal. HC)

At this juncture, it would be relevant to take note of the definition of assessing officer as defined in section 2(7A) of the Act. The said provision defines ‘assessing officer’ to mean 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 section120 or any other provision of the 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 section 120 to exercise or perform all or any of the powers and functions conferred on, or assigned to, an assessing officer under this Act. In the instant case, the order of assessment was challenged on several grounds and, particularly, on the ground that no notice under section 143(2) of the Act was issued within the time prescribed by the assessing officer, who had jurisdiction over the assessment file of the assessee at the relevant time…. The Tribunal considered the correctness of the finding of the CIT(A) and, on facts, found that both the assessing officers, namely, the assessing officer, who had jurisdiction over the assessee till 6-4-2009 and the assessing officer, who had jurisdiction post the said date had not issued notice under section 143(2) of the Act within the prescribed period of six months from the end of the financial year in which the return was filed. This factual position could not be controverted by the revenue before us. As pointed out by the Hon’ble Supreme Court in the case of Hotel Blue Moon(supra), non-issuance of notice under section 143(2) is not a procedural irregularity and, therefore, it is not curable. Thus, on facts, it having been established that no notice was issued under section 143(2) of the Act, the order passed by the Tribunal was perfectly legal and valid…. The Tribunal, thereafter, analysed as to the correctness of the submission of the revenue seeking to sustain their stand by referring to a notice issued by the assessing officer, who at the relevant point had no jurisdiction over the assessee and, on facts, found that there is no valid compliance of section 143(2) of the Act as the notice issued under section 143(2) of the Act by the assessing officer/ Income Tax Officer,Ward-3(1) had no jurisdiction over the assessee at the relevant time.

ii) S. K. Industries v. ACIT [2022] 141 com 568 (Del. HC) – SLP of the Revenue Dismissed by the Hon’ble Supreme Court in [2022] 141 taxmann.com 569 (SC)

Be that as it may, in the considered view of the Court, the AO having jurisdiction i.e. Respondent No1 ought to have issue a notice under section 143(2)(a) of the Act within the prescribed time limit i.e., 30th September, 2014 in order to proceed with the assessment. Considering that a similar mistake of an AO not having jurisdiction over the Assessee issuing a notice to it had been committed earlier, there was no occasion for the Revenue to continue to repeat the same mistake and expect that it will be condoned. The impugned assessment order dated 31st March, 2016 is unsustainable in law since it has been passed without the AO having jurisdiction over the Assessee issuing notice to it under section 143(2)(a) within the prescribed time limit i.e. on or before 30th September, 2014. The impugned assessment order dated 31st March, 2016 is hereby set aside.

iii) Sunworld Infrastructure (P.) Ltd. v. ITO [2015] 64 taxmann.com 471 (Del. HC)

The learned counsel for the respondent submitted that the impugned notice was not time-barred in as much as it was in continuation of an earlier notice under Section 143(2) issued by the Income Tax Officer, Ward-12(2), Bangalore on 10.09.2013. But, in our view, this does not save the impugned notice under Section143(2). The reason for this is that the purported notice dated 10.09.2013 issued under Section 143(2) by the Assessing Officer at Bangalore was without jurisdiction inasmuch as the Assessing Officer at New Delhi had jurisdiction over the case. This fact was immediately pointed out by the assessee/ petitioner by virtue of its letter dated 17.09.2013 where it had clearly indicated that it was regularly filing returns in Delhi and that the jurisdiction of the case was in Delhi. On this basis, it was requested that the said notice issued by the Bangalore office be withdrawn. Thereafter, the Income Tax Officer, Ward-6(1) (1), Bangalore wrote to the Income Tax Officer, Ward-24(3), New Delhi on the subject of transfer of scrutiny assessment records in the case of the petitioner….It is evident from the aforesaid letter that it is only the records of the case which were transferred and if the case itself had been transferred, the same would have to be directed under Section 127 of the said Act. No such order of transfer has been made and the above letter dated 16.12.2014 is indicative of the fact that the Bangalore Office of the Income Tax Department did not have jurisdiction in this case. That being the position, the purported notice under Section 143(2) issued on 10.09.2013 was one without jurisdiction and cannot be regarded as a valid notice. The first notice, therefore, which was issued by an Officer having jurisdiction was on 21.12.2014. This was issued clearly beyond the period of limitation which has been prescribed, i.e., beyond 30.09.2013 in this case. As such, the impugned notice dated 24.12.2014 issued under Section 143(2) of the said Act is barred by time. The same is quashed.

iv) PCIT v. Cosmat Traders (P.) Ltd. [2023] 146 taxmann.com 207 (Cal. HC)

Section 143 of the Income-tax Act, 1961 – Assessment – Scrutiny assessment (Issue of notice) – Assessment year 2012-13 – Whether where Assessing Officer passed an assessment order under section 143(3) without issuing notice under section 143(2) and in pursuance with notice issued under section 143(2), by authority who had no jurisdiction over assessee at relevant time, such assessment order was rightly set aside by Tribunal -Held, yes – Whether submission of revenue that assessee had not raised question of jurisdiction before Assessing Officer but participated in assessment proceedings and, therefore, could not have raised said issue before Tribunal could not have been accepted as it was not case of revenue that assessee consciously waived his right to raise such a jurisdictional issue – Held, yes

v) PCIT v. M/s. OSL Developers Pvt. Ltd. ITAT/145/2022 (16.11.2022) (Cal. HC)

When it is an admitted fact that the Assessing Officer, namely, the Income Tax Officer, Ward 5(111) was divested of the jurisdiction on or after 28th August, 2012, the order passed under Section 263 of the Act could not have been given effect to….. In our opinion in the facts of this case, once the order u/s 127(2) was passed on 28.08.2012 by the Ld. CIT-Il, Kolkata unconditionally transferring the jurisdiction over the appellant’s case to the charge of DCIT/ACIT, Central Circle-XVII, Kolkata; then by virtue of such an order, the jurisdiction enjoyed by ITO, Ward-5(3), Kolkata in terms of Section 124 read with Section 120(1) & (2) stood abrogated…Accordingly, the appeal fails and is dismissed.

vi) Pavan Morarka v. ACIT [2022] 136 com 2 (Bom. HC)

Revenue’s stand that the Assessing Officer at New Delhi had issued a notice under section 148 on petitioner on 22-3-2013 before the limitation period expired and, therefore, the impugned notice issued by the Assessing Officer at Mumbai in continuation of the said proceedings must also be treated as valid and within time is misconceived. This is because the notice issued by the Assessing Officer at New Delhi itself was invalid and of no effect since it was issued by an officer who did not have jurisdiction over petitioner. [Para 16] It is also noted that on the date when the records were transferred by the Assessing Officer at New Delhi to the Assessing Officer at Mumbai, the time limit of six years as per section 149 had already elapsed. Assessing Officer at Mumbai, thereafter, recorded fresh reasons and issued a fresh notice dated 14-1-2014 under section 148, that is impugned, well beyond six years. The notice issued by the Assessing Officer at Mumbai was independent of the notice issued by the Assessing Officer at New Delhi and, therefore, the validity thereof has to be decided independently. The very fact that the Assessing Officer at Mumbai recorded his own reasons and issued a fresh notice and did not seek to derive his jurisdiction basis the notice dated 22-3-2013 itself indicates that the revenue’s stand has no basis. [Para 17] In the circumstances, the notices issued by Assessing Officer, Mumbai under section 148 to petitioner for assessment year 2006-07 are quashed and set aside.

vii) Abdul Azeez Haroon v. DCIT [2020] 115 taxmann.com 289 (Mad. HC)

Section 120, read with sections 124, 127 and 148, of the Income-tax Act, 1961 – Income-tax authorities – Jurisdiction of (Territorial jurisdiction) – Assessment year 2008-09 – Assessee was a non­resident Indian – Assessment in case of assessee was completed – Subsequently, Commissioner (International Taxation) issued a reopening notice against assessee at its address at Madurai as PAN address of assessee was in Madurai and, accordingly, transferred case of assessee to Assessing Officer at Madurai – Assessee contended that assessee was residing in Shimoga, Karnataka and thus, appropriate officer to assess assessee would be officer at Shimoga and impugned notice issued at Madurai was not valid – It was noted that assessee was staying in Madurai prior to period relating to assessment year 2011-12 and admittedly, no return of income was filed by him during his stay at Madurai as he had not earned any income liable to tax in that period – From assessment year 2010-11 onwards, assessee had shifted to Shimoga, Karnataka, carrying on business there and returns of income were filed from assessment year 2012-13onwards at Shimoga, till date – These returns of income were processed and intimations were issued wherein address of assessee was stated to be Shimoga – Whether, on facts, appropriate officer to assess assessee was officer at Shimoga – Held, yes -Whether, therefore, impugned reopening notice issued at its address at Madurai was not valid -Held, yes [Paras 36, 39, 41 and 42]

viii) CIT v. M/s. Dalipur Construction (P.) Ltd. I.T.A.No.43 Of 2015 (13.01.2017) (All.HC)

However, he could not dispute that lack of jurisdiction in such case is not a mere irregularity and if that be so, if an authority has no jurisdiction in the matter, same cannot be conferred even by consent of parties. Something which is wholly without jurisdiction, that is nullity in the eyes of law, no principle of law would come to confer any kind of effectiveness to such proceedings so as to have any legal consequences….Hence, the mere fact that objection was not taken before Assessing Officer will not make the order of assessment final as it has been passed by competent authority. In our view Tribunal has rightly upheld the order of CIT(A).”

Considering the aforesaid facts involved in the present case before us read a/w. the settled position of law, we are persuaded to subscribe to the claim of the Ld. AR that the assessment framed by the ITO, Ward-4(1), Raipur, i.e the jurisdictional A.O, on the basis of notice issued u/s.143(2) of the Act, dated 19.09.2016 by the ITO, Ward-2, Rewa, i.e. a non-jurisdictional Officer is nothing but nullity.

18. We shall now deal with the issue, i.e. as to whether or not validity of the order passed by the A.O u/s.143(3) of the Act dated 29.11.2017 could for the first time in the course of present appellate proceeding before us be taken as a basis for assailing the sustainability of the order passed by the Pr. CIT u/s.263 of the Act dated 28.03.2021?

19. In our considered view there is substance in the claim of the ld. AR that as the proceedings before the Pr. CIT u/s 263 of the Act, dated 28.03.2021 are in the nature of collateral proceedings, therefore, the assessee could in the course of appellate proceedings which in turn originates from the order passed u/s 263 of the Act, dated 28.03,2021 challenge the validity of the impugned assessment order passed by the A.O u/s. 143(3), dated 29.11.2017. The aforesaid contention of the ld. A.R that the illegality/invalidity of an order passed in the primary proceedings can be challenged in the course of the collateral proceedings finds support from the recent order of the Hon’ble High Court of Orissa in the case of Pr. CIT, Sambalpur Vs. Badal Prakash Jindal HUF & Ors. (2023) 150 taxmann. com 483 (Orissa), wherein it was held as under:

“12. Indeed, if the original re-assessment order itself was not validly passed, the subsequent revisional order by the PCIT was required to be held invalid.

13. No substantial question of law arises from the impugned order of the ITAT. The Court is therefore not inclined to frame the questions of law as urged by the Revenue in the present appeals. It will be noted her that in Para-19 of the impugned order of the ITAT, the Revenue has not disputed that the connected appeals raised similar issues.

14. The appeals are accordingly dismissed in the above terms.”

Also, the said view is supported by the order of a coordinate bench of the Tribunal i.e ITAT, Mumbai in the case of Westlife Development Ltd. Vs. Pr. CIT-5, Mumbai (2017) 88 taxmann.com 439 (Mumbai). It was, inter alia, observed by the tribunal that an assessee can challenge the validity of an order passed u/s.263 of the Act on the ground that the impugned assessment order was non-est. Indulgence of the tribunal in the said case was sought by the assessee for adjudicating the following issues (as culled out from the order):

“1. Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263?

2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity as has been claimed by the assessee?

3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order?”

(emphasis supplied by us)

(A). Answering the first issue, i.e, whether the assessee remains within his right to challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263 of the Act, the tribunal had on the basis of its exhaustive deliberations and drawing support from a host of judicial pronouncements answered the said issue in the affirmative. For the sake of clarity the relevant observations of the tribunal in context of the aforesaid issue are culled out as under:

“8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263:

The first issue that arises for our consideration is – whether the assessee can challenge the jurisdictional validity of order passed u/s 143(3) in the appellate proceedings taken up for challenging the order passed u/s 263? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as ‘primary proceedings’. These are, in effect, basic foundational proceedings and akin to a platform upon which any subsequent proceedings connected therewith can restupon. The proceedings initiated u/s 263 seeking to revise the original assessment order is off shoot of the primary proceedings and therefore, these may be termed as ‘collateral proceedings’ in the legal framework. The issue that arises here is whether any illegality/invalidity in the order passed in the ‘primary proceedings’ can be set up in the ‘collateral proceedings’ and if yes, then of what nature?

8.1. We have analysed this issue carefully. There is no doubt that after passing of the original assessment order, the primary (i.e. original proceedings) had come to an end and attained finality and, therefore, outcome of the same cannot be disturbed, and therefore, the original assessment order framed to conclude the primary proceedings had also attained finality and it also cannot be disturbed at the instance of the assessee, except as permitted under the law and by following the due process of law. Under these circumstances, it can be said that effect of the original assessment order cannot be erased or modified subsequently. In other words, whatever tax liability had been determined in the original assessment order that had already become final and that cannot be sought to be disturbed by the assessee. But, the issue that arises here is that if the original assessment order is illegal in terms of its jurisdiction or if the same is null & void in the eyes of law on any jurisdictional grounds, then, whether it can give rise to initiation of further proceedings and whether such subsequent proceedings would be valid under the law as contained in Income Tax Act? It has been vehemently argued before us that the subsequent proceedings (i.e. collateral proceedings) derive strength only from the order passed in the original proceedings (i.e. primary proceedings). Thus, if order passed in the original proceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an ‘enforceable’ tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs.

8.2. In a matter that came up before Hon’ble Supreme Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors., [1955] 1 SCR 117 the facts were that the appellant in that case had undervalued the suit at Rs.2,950 and laid it in the court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court the Registry raised the objection as to valuation under Section 11. The value of the appeal was fixed at Rs.9,980. A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by the High Court the appeal against the decree of the court of the Subordinate Judge did not lie to the District Court, but to the High Court and on that account the decree of the District Court was a nullity. Alternatively, it was contended that it caused prejudice to the appellant. In considering that contention at page 121, a four Judge Bench of Hon’ble Supreme Court speaking through Vankatarama Ayyar, J. held that:

“It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties.”

8.3. This judgment was subsequently followed by Hon’ble Supreme Court in the landmark case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193, wherein an issue arose whether a decree can be challenged at the stage of execution and whether a decree which remained uncontested operates as res-judicata qua the parties affected by it. Hon’ble apex court, taking support from aforesaid judgment, observed as under:

“In the light of this position in law the question for determination is whether the impugned decree of the Civil Court can be assailed by the appellant in execution. It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord. Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment. Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex-parte trial, the decree there-under is a nullity, and does not bind the appellant. Therefore, it does not operate as a res judicata. The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution.”

8.4. Similar view has been taken by Hon’ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank vs Manilal Govindji Khona reported in 2015 (3) SCC 712. Further, similar view was emphasized by Hon’ble Bombay High Court (GOA Bench) in the case of Mavany Brothers vs CIT (Tax Appeal No 8 of 2007) in its order dt 17th April, 2015 wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution.

8.5. The aforesaid principles, enunciated by the Apex Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors, supra were reiterated by the Apex Court in the cases of Superintendent of Taxes vs Onkarmal Nathmal Trust (AIR 1975 SC 2065) and Dasa Muni Reddy v. Appa Rao (AIR 1974 SC 2089). In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public policy and, therefore, jurisdiction to assess or reassess a person can never be waived or created by consent. This decision shows that the basic principle recognized in Kiran Singh (supra) is applicable even to revenue statutes such as the Income Tax Act. Dasa Muni Reddy (supra) is a judgment where the principle of ‘coram non judice’ was applied to rent control law. It was held that neither the rule of estoppel nor the principle of res judicata can confer the Court jurisdiction where none exists. Here also the principle that was put into operation was that jurisdiction cannot be conferred by consent or agreement where it did not exist, nor can the lack of jurisdiction be waived.

8.6. These judgments were subsequently noticed by Hon’ble Gujarat High Court in the case of P. V. Doshi 113 ITR 22(Gujrat). This case arose under the Income Tax Act with reference to the provisions of Section 147 dealing with re-assessment. The facts were that the assessment was sought to be reopened under Section 147 and notice under section 148 was issued. Validity of reopening was not challenged upto Tribunal and additions were challenged on merits only. The Tribunal restored the matter to the Assessing Officer with some directions to reexamine the issue on merits. When the matter came back to the assessing officer the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. The AO rejected plea of the assessee but the AAC accepted this ground and also held the reassessment to be bad in law on jurisdictional ground. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point again before the AAC and the AAC was equally wrong in permitting the assessee to raise that point which had become final in the first round and in adjudicating upon the same. The plea of the Revenue impressed the Tribunal which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction which was given up before the AAC and not agitated further and that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenues plea. The assessee thereafter carried order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Onkarmal Nathmal Trust (supra) and Dasa Muni Reddy (supra) held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of an authority was under challenge. According to Hon’ble Gujarat High Court, the rule of res judicata cannot be invoked where the question involved is the competence of the Court to assume jurisdiction, either pecuniary or territorial or over the subject matter of the dispute. Hon’ble High Court further held that since neither consent nor waiver can confer jurisdiction upon the Assessing Officer where it did not exist, no importance could be attached to the fact that the assessee, in the first round of proceedings, expressly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Hon’ble Court, the “finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals”. In this view of the matter, Hon’ble High Court finally answered the reference in favour of the assessee.

8.7. It is further noted that many of these judgments were discussed and followed by the co-ordinate bench of the Tribunal in the case of Indian Farmers Fertilizers Co-operative Ltd vs JCIT 105 ITD 33 (Del), wherein a similar issue had arisen. In this case, the issue raised before the bench was whether it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof u/s 154. The bench minutely analysed law in this regard and applying the principle of ‘coram non judice’ and following aforesaid judgments of the supreme court, it was held that if an assessee seeks to challenge the reassessment proceedings as being without jurisdiction, when action for rectification is sought to be taken on the assumption of the validity of the reassessment order, then the assessee has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it……………. ”

(emphasis supplied).

8.8   Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri vs ACIT 98 ITD 87 (Del). In the said case, appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by Hon’ble Gujrat High Court in the case of P.V. Doshi, supra and Hon’ble Bombay High Court in the case of Jainarayan Babulal vs CIT, 170 ITR 399, the bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty u/s. 158BFA(2) and therefore it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty.

8.9. We also derive support from another judgement of Hon’ble Bombay High Court in the case of Inventors Industrial Corporation Ltd vs CIT 194 ITR 548 (Bombay) wherein it was held that assessee was entitled to challenge the jurisdiction of the AO to initiate re-assessment proceedings before the CIT(A) in the second round of proceedings, even though he had not raised it in earlier proceedings before the Assessing Officer or in the earlier appeal.

8.10. Thus, on the basis of aforesaid discussion we can safely hold that as per law, the assessee should be permitted to challenge the validity of order passed u/s 263 on the ground that the impugned assessment order was non est and we hold accordingly.”

(B). Answering the second issue, i.e, if the order passed u/s 143(3) was illegal or nullity, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order, the tribunal answered in the negative. For the sake of clarity the relevant observations of the tribunal in context of the aforesaid issue are culled out as under:

10. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order: Having decided the aforesaid two issues, the next issue that is to be decided by us is about the validity of order passed u/s 263 by the Ld. CIT seeking to revise the assessment order which was nullity in the eyes of law.

10.1. We have discussed in detail in earlier part of our order that an invalid order cannot give birth to legally valid proceedings. It is further noticed by us that some of the judgments relied upon by the Ld. Counsel have already addressed this issue. This issue has also been decided by the co-ordinate bench (Delhi Bench of Tribunal) in the case of Krishna Kumar Saraf vs CIT (supra). The relevant part of the order is reproduced below:

“17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee.

18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter.

19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended, because the provisions of limitation are provided in the same.

20. In view of above discussion, ground no.3 is allowed and revision order passed u/s 263 is quashed.”

10.2. It is further noticed by us that similar view has been taken by Chandigarh Bench of the Tribunal in the case of Steel Strips Ltd (supra).

11. Thus, after taking into account all the facts and circumstances of the case, we find that in this case, the original assessment order passed u/s 143(3) dt 24-10-2013 was null & void in the eyes of law as the same was passed upon a non-existing entity and, therefore, the Ld. CIT could not have assumed jurisdiction under the law to make revision of a non est order and, therefore, the impugned order passed u/s 263 by the Ld.CIT is also nullity in the eyes of law and therefore the same is hereby quashed.”

It may at this stage be relevant and pertinent to point out that while for the aforesaid order of the tribunal had thereafter been approved by the Hon’ble High Court of Bombay vide its order passed in ITA No.1168/2017 dated 28.09.2021, but as the aforesaid view of the tribunal on the issues in question before us was not carried by the revenue any further in appeal before the Hon’ble High Court, therefore, the same having been accepted by the department had attained finality. Our aforesaid view that when the assessment order is in itself null and void, then, the Commissioner of Income-Tax cannot exercise his revisionary jurisdiction u/s.263 of the Act is also supported by the order of the ITAT, Allahabad in the case of Hari Mohan Das Tandon (HUF) Vs. Pr. CIT (2018) 91 taxmann.com.199 (Allahabad). It was observed by the tribunal by relying on the order of the ITAT, Mumbai in the case of Westlife Development Ltd. (supra) that as the assessment order was in itself null and void as it was based on a non-est return, therefore, the Commissioner could not have exercised his jurisdiction under section 263 of the Act. Observations of the tribunal for the sake of clarity are culled out as under:

“10.4 The Learned Counsel for the Assessee also argued that since the assessment is framed on the basis of the revised return filed on 1stJuly, 2013 and according to Ld. CIT it was a non-est return, if assessment is framed on non est return, the assessment itself would be mill and void and could not be subject matter of jurisdiction under section 263 of the I.T. Act. In support of his contention, he relied upon the decision of the ITAT, Mumbai Bench in the case of Westlife Development Ltd. (supra) in which original assessment order was held to be null and void in the eye of Law as same was passed upon non-existing entity. Therefore, it was held that Ld. CIT could not have assumed jurisdiction under the Law to make revision of a non est order. Therefore, impugned order passed under section 263 by the CIT was also held invalid in the eye of Law and therefore, the same was quashed. The A.O in this case has framed the assessment on the basis of revised return filed on 1st July, 2013 and taken the income from the same for computing the total income of assessee. It is also case of the Revenue that even the A.O. did not mention original return of income in the assessment order, therefore, even if it is considered that revised return dated 1st July, 2013 which is basis for completing the assessment in question was non est, then the entire assessment would vitiated and would also be non est under the eye of Law. Therefore, decision of the Mumbai Bench would apply to the facts of the case. When assessment order itself is null and void based on non est revised return, the Ld. CIT could not have exercise jurisdiction under section 263 of the I T Act.”

We further find that the ITAT, Delhi in the case of Krishan Kumar Saraf Vs. Commissioner of Income Tax, Hissar, ITA No.4562/Del /2011, dated 24.09.2015 had also taken a similar view. It was observed by the tribunal that the CIT cannot revise an order which is non-est in the eyes of law. In the said case the assessee in the course of the appellate proceedings which had originated from the order passed by the CIT under Sec. 263 of the Act had assailed the validity of the order passed u/s 263, for the reason that the notice u/s 143(2) was issued beyond the stipulated time period. The department objected to the aforesaid challenge thrown by the assessee to the validity of the assessment order on the ground that as the assessee had not challenged the assessment order, therefore, the same had attained finality. However, the said contention of the revenue was turned down by the tribunal by relying on the order of the Hon’ble High Court of Delhi in the case of CIT Central-1 Vs. Escorts Farms Pvt. Ltd., 180 ITR 280(Del) on the ground that the CIT could not have revised a non-est order. The relevant observations of the tribunal are for the sake of clarity culled out as under:

16. Admittedly the notice u/s 143(2) was issued beyond time and, therefore, the assessment order was bad in law. Ld. CIT(DR)’s submission is that assessee has not challenged the assessment order. However, since the assessee was not aggrieved with the assessment order, therefore, he did not challenge. However, nothing turns on this when we consider the issue in the backdrop of proceedings initiated u/s 263 by ld. Commissioner. The moot point for consideration is as to whether this objection can be entertained at this stage of proceeding or not. In this regard we find that the decision of Hon’ble Delhi High Court in the case of Escorts Farms Pvt. Ltd. (supra), which we have extensively reproduced earlier, clearly supports the assessee’s plea.

17. There is no quarrel with the proposition advanced by ld. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee.

18. However, u/s 263 the ld. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice u/s 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter.

19. While exercising powers u/s 263 ld. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If ld. Commissioner revises such an assessment order, then it would imply extending/granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended, because the provisions of limitation are provided in the statute.

20. In view of above discussion, ground no. 3 is allowed and the revisional order passed u/s 263 is quashed.”

We, thus, on the basis of our aforesaid deliberations read along with the aforesaid settled position of law concur with the ld. AR that now when the impugned order of reassessment under Sec.143(3), dated 29.11.2017 in itself had been passed on the basis of invalid assumption of jurisdiction by the AO and thus is invalid and bereft of any force of law; or in fact non-est in the eyes of law, therefore, the same could not have been revised by the Pr. CIT under Sec. 263 of the Act.

20. On the basis of our aforesaid observations, we herein conclude that as the order of assessment under Sec.143(3) of the Act, dated 29.11.2017 in itself had been passed on the basis of invalid assumption of jurisdiction by the AO, therefore, as claimed by the Ld. AR and, rightly so, the same could not have been revised by the Pr. CIT under Sec. 263 of the Act. Accordingly, we herein quash the order passed by the Pr. CIT under Sec. 263 of the Act, dated 28.03.2021 for want of valid assumption of jurisdiction. As we have quashed the impugned order passed by the Pr. CIT under Sec. 263 of the Act, dated 28.03.2021 on account of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the other contentions that have been advanced by the ld. A.R both as regards the validity of the impugned order as well as those canvased before us as regards the merits of the case which, thus, are left open.

21. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.

Order pronounced in open court on 18^th day of July, 2023.