I. _Sudhir Kumar Agarwal v. Ito Bhilai_[10

I.T.A No.103/2017 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28 DAY OF JULY 2023 PRESENT THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON’BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO.103 OF 2017 BETWEEN: M/S. CHANDRIKA INVESTMENTS REP. BY ITS MANAGING PARTNER SRI. I. HARISHCHANDRA SHETTY NO.8/A, 24 MAIN 1 PHASE, J.P. NAGAR BANGALORE-560 078 …APPELLANT (BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. M. LAVA AND SHRI. S. ANNAMALAI, ADVOCATES) AND: THE INCOME-TAX OFFICER WARD 4(3) NOW AT 80 FEET ROAD, BMTC BUILDING KORAMANGALA 6 BLOCK BANGALORE-560 095 …RESPONDENT (BY SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 23.09.2016 PASSED IN ITA NO.631/BANG/2013, FOR THE ASSESSMENT YEAR 2009-2010 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED THEREIN AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT I.T.A No.103/2017 AGAINST THE APPELLANT IN THE ORDER PASSED BY THE ITAT, BENGALURU “C” BENCH, IN ITA NO. 631/BANG/2013 DATED 23.09.2016 FOR THE ASSESSMENT YEAR 2009-10 (ANNEXURE-A) AND ETC. THIS ITA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 11.07.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH KUMAR, J., PRONOUNCED THE FOLLOWING:- JUDGMENT This appeal by the Assessee, directed against order dated September 23, 2016 in ITA No. 631/Bang/2013, passed by the ITAT[1] has been admitted to consider following questions of law: 1.Whether the Tribunal was justified in law in not quashing the assessment order passed by the Income-tax Officer after holding that the order passed by the Income-tax officer is not valid on the facts and circumstances of the case. the assessment order passed by the Income-tax Officer after holding that the order passed by the Income-tax officer is not valid on the facts and circumstances of the case. 2.Whether the Tribunal was justified in law in restoring the matter back for framing the de-nova assessment by a competent officer being ACIT or DCIT and thereby elongating the period of limitation on the facts and circumstances of the case. matter back for framing the de-nova assessment by a competent officer being ACIT or DCIT and thereby elongating the period of limitation on the facts and circumstances of the case. 3.Whether the Tribunal was justified in law in not holding that the assessment order, passed is without jurisdiction and contrary to the Instruction No.1/2011 dated 31.01.2011 the assessment order, passed is without jurisdiction and contrary to the Instruction No.1/2011 dated 31.01.2011 1Income Tax Appellate Tribunal I.T.A No.103/2017 and the assessment order is then liable to be annulled on the facts and circumstances of the case. 4.Whether the Tribunal was justified in law in not adjudicating the various grounds of appeals filed by the appellant on the facts and circumstance of the case. the various grounds of appeals filed by the appellant on the facts and circumstance of the case. 2. Heard Shri. A. Shankar, learned Senior Advocate for the Assessee and Shri. K.V. Aravind, learned Senior Standing Counsel for the Revenue. 3. Brief facts of the case are, assessee is a partnership firm. A survey under Section 133A of the Income Tax Act, 1961[2] was conducted in assessee’s premises on 19.02.2010. Assessee filed its returns for A.Y.[3] 2009-10 on 17.03.2010 declaring a total income of Rs.3,42,45,991/-. Subsequently, it filed revised returns on 31.03.2010 declaring a total income of Rs.1,27,50,050/-. 4. The AO[4] passed the assessment order making certain additions. On appeal, the CIT(A)[ 5] partly allowed assessee’s appeal. On further appeal, the ITAT held that AO’s 2 ‘the Act’ for the short 3 Assessment Year 4 Assessing Officer 5 Commissioner of Income Tax (Appeals) I.T.A No.103/2017 3. Brief facts of the case are, assessee is a partnership firm. A survey under Section 133A of the Income Tax Act, 1961[2] was conducted in assessee’s premises on 19.02.2010. Assessee filed its returns for A.Y.[3] 2009-10 on 17.03.2010 declaring a total income of Rs.3,42,45,991/-. Subsequently, it filed revised returns on 31.03.2010 declaring a total income of Rs.1,27,50,050/-. 4. The AO[4] passed the assessment order making certain additions. On appeal, the CIT(A)[ 5] partly allowed assessee’s appeal. On further appeal, the ITAT held that AO’s 2 ‘the Act’ for the short 3 Assessment Year 4 Assessing Officer 5 Commissioner of Income Tax (Appeals) I.T.A No.103/2017 assessment order is not valid and set aside the same and remitted the matter to the AO for framing a de-novoassessment by a competent officer namely, the ACIT[6] or the DCIT[7]. Hence, this appeal. 5. Shri. Shankar, praying to allow the appeal submitted that: the ITAT has erred in restoring the matter for framing the de-novo assessment by the ACIT or the DCIT. It ought to have annulled the assessment order; the ITAT has erred in restoring the matter for framing the de-novo assessment by the ACIT or the DCIT. It ought to have annulled the assessment order; the ITAT having recorded a finding that as per the CBDT[8] instruction 1/2011, the ITO[9] had no jurisdiction to frame the assessment, ought not to have remitted the case; the ITAT having recorded a finding that as per the CBDT[8] instruction 1/2011, the ITO[9] had no jurisdiction to frame the assessment, ought not to have remitted the case; jurisdictional defect cannot be cured and assessment proceedings are void-ab-initio; assessment proceedings are void-ab-initio; 6 Assistant Commissioner of Income Tax 7 Deputy Commissioner of Income Tax 8Central Board of Direct Taxes 9 Income Tax Officer I.T.A No.103/2017 the effect of restoring the matter amounts to the effect of restoring the matter amounts to giving the revenue a second opportunity to pass an assessment order and the same is impermissible in law. an assessment order and the same is impermissible in law. 6. In support of his contentions, Shri. Shankar has placed reliance on following authorities: i.Sudhir Kumar Agarwal Vs. ITO Bhilai[10]; ii.Deepak Agro Foods Vs. State of Rajasthan[11]. 7. Opposing the appeal, Shri. Aravind, submitted that the objection raised by the assessee is with regard to the pecuniary jurisdiction which has to be urged at the earliest point of time. The ITAT has rightly recorded that the assessment order is an irregular one but not an illegal one and rightly remitted the case for framing fresh assessment. 8. In support of his contentions, he placed reliance on following authorities: 10ITA No. 158/RPR/2017 (Raipur) 11 (2009) 16 STR 518 (SC) I.T.A No.103/2017 (i). Abhishek Jain Vs. Income Tax Ward-55(1), New Delhi[12]; Officer, (ii). Fidelity Business Services India (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Circle-3(1)(1), Bangalore[13]; (iii). The Commissioner of Income Tax and Another Vs. M/s. Kripamrit Enterprises[14]. 9. We have carefully considered the rival contentions and perused the records. 10. Undisputed facts of the case are, a survey was conducted in the business premises of the assessee on 19.02.2010. In response to the notice under Section 142(1) of the Act, assessee filed its returns declaring a total income of Rs. 3,42,45,991/-. Subsequently it filed a revised return declaring a sum of Rs.1,27,50,050/-. The AO processed and framed the assessment. Feeling aggrieved, assessee filed an appeal before the CIT(A) and it was partly allowed. On further appeal, the ITAT held that the AO had no jurisdiction and 12 [2018] 94 taxmann.com 355 (Delhi) 13 [2018] 95 taxmann.com 253 (Karnataka), para 63 14 ITA No. 203/2008 dated 29.09.2010 I.T.A No.103/2017 remitted the matter for framing the assessment order by the competent officer. 10. Undisputed facts of the case are, a survey was conducted in the business premises of the assessee on 19.02.2010. In response to the notice under Section 142(1) of the Act, assessee filed its returns declaring a total income of Rs. 3,42,45,991/-. Subsequently it filed a revised return declaring a sum of Rs.1,27,50,050/-. The AO processed and framed the assessment. Feeling aggrieved, assessee filed an appeal before the CIT(A) and it was partly allowed. On further appeal, the ITAT held that the AO had no jurisdiction and 12 [2018] 94 taxmann.com 355 (Delhi) 13 [2018] 95 taxmann.com 253 (Karnataka), para 63 14 ITA No. 203/2008 dated 29.09.2010 I.T.A No.103/2017 remitted the matter for framing the assessment order by the competent officer. 11. We may record that the assessee raised its objection with regard to pecuniary jurisdiction for the first time before the CIT(A). According to Shri. Shankar, the AO lacked inherent jurisdiction. To buttress his argument, he has relied upon Deepak Agro Foods. 12. In Abhishek Jain, the Delhi High Court has held as follows: “As far as territorial or pecuniary jurisdiction are concerned, objection should be taken at the earliest possible opportunity and/or before the settlement of issues and not at the subsequent state. Jurisdiction as to the subject matter is distinct and stands on a different footing.” (Emphasis Supplied) 13. This court in Fidelity Business Services India (P.) Ltd. has held that the words ‘as it thinks fit’ confer wide powers upon the ITAT to pass such orders in the subject matter of appeal. I.T.A No.103/2017 14. Admittedly, assessee has not raised any objection with regard to pecuniary jurisdiction before the AO. In view of the law laid down in Abhishek Jain that any objection with regard to territorial and pecuniary jurisdiction should be taken at the earliest possible opportunity before the settlement of issues and not at a subsequent stage and the interpretation of Section 254 of the Act by this Court, we find no error in the order passed by the ITAT. 15. All three questions raised by the appellant in the memorandum of appeal are similar in nature, i.e., assailing the ITAT’s order and remitting the case for framing fresh assessment by the competent officer. The main ground urged is that the AO had no jurisdiction. 16. In the light of above discussion, this appeal must fail and hence, the following: I.T.A No.103/2017 ORDER (i)Appeal is dismissed. (ii)The questions of law are answered in favour of the Revenue and against the assessee. No costs. Sd/-JUDGE Sd/- JUDGE SPS