Case Law Details
Dream Projects Vs ITO (ITAT Patna)
The Patna ITAT allowed the assessee’s appeals for AYs 2014-15 and 2015-16, holding that the notices issued under Section 143(2) and the consequent assessment orders were without jurisdiction, as the Assessing Officers at Patna did not possess territorial jurisdiction over the assessee under Section 120 of the Income Tax Act and the relevant CBDT notification.
The assessee, an Association of Persons engaged in construction and property development, had its registered office and principal place of business in Kolkata. It had applied for PAN using its Kolkata address, filed its income tax returns mentioning the Kolkata address, and was registered with the trade licence and Service Tax authorities at Kolkata. Although the PAN allotment letter directed the assessee to contact ITO Ward-6(2), Patna for filing returns, the assessee consistently requested transfer of jurisdiction to the Kolkata Assessing Officer. Those requests were not accepted, and the assessments for both years were completed by ITO Ward-6(5), Patna after notices under Section 143(2) were issued by the Patna authorities. The CIT(A) remanded the matter for fresh assessment, following which the assessee challenged the jurisdiction of the Patna Assessing Officer before the Tribunal.
The Tribunal examined Section 120 of the Act and observed that Income Tax Authorities can exercise powers only in accordance with the jurisdiction conferred by the CBDT. Jurisdiction may be assigned based on territorial area, class of persons, income, or class of cases. Concurrent jurisdiction can also be exercised only if specifically conferred by the CBDT under Section 120. Therefore, jurisdiction cannot arise merely from administrative actions or errors.
Relying on the Delhi High Court decision in PCIT v. UV Realters Private Limited and the Kolkata Bench decision in Boast Traders Pvt. Ltd., the Tribunal held that if an assessee raises a jurisdictional objection within the prescribed time, the Assessing Officer must act in accordance with the statutory procedure. It also noted that an administrative or system error cannot confer jurisdiction contrary to a CBDT notification.
The Tribunal further found that the National Securities Depository Limited (NSDL) had admitted that the assessee had not mentioned the AO code in the PAN application and that the PAN was wrongly digitised under the Patna jurisdiction. NSDL had subsequently requested the Patna Assessing Officer to migrate the PAN to the correct jurisdiction, namely ITO Ward-6(2), Kolkata. The Tribunal concluded that the territorial jurisdiction over the assessee always lay with the Kolkata Assessing Officer under the CBDT notification and not with the Patna authorities.
Accordingly, the Tribunal held that the notices issued under Section 143(2) by ITO Ward-6(2), Patna and the assessment orders passed by ITO Ward-6(5), Patna were without jurisdiction. Ground No. 2 of the appeals was allowed, the assessment orders for both assessment years were quashed, and the remaining grounds were held to require no adjudication. The appeals were accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT PATNA
These Appeals are filed by the Assessee against the orders of the NFAC, Delhi [“the Ld. CIT(A)”, for short], both dated 18.11.2024 passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) pertaining to the assessment years 2014-15 & 2015-16 respectively.
2. Since both the Appeals are filed by the same Assessee and involve interconnected issues, the Appeals were heard together and are being disposed by this common order.
3. Brief facts of the case are that, Assessee is an AOP engaged in the business of construction of buildings and developing the property, having office at No.33A/Suite No.A1 & A2, Chatterjee International Centre, Jawaharlal Nehru Road, 14th Floor, Kolkata, West Bengal at the time of applying the PAN. Assessee filed returns of income for the assessment years 2014-15 and 2015-16 by mentioning the address of Kolkata, which were selected for complete scrutiny under CASS.
4. The notice u/s 143(2) of the Act was issued for assessment year 2014-15 originally by the ITO, Ward-6(2), Patna and thereafter the file was transferred from ITO Ward-6(2), Patna to ITO Ward-6(5) Patna, as the Assessee derives income from property development or building. Insofar as assessment year 2015-16, the notice issued u/s 143(2) of the Act, was issued by the ITO Ward-6(5) Patna. On receipt of the notices u/s 143(2) of the Act, Assessee requested the ITO Patna to transfer the records to the Kolkata Assessing Officer having territorial jurisdiction over it.
5. However, the request of the Assessee to transfer the records to the Assessing Officer having jurisdiction over the Assessee was not entertained by the department and Assessment Orders came to be passed for the Assessment Year 2014-15 on 29.12.2016 and for the Assessment Year 2015-16 on 30.12.2017 by ITO Ward-6(5), Patna, by making certain additions.
6. As against the Assessment Orders for the Assessment Year 2014-15 & 2015-16 (supra), Assessee preferred two first Appeals before the CIT(A). On adjudicating the Appeals filed by the Assessee, the Ld. CIT(A) vide orders dated 18.11.2024, remanded the matter to the file of the ‘Assessing Officer’ for de novo assessment. Aggrieved by the orders of the Ld. CIT(A) dated 18.11.2024, Assessee preferred the captioned Appeals by raising following common grounds of Appeals:-
Ground No.1
For that order passed by the Assessing Officer is barred by limitation since the same was served after 6 days from the end of the limitation period and there is no evidence brought on record that the order left the control of the Assessing Officer before the end of the limitation period.
Ground No. 2:
For that the Ld. CIT(A) erred in holding that the AO Patna had valid jurisdiction Assessee when the Assessee had no place of business under his jurisdiction, the assessment records even otherwise were liable to be transferred to the AO having jurisdiction as per CBDT notification published on 14.11.2014 and further the jurisdiction was duly disputed within the time allowed under the law but the Ld AO acted in defiance of law.
Ground No. 3:
For that even otherwise the assessment was without jurisdiction as per the notification of the CBDT since the Assessee’s PIN code jurisdiction was never there in Patna and the CBDT;s notification was binding on the AO.
Ground No.4:
For that the CIT(A) erred in giving a second innings to the AO when only arbitrary and whimsical additions without any head and tail were made in the original assessment. best judgement assessment.
7. The Ld. AR on the instructions of the Assessee, not pressed the Ground No.1, accordingly, Ground No.1 of the Assessee’s Appeals are dismissed.
8. The Learned Counsel for the Assessee addressing on Ground No.2 vehemently submitted that the ITO, Ward-6(2), Patna or ITO, Ward-6(5), Patna, had no territorial jurisdiction over the Assessee to issue notice u/s 143(2) of the Act as the Assessee being an AOP, having registered address at Kolkata and filed its return in Kolkata and even applied the Pan card mentioning the address of Kolkata. The Learned Counsel further submitted that the Assessee has been granted with Trade License at Kolkata and also registered with Service Tax department at Kolkata and The Assessee has also filed its Return for the Assessment Year 2011-12 to till date by mentioning the address at Kolkata. Therefore, the assessment orders framed by ITO, Ward-6(5), Patna had no territorial jurisdiction over the Assessee.
9. Further submitted that Assessee made several attempts to correct the territorial jurisdiction and to transfer the file to the ITO at Kolkata having jurisdiction over the Assessee by way of filing petitions before the Hon’ble Calcutta High Court and also gave multiple representations to the concerned authorities of the Department. However, the said issue was not resolved. On the other hand the notice u/s 143(2) of the Act were issued by the ITO, Ward-6(2), Patna and ITO, Ward-6(5) at Patna to the Assessee for the years under consideration. The Learned Counsel further submitted that as per the CBDT Notification dated 22.10.2014, the territorial jurisdiction of the Assessee is not under ITO, Patna, on the contrary the jurisdiction on the Assessee lies with ITO, Kolkata. The Learned Counsel further relied on the Judgment of the Hon’ble Delhi High Court in the case of PCIT Delhi Vs UV Realters Private Limited in ITA No.228/2022 dated 27.02/7.2022 and also relied on the following Orders of the Coordinate Bench of the Tribunal at Kolkata and sought for allowing the Ground No.2 of the Assessee’s Appeals:-
a. DCIT, central circle – 2(2), Kolkata Vs. M/s. Boast Traders Pvt. Ltd., (formerly known as Acme Pvt. Ltd.,), Kolkata dated 19.06.2020.
b. K. A. Wires Limited, Kolkata Vs. I.T.O.,Ward-8(3), Kolkata dated 22.01.2020.
10. Per contra, the Ld. DR took us through Page No. 21 of the paper book filed by the Assessee and submitted that while allotting the PAN number, the Income Tax PAN Services Unit specifically mentioned that ‘for filing the return of income, the Assessee has to contact ITO, Ward-6(2), Patna’. However, the Assessee has filed the return at Kolkata and not made any effort to change the jurisdiction of the PAN and did not inform about the ‘error, if any’, made while allotting the PAN number to the Income Tax PAN Services Unit. The Ld. DR further submitted that there is no prejudice caused to the Assessee and the additions have been rightly made on merits by the Assessing Officer which have been confirmed by the Ld. CIT(A) and the same requireno interference at the hands of the Tribunal, thus, sought for dismissal of Ground No.2 of the Assessee’s Appeals.
11. We have heard the parties and perused the material available on record. It is not dispute that the place of business or the geographical area where the Assessee/AOP primarily carries on its ordinary business is Kolkata and the assessee has no other branches much less in Patna. The Assessee, while applying for the PAN, had given the address of Kolkata and while allotting the PAN number and issuing the PAN card, the address mentioned by the department reads as under:
“DREAM PROJECTS,
33A SUITE NO A1 & A2, CHATERJEEINTERNATIONAL-CENTRE,
JAWAHARLAL NEHRU ROAD, 14TH FLOOR, KOLKATA,
WEST BENGAL-700 071”
It is also not in dispute that, while applying for the PAN, the Assessee has not given any other address than the address of Kolkata mentioned above. The PAN has been allotted to the Assessee, which has been informed to the Assessee by the Income Tax PAN Services Unit along with the covering letter placed at Page No. 21 of the paper book of the Assessee and the said covering letter has been addressed to the address of the Assessee at Kolkata. However, in the said covering letter it has been directed to the Assessee that, ‘for filing the return of income, to contact ITO, Ward-6(2), Patna’.
12. Pursuant to the issuance of the said PAN, Assessee filed Returns of Income for the assessment years 2014-15 and 2015-16, wherein the Assessee mentioned the address of Kolkata, West Bengal. The Returns for the assessment years 2014-15 and 2015-16 were selected for ‘Limited Scrutiny’. Further, the notice u/s 143(2) of the Act for the assessment year 2014-15 was issued by the then ITO, Ward-6(2) Patna, thereafter, the file was transferred to ITO, Ward-6(5) Patna, as the Assessee derived income from property development. For the assessment year 2015-16, the notice u/s 143(2) of the Act was issued by ITO, Ward-6(5) Patna. The assessment orders were also passed by the ITO, Ward-6(5) Patna. Those assessment orders have been affirmed by the Ld. CIT(A) vide order impugned.
13. The moot question here is to whether the ITO, Ward-6(5) Patna, had territorial jurisdiction over the Assessee to issue notice u/s 143(2) of the Act and also to frame the assessments for the assessment years 2014-15 and 2015-16?.
14. The provisions of Section 120 of the Act deals with the Jurisdiction of the Income Tax Authorities, which reds as under:
120. (1) income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise’ of the powers and performance of the functions by all or any of those authorities.
Explanation. – For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1).
(2) The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income- tax authorities who are subordinate to it.
(3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised by it may have regard to anyone or more of the following criteria, namely:-
a. territorial area;
b. persons or classes of persons;
c. incomes or classes of income, and
d. cases or classes of cases.
(4) Without prejudice to the provisions of sub-sections (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein,-
a. authorise any (Principal Director General or] Director General or 14 Principal Director or] Director to perform such functions of any other income-tax authority as may be assigned to him by the Board:
b. empower the Principal Director General or] Director General or 14 [Principal Chief Commissioner or Chief Commissioner or 14 Principal Commissioner or) Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to. the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made there under to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or Joint Director by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply.
(5) The directions and orders referred to in sub-sections (1) and (2) may, wherever considered necessary or appropriate for the proper management of the work, require two or more Assessing Officers (whether or not of the same class) to exercise and perform, concurrently, the powers and functions in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply.
(6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.
From the reading of the above provisions, as per section 120(1) of the Act, the Income Tax Authorities will have to exercise power conferred upon them only in accordance with the jurisdiction conferred by the Board. Such powers can be conferred by the Board 120(3) of the Act, having regard to the territorial area, class of person, income or class of the cases. The Central Board of Direct Tax u/s120(5) of the Act, can also confer the jurisdiction on two or more Assessing Officers (concurrent jurisdiction). The CBDT can also by notification confer powers on the authorities for the purpose of assessment as may be notified in the notification. Thus, the concurrent jurisdiction can only be exercised only when CBDT confers such jurisdiction u/s 120(4) and 120(5) of the Act.
15. The Hon’ble High Court of Delhi, in the case of PCIT Delhi Vs UV Realters Private Limited (supra) held as under:-
2. Learned counsel for the Appellant states that the ITAT erred in quashing the assessment order passed by the Assessing Officer, Kolkata without appreciating that the PAN of the Assessee-company was under the jurisdiction of the Assessing Officer. He states that the ITAT has erred in not appreciating that the PAN of the Assessee is lying at Kolkata and for the last six years the returns were being processed at Kolkata and during the period the Assessee had never raised any objection to the jurisdiction.
3. He submits that the ITAT also failed to appreciate that the Assessee had not made any request for change of jurisdiction under Section 127 of the Income Tax Act, 1961 (for short ‘Act’) between the Assessment Years 2006-07 and 2012-13.
4. However, a perusal of the paper book reveals that the Tribunal has found that the acknowledgment receipt of the return of income shows that the respondent Assessee had been filing its returns since inception i.e. Assessment Year 2005-06 at the address mentioned at New Delhi. It is pertinent to mention that in the Assessment Year 2012-13 when the Assessee’s case was selected for scrutiny, the Assessee had within a month filed its objection to the jurisdiction of the ITO, Ward-10(2), Kolkata stating that the Assessee’s jurisdiction lies with Assessing Officer, Range-18, New Delhi.
5. This Court is in agreement with the view of the Tribunal that as the Assessee had raised objection within the time provided under Section 124(3) of the Act, the Assessing Officer, if not, satisfied with the correctness of the claim should have referred the matter for determination before the assessment was made to the PCIT. However, in the present case, the Assessing Officer rejected the objection regarding the jurisdiction and referred the matter to the PCIT to decide the issue after sixteen months. Further, the PCIT instead of deciding the issue of jurisdiction ordered that the issue of transfer of the jurisdiction will be decided after the completion of assessment.
6. This Court is of the view that the approach adopted by both the Assessing Officers i.e. ITO, Ward-10(2), Kolkata as well as PCIT, Kolkata was contrary to the mandate of law, in particular, Section 124(4) of the Act.
16. Further, the Co-ordinate Bench of Delhi in the case of DCIT, Central Circle-2(2), Kolkata Vs. M/s. Boast Traders Pvt. Ltd., (formerly known as Acme Pvt. Ltd.,), Kolkata (supra) held as under:-
8.9. Under the scheme of “e” filing of return, the Assessee has to fill PAN on the return. It has to also fill its address and some of the details are picked up by the Assessee. If the Department’s system fails to correctly transfer the return to the jurisdictional Assessing Officer and transfer the same to a Assessing Officer though who has no jurisdiction as per the CBDT’s notification, such mistake cannot confer the jurisdiction. In such an Assessing Officer. Jurisdiction can be conferred only by notification u/ s 120(1) and 120(2) of the Act only.
8.10. The Ld DR submitted that there was transfer order of the Assessee’s case for the assessment year in question, from ITO Ward 33(1) to ITO Ward 8(3). There can be a valid transfer order from ITO Ward 33(1) only if he was vested with the jurisdiction over the Assessee. As he was never vested with the jurisdiction either by the notification of the CBDT or by any order of the Commissioner of Income tax earlier to the issue of notice u/s 143(2) of the Act, he could not have validly transferred the case to ITO, Ward Ward-8(3), Kolkata. The file/case was restored to its jurisdictional area. When the said ITO Ward 33(1) was not having valid jurisdiction at the time of issue of notice u/s 143(2) of the Act, then the notice is bad in law. The transfer of the folder from ITO Ward 33(1) to ITO Ward 8(3) in fact establishes that the revenue realised that the ITO Ward 33(1) had no jurisdiction.
17. In the present case, the Assessee was carrying out its business at Kolkata, while applying the PAN card submitted the address of Kolkata. The Assessee had been issued with trade license and registered with Service Tax Department at Kolkata. The Assessee also filed return of Income right from the year 2011-12 to till this year by mentioning the address/es of Kolkata. Even after making several attempts by the Assessee to change the jurisdiction from Patna to Kolkata with the department were gone in vain. The Assessee even approaches the Hon’ble Calcutta High Court seeking a direction to CBDT/Department to resolve the issue by assigning the assessee to the ITO having proper territorial jurisdiction. Finally, the National Securities Depository Limited (NSDL) has admitted the mistake vide letter dated 12.04.2018, wherein vide letter dated 12.04.2018, requested the ITO, Ward-6(5), Patna to migrate the PAN to the correct jurisdiction i.e., ITO, Ward-6(2), Kolkata. The copy of the letter issued by the NSDL is placed at Page No.67 to 71 of the paper book filed by the Assessee. The relevant portion of the said notice is produced as under:-
“Upon receipt of your said letter dated March 21, 2018, we had verified the above application form (copy enclosed) and it was observed that AO code which was supposed to be mentioned by the PAN applicant in the application form, was not mentioned. It is noticed that, the AO code details were digitized as “PTN-W-26-2’ by TIN-FC, Alankit Limited since the PAN applicant ahd not mentioned AO code details in above PAN application form. Hence, the PAN AAAAD9390B was allotted under the ITO Ward-6(2), Patna.
In view of the above, in order to resolve your issue, we have vide our letter reference no. TIN/OPS/KD/2017-18/177 dated April 12, 2018 (copy enclosed) requested Office of ITO, Ward-6(5), Patna to migrate the above-mentioned PAN to the correct jurisdiction i.e,, ITO Ward-6(2), Kolkata (copy enclosed). You may contact the concerned Assessing Officer with these details which will enable you to resolve the matter.”
18. Thus we find that the territorial jurisdiction of the Assessee lies with ITO, Ward-6(2), Kolkata as per the notification issued by the CBDT and the ITO, Ward-6(2), Patna and ITO, Ward-6(5), Patna has no territorial jurisdiction over the Assessee. Further by following the ratio laid down by the Hon’ble Delhi High Court in the case of PCIT Delhi Vs UV Realters Private Limited (supra) and by the order of the Coordinate Bench of the Tribunal in the case of DCIT, central circle – 2(2), Kolkata Vs. M/s. Boast Traders Pvt. Ltd., (formerly known as Acme Pvt. Ltd.,), Kolkata (supra), we hold that the notice issued u/s 143(2) by the ITO, Ward-6(2), Patna for AY 2014-15 and the notice issued by the and also the Assessment Orders passed by the ITO, Ward-6(5), Patna are without jurisdiction. Accordingly, by allowing Ground No.2 of the Assessee, the Assessment Orders passed for AYs 2014-15 and 2015-16 are hereby quashed.
19. Since, we have allowed Ground No.2 of the Assessee and quashed the assessment orders, the others grounds of appeal require no adjudication.
20. In the result, appeals of the Assessee are allowed.
Order pronounced in the Open Court on 19.06.2026.
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