ITO Vs BPO Finance and Investments Pvt Ltd (ITAT Kolkata)
ITAT Kolkata held that once the jurisdiction of the assessee is transferred from Delhi to Kolkata, every action for all the assessment year lies with ITO, Kolkata. Accordingly, notice issued u/s 148 by ITO, New Delhi is bad and illegal.
Facts- The present appeal has been filed by the revenue contesting that whether CIT(A) has erred in quashing the addition of Rs. 1,85,000,00/- made by the Assessing Officer on account of share capital and premium in the course assessment in absence of identity of the creditors, genuineness and creditworthiness of the entire transactions.
Notably, CIT(A) deleted the additions on the legal ground relating to the validity of the assessment framed by the Assessing Officer, which issue, has not been raised at all by the revenue through grounds of appeal despite bringing this fact to the knowledge of the concerned authorities and giving sufficient opportunities. However, considering the principles of natural justice, we proceed to adjudicate the issue relating to the action of the CIT(A) in setting aside the assessment holding the same as bad in law.
Conclusion- CIT(A) duly held that at the time of passing of order by CIT-I Delhi transferring jurisdiction from ITO, Ward 3(3), New Delhi dated 04/01/2010 to ITO. Ward 6(1), Kolkata, there is no proceedings pending before the ITO, Ward 3(3), New Delhi. The CIT-I, Delhi passed order u/s 127 of the Act on 04/01/2010 transferring the jurisdiction of the assessee to ITO, Ward 6(1), Kolkata and the jurisdiction in respect to every action for all assessment years lies with the ITO, Ward 6(1), Kolkata and only he is competent to issue notice u/s 148 of the Act. In such circumstances, the notice issued u/s 148 of the Act by the ITO, Ward 3(3), New Delhi is bad and illegal in view of the clear provisions of the Act because an order for transfer of case was validly made by CIT and the purpose for transfer was simply that all future proceedings are to be taken by ITO, Ward-6(1), Kolkata w.e.f. 04/01/2010. Hence, the notice issued u/s 148 of the Act dated 25/03/2010 is quashed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal has been preferred by the revenue against the order dated 10.09.2020 of the Commissioner of Income Tax (Appeals)-13, Kolkata (hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
2. The revenue originally has taken the following grounds of appeal:
“1. Whether on the facts and in the circumstances of the case, Ld, CIT(A) was justified in the quashing the addition of Rs. 1,85,000,00/- made by the Assessing Officer on account of share capital and premium in the course assessment in absence of identity of the creditors, genuineness and creditworthiness of the entire transactions.
2. Whether on the facts and in the circumstances of the case, Ld, CIT(A) was justified in the quashing the addition of Rs. 1,85,00,000/-made by the Assessing Officer where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings and as such identity & creditworthiness of the creditors and genuineness of transactions could not be verified.
3. Whether on the facts and in the circumstances of the case, and in law, the Ld CIT(A) has erred in considering the ratio of the case in the case of Pr. CIT(C)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd (412 ITR 161).
4. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in considering the facts, that the assessee company discharged its onus as is envisaged u/s. 68 of the Act.
5. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting the disallowance made u/s. 14A.
6. The appellant craves to add, alter, amend, delete or substitute any of the grounds and/or take additional grounds before or at any time of hearing of this appeal.”
A perusal of the above grounds of appeal would reveal that the revenue has contested the action of the CIT(A) in deleting the additions citing factual matrix of the case. However, a perusal of the impugned order of the CIT(A) would reveal that the ld. CIT(A) has not decided any issue on factual matrix of the case, rather, the ld. CIT(A) has held the assessment order as bad in law for want of valid jurisdiction of the Assessing Officer to frame the assessment. The aforesaid lacuna in not raising the valid grounds of appeal relating to the action of the CIT(A) in setting aside the assessment order as bad in law was brought into the knowledge of the department. The ld. DR sought adjournment on 16.01.2023 to get clarification from the Assessing Officer regarding the grounds of appeal. Thereafter, a letter dated 16.01.2023 was written on behalf of the ld. DR to the concerned Income Tax Officer requesting therein that in the case in hand, the ld. CIT(A) deleted the addition on issue of jurisdiction (technical ground) but the appeal has been filed by the Assessing Officer on the basis of the merit of the case and that there is nothing in grounds of appeal challenging the action of the CIT(A) in setting aside the assessment order on the basis of legal ground. In view of the above, it was requested to send the revised grounds of appeal. A copy of the said letter was also sent to the ld. Principal Commissioner of Income Tax-2, Kolkata and Additional Commissioner of Income, Range-5, Kolkata. In reply to the said letter, the concerned Income Tax Officer/Assessing Officer sent the revised grounds of appeal vide his letter dated 25.01.2023 to the office of the CIT-DR, which were placed on record by the ld. DR and the same are reproduced as under:
“1. That on the facts and circumstances of the case, Ld. CIT(Appeals) erred in law in deleting the addition of Rs. 1,85,00,000/- as unexplained cash credit u/s. 68 of the Act, ignoring the facts that the assessee failed to produce any director for verification of identity, creditworthiness and genuineness of transaction.
2. That the appellant subtly avoided the onus to produce any director for verification of identity, creditworthiness and genuineness of transaction.
3. That on the facts and circumstances of the case, Ld. CIT(Appeals) erred in coming to the conclusion that the assessee had discharged the initial onus which lay upon him in terms of section 68 of the Act.
4. That on the facts and circumstances of the case, Ld. CIT(Appeals) erred in law in deleting the addition of Rs. Rs. 13,56,097/- u/s. 14A of the Act, denying the findings of the Assessing Officer.
5. That on the facts and circumstances of the case, Ld. CIT(Appeals) failed to appreciate the facts in proper prospective while concluding in favour of the assessee.
6. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing.”
A perusal of the above grounds of appeal would show that despite bringing this fact specifically to the knowledge of the concerned authorities, the concerned authorities have again repeated the grounds of appeal agitating the deletion of the addition by the CIT(A) citing the factual matrix of the case, whereas, the CIT(A) has not touched upon the factual merits of the case, rather, he deleted the additions on the legal ground relating to the validity of the assessment framed by the Assessing Officer, which issue, has not been raised at all by the revenue through grounds of appeal despite bringing this fact to the knowledge of the concerned authorities and giving sufficient opportunities. However, considering the principles of natural justice, we proceed to adjudicate the issue relating to the action of the CIT(A) in setting aside the assessment holding the same as bad in law.
3. The assessee before the CIT(A) had made the following submissions agitating the validity of reassessment proceedings initiated u/s 147 of the Act by the Assessing Officer:
“4. Submission of the appellant:
These grounds are interconnected and challenge the action of assessing officer to contest the validity of re-assessment proceeding initiated u/s 147 of I.T. Act, 1961 along with challenging the validity of notice issued u/s 148 of the IT Act by an jurisdictional assessing officer situated in New Delhi. The reassessment proceeding us 147 initiated by non- jurisdictional assessing officer is not maintainable in law and is liable to be quashed. In support of our contention we submit as follows:-
a) The appellant prior to 01.04.2009 was assessed with ITO Ward 5(2), New Delhi. Thereafter by an order form Ld CIT-I Delhi, dated 01.04.2009 passed u/s 127 of the IT Act. The jurisdiction of the appellant company was transferred from ITO Ward 5(2) New Delhi to ITO Ward 5(3) Kolkata.
b) Notice u/s 148 is stated to have been issued by the ITO 5(2) New Delhi on 30.03.15 who had no jurisdiction over the appellants case, thereafter the case was transferred to the jurisdictional assessing officer ITO Ward 5(3) Kolkata, who passed the reassessment order without issuance of any notice u/s 148 of the IT Act.
c) The appellant company on 29.02.20l6 received communication in form of a notice u/s 142(1) from ITO Ward 5(3) Kolkata, wherein for the first time it was made aware of any proceedings u/s 148 of the IT Act. In reply to the said notice the appellant company on 07.03.2016 stated the appellant was never served with any mandatory notice u/s 48 of the IT Act and hence slated that the re assessment proceeding is void and bad in law and even if assuming that notice u/s 148 was served within the due date, the notice being issued by non-jurisdictional AO is invalid in absence of any jurisdiction by ITO Ward 5(2) New Delhi.
d) The assessing officer in Kolkata on 15.03.2016 issued another notice to the appellant, in the said notice he ignored the previous objections raised by the appellant company and asked the appellant to make compliance. The AO in Kolkata did not issue fresh notice u/s 148 of the Act as the due date for issuing notice w/s 148 already expired long time back i.e. in the month of March 2015.
e) Before going further, it is important to note the significant dates which will assist your honour in understanding the series of events leading to the reopening of the case and the completion of the re-assessment as follows;
