Case Law Details
Community For Social Work Vs ITO (ITAT Kolkata)
Assessee asserted that the assessment order is bad in law since notice u/s 143(2) of the Act was never issued by ld. AO who completed the assessment. It was initially issued by ITO, Ward-51(1), Kolkata and the assessment has been completed by ITO, Ward-1(1), Exemption, Kolkata. Also, the order passed u/s 127 of the Act is not made available to the assessee.
Based on documents produced and Submissions made ITAT held that assessment is not in accordance with the provisions of law since the assessment order has been passed by ITO, Ward-1(1), Exemption, Kolkata whereas assumption of jurisdiction for the assessment was done by ITO, Ward-51(1), Kolkata who issued the notice u/s 143(2) of the Act. Also, a valid order u/s 127 of the Act which is required to be passed for transferring a case from one Assessing Officer to another Assessing Officer could not be brought on record, though claimed to have been mentioned in the above referred documents. We, therefore, are inclined to allow the additional ground raised by the assessee in holding the impugned assessment order as bad in law, liable to be struck down.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal by the assessee is directed against the order no. ITBA/NFAC/S/250/2022-23/1045683391(1) dated 19.09.2022 passed by the Ld. CIT(A), NFAC, Delhi for AY 2017-18 against the assessment order u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Exemption, Ward-1(1), Kolkata dated 13.12.2019.
2. Grounds of appeal taken by the assessee reads as under:
“1. For that on the facts and in the circumstances of the case, the appeal order was not fair and proper and on the other hand it was made contrary to law, sound and adequate principles.
2. For that on the facts and in the circumstances of the case the Ld. C.I.T.(Appeals) was not at all justified in confirming the income of the appellant at Rs. 14,12,699.00 for the year under appeal as against the returned/ disclosed income of Rs. Nil for the A.Y. 2017-18.
3. For that on the facts and in the circumstances of the case the reasons adduced by the Ld. C.I.T.(Appeals) in support of confirming the income at Rs. 14,12,699.00 are not at all convincing & legally sound with the Principles of case laws and as such the addition is liable to be deleted in full.
4. For that on the facts and in the circumstances of the case the Ld. C.l.T.(Appeals) was not at all justified in confirming the addition of Rs. 12,41,967.00 as income of the humble appellant and the Ld. C.I.T.(Appeals) ought to have considered the rejoinder against the show-cause notice.
5. For that on the facts and in the circumstances of the case the Ld. C.l.T.(Appeals) was not at all justified in confirming the addition of Rs. 6,93,570.00 received as grant-in-aid from the Government of India.
6. For that on the facts and in the circumstances of the case the Ld. C.I.T.(Appeals) was wrong in denying the claim of depreciation of Rs. 1,98,374.00 by invoking the provision of Sec. 11(6) of the I.T. Act which is not at all applicable in the case of the assessee as the depreciation was claimed as per the provision of Section 32 of the I.T. Act, 1961.
7. For that on the facts and in the circumstances of the case the Ld. C.I.T.(Appeals) should have considered that the assessee-society is registered u/s. 12AA of the Act & obtained approval u/s. 80G of the Act & as such the society was entitled to get blanket deduction & / or exemption of the Grant-in-aid for the year under appeal.
8. For that the Ld. C.LT.(Appeals) erred both in points of law and on facts.
9. For that the humble appellant craves leave to take additional grounds and amend grounds and produce additional evidences at the time of hearing of the case.”
3. We note that there is a delay of 11 days in filing the present appeal for which petition for condonation of delay is placed on record along with supporting document. The impugned order of ld. CIT(A) is dated 19.09.2022 which is claimed to have been received on 20.09.2022. From the petition filed by the assessee explaining the delay it is noted that ld. Counsel for the assessee went through certain medical exigencies and therefore, could not file the appeal within the due date. Relevant supporting medical documents are also placed on record with the petition. Considering the same, the delay of 11 days is condoned and appeal is admitted for adjudication.
4. Assessee has taken an additional ground of appeal vide an application dated 13.02.2023 which is reproduced as under:
“That the Assessment order for the A.Y. 2017-18 is bad in the eyes of Law since the notice u/s. 143(2) for the A.Y. 2017-18 was never issued by the Assessing Officer completing the assessment and it is mandatory and statutory provision under the I.T. Act, 1961 and if this is not followed the assessment order should be treated bad in law and is liable to be struck down.”
5. With the prayer for admission of additional ground, ld. Counsel for the assessee submitted that this is a specific ground in addition to the grounds already taken in Form No.-36 which involves a pure question of law on the assumption of jurisdiction for the impugned assessment. Ld. Counsel for the assessee submitted that the jurisdictional issue raised vide this additional ground goes to the root of the matter for which relevant facts are already on record and therefore, by placing reliance on the decision of Hon’ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in 229 ITR 383 (SC), prayed for its admission and adjudication.
5.1. On confrontation of these submissions to the ld. Sr. D/R, nothing was controverted and therefore, this additional ground is admitted for adjudication. Accordingly, before going into the grounds originally taken in the appeal in Form No.-36, we first take up the additional ground which is on the jurisdictional issue.
6. Brief facts of the case are that assessee is a Trust registered u/s 12AA of the Act vide Order No. DIT(E)/8E/73/2006-07/4661-63 dated 31.10.2006. The assessee is also registered u/s 80G (5)(vi) of the I.T. Act,1961 vide M. No DIT(E)/8E/73/06-07/1955-57 dated 16.05.2016. The assessee submitted Form 10B and claimed exemption u/s 11 of the Act. The main activity of the Trust was to start and run social and scientific research centres, social welfare centres, and non-formal education and work experiences centres and to organise seminars, lectures, reading rooms and libraries in both rural and urban areas.
7. Assessee filed its return of income on 11.09.2017 reporting total income as NIL. Case of the assessee was selected for complete scrutiny under CASS. Statutory notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued and duly served upon the assessee which were complied with by furnishing required details and explanations. The assessment was completed by the ITO, Ward-1(1), Exemption, Kolkata vide order dated 13.12.2019.
7.1. Ld. Counsel for the assessee referred to notice u/s 143(2) of the Act, dated 09.08.2018 which was issued by the ITO, Ward-51(1), Kolkata. Later on, a letter was issued by ITO, Ward-1(1), Exemption, Kolkata, dated 24.07.2019 to the ITO, Ward-51(1), Kolkata requesting for sending the assessment folder along with order u/s 127 of the Act for completing the pending proceedings of the assessment. In the said letter, ld. ITO, Ward-1(1), Exemption, Kolkata noted that notice u/s 143(2) of the Act was issued from the office of ITO, Ward-51(1), Kolkata as the PAN was lying under that jurisdiction. Now, that the PAN is currently lying with ITO, Ward-1(1), Exemption, Kolkata, the request was made to forward the assessment folder along with relevant order u/s 127 of the Act to him for completing the necessary proceedings. Subsequently, vide document titled as “Transfer of assessment record” dated 15.11.2019 along with covering letter of the same date, ld. ITO, Ward-50(5), Kolkata transferred the assessment record by noting that in the ITBA module, PAN of the assessee lies under the charge of ITO, Ward-1(1), Exemption, Kolkata and that the assessment proceedings are due by 31.12.2019, the assessment records are transferred to the proper jurisdiction of ITO, Ward-1(1), Exemption, Kolkata.
8. The relevant documents of above communication between the two ld. ITOs are reproduced herein:
9. On the strength of these documents, ld. Counsel for the assessee asserted that the assessment order is bad in law since notice u/s 143(2) of the Act was never issued by ld. AO who completed the assessment. It was initially issued by ITO, Ward-51(1), Kolkata and the assessment has been completed by ITO, Ward-1(1), Exemption, Kolkata. Also, the order passed u/s 127 of the Act is not made available to the assessee.
9.1. Ld. Counsel for the assessee placed reliance on the decision of the Coordinate Bench of ITAT, Kolkata in the case of ACIT vs. Debabrata Kayal in ITA No. 06/KOL/2021 order dated 11.02.2022 wherein similar issue was dealt with wherein reliance was placed on the decision of Hon’ble Supreme Court in the case of ACIT vs. Hotel Blue Moon reported in [2010] 321 ITR 362 (SC) as well as decision of Hon’ble Jurisdictional High Court of Calcutta in the case of Kusum Goyal vs ITO in WP No. 1229 of 2009 order dated 05.04.2010. The relevant extracts of the same order are reproduced as under:
“9. Now, in this case, the assessment was initiated by issuing notice u/s 143(2) of the Act by ITO, Ward-26, Kolkata. However the assessment order has been passed by ACIT. At this stage, it will be appropriate to refer to the provisions of section 127 of the Act as under:
Power to transfer cases
(1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
10. A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in ^section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ITO which was beyond his jurisdiction and the same was therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not issue any notice u/s 143(2) of the Act to assume jurisdiction to frame the assessment. The Ld. CIT(A), this respect has placed reliance on the decision of the Apex Court of the Country in the case of Hotel Blue Moon reported in 321 ITR 362 (SC) wherever the Hon’ble Supreme Court has held that issue of notice u/s 143(2) of the Act is sine-qua-non to assume jurisdiction to frame assessment. Further the Ld. CIT(A) has relied upon the decision of Hon’ble Calcutta High Court in the case of Kusum Goyal vs. ITO in W.P. No. 1229 of 2009 vide order dated 5.4.2010 to hold that a valid order u/s 127 of the I.T. Act is required to be passed to transfer the case from one Assessing Officer to other Assessing Officer.
11. No law laying any contrary proposition of law has been cited by the Ld. D.R. We therefore, do not find any reason to interfere with the order of Ld. CIT(A). The order of the Ld. CIT(A) is upheld.
12. In the result, the appeal of the revenue stands dismissed.”
10. Per contra, ld. Sr. D/R could not place anything positive to controvert the facts from the documents referred above. Also, no contrary proposition of law was cited by ld. Sr. D/R. Considering the facts on record along with the documentary evidences and the judicial precedence referred above, we are of considered view that the assessment is not in accordance with the provisions of law since the assessment order has been passed by ITO, Ward-1(1), Exemption, Kolkata whereas assumption of jurisdiction for the assessment was done by ITO, Ward-51(1), Kolkata who issued the notice u/s 143(2) of the Act. Also, a valid order u/s 127 of the Act which is required to be passed for transferring a case from one Assessing Officer to another Assessing Officer could not be brought on record, though claimed to have been mentioned in the above referred documents. We, therefore, are inclined to allow the additional ground raised by the assessee in holding the impugned assessment order as bad in law, liable to be struck down. Accordingly, the additional ground taken by the assessee is allowed.
11. Since the additional ground on the jurisdictional issue is already held in favour of the assessee, the original grounds taken in the appeal memo in Form No.-36 are not adjudicated upon.
12. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 28th April, 2023 at Kolkata.
