Income Tax Appellate Tribunal - Mumbai
Chetana Zarda Company, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH 'C ' MUMBAI BEFORE SHRI R K GUPTA, JM & J SUDHAKAR REDDY, AM ITA Nos. 5876 & 5877/Mum/07 (Asst Years 1993-94 & 94-95) Chetna Zarda Company 1/213 Navjivan Society Lamington Road Mumbai 8 Vs The Income Tax Officer Ward 15(2)(2), Mumbai (Appellant) (Respondent) PAN AAAFC0896Q Assessee by: Shri S C Tiwari Revenue by: Shri Yeshwant V Chavan ORDER
PER R K GUPTA:
These are two appeals by the assessee relating to assessment years 1993-94 & 94-95. Similar facts are involved in both these appeals; therefore, they are disposed off by this single order.
2 The return for AY 1993-94 was filed on 21.10.1993 declaring loss of Rs. 4,27,762/- and the same was accepted u/s 143(1) on 8.11.1993.
2.1 Similarly, for AY 1994-95 the return declaring loss of Rs.2,03,716/- was filed on 25.4.1995 which was also accepted u/s 143(1) on 13.11.1995.
2.2 Search and seizure action was conducted by Excise Department on the business premises of the assessee and as per the order, suppression of sales were detected. On receipt of information with prior approval of Addl.CIT, Range -12 Mumbai on 15.3.2000, the assessments for both the years were reopened and notice u/s 148 dated 15.3.2000, were issued and served on the assessee requiring to file revised returns of income. In response to notice u/s 148, the assessee requested to treat the returns of income filed originally as returns filed in response to notices u/s 148 for both these years. As per assessment order, subsequently notice u/s 143(2) and 142(1) were issued to the assessee to complete the assessment proceedings for both these years. On receipt of notice u/s 143(2)/142(1), the ld AR of the assessee appeared and fled letter dated 23.3.2002 by which the jurisdiction of the AO was challenged. The AO at page 2 of his order has accepted that the jurisdiction was challenged. In this respect, the AO has observed at para 2 at page 2 of his order for AY 1993-94 as under:
"However, he challenged the jurisdiction vide his letter dated 23.3.2002. But before his challenge for jurisdiction necessary enquiries were already made by Ward Inspector Shri R S Patil vide his report dt 18.3.2002 that area of jurisdiction of Lamington Road is totally mixed up. There is no clear cut bifurcation of area. Numbers of assessee of Lamington Road, Navjivan Society, Mumbai, are assessed in both the Ranges i.e Range 16(2) as well as Range 15(2). Some assessees mention that Mumbai No.400007 and some as Mumbai no.400008. This requires a clear cut bifurcation of area to avoid such type of jurisdiction challenge."
2.3 Thereafter, in para 3, the AO has observed that;
"Subject to above the revised total income of the assessee is computed as under subject to following observations:
In this case, Central Excise conducted search and seizure action on 2.8.84. During the course of action Central Excise Department has found that assessee has purchased Packing material in the various names. It has not recorded the transactions of sale in the statutory books, to evade Central Excise duty. As a result of this search and seizure action, the department arrived to the conclusion that during the previous year relevant to Asst Year under consideration till the date of action, the assessee has evaded the sales to the extent of Rs. 5,36,45,105/-. It was also made known that the adjudication order has not been passed by the adjudication Commissioner of Central Excise. The Central Excise Department has issued show cause notice to the assessee to that effect. A detailed enquiry has been made during AY 1995-96 and this fact has been briefly mentioned n the body of assessment order foray 1995-96.
In the above circumstances as per details mentioned in the AY 1995-96, I draw a conclusion that the Central Excise Department's finding of evasion of sales to the tune of Rs. 5,36,45,105/- is correct. I therefore, proceed to estimate assessee's income from such sale equal to GP rate declared by the assessee@ 19% which works out to Rs. 1,01,92,569/-. After adjusting loss of Rs. 4,27,762/- as per Return of income, total taxable income for the year under consideration works out to Rs. 97,64.807/-."
Thereafter, the assessment was completed by which an addition of Rs. 1,01,92,569 for AY 1993-94.
2.4 Similar observations have been made in the order for AY 1994-95 also. Thereafter, the assessment at Rs. 3,32,24,424/- for AY 1994-95 was made. The assessee preferred appeals before the CIT(A) for both these years.
3 The then CIT(A) allowed the appeals of the assessee by observing that no reasons have been recorded by the AO; therefore, reopening of assessments are bad in law. Accordingly, both the orders of the AO were cancelled.
3.1 The department filed appeals before the Tribunal, before it, the copies of the reasons recorded were filed. The Tribunal, after taking into consideration the reasons recorded set aside the orders of the CIT(A) and remanded the matter back to the file of the CIT(A) to pass a fresh order on the basis of the grounds raised. Thereafter, the present CIT(A) decided the appeals for both these years ground wise on merit.
4 The issue in respect to jurisdiction of the AO has been decided by the CIT(A) in para 6 & 7 at pages 3 & 4 of his order. The following findings have been recorded by the CIT(A):
"Section 124(2) categorically state that where any dispute arises with regard to the jurisdiction of an Assessing Officer, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner. A plain reading of the sub-section (2) to section 124 makes it abundantly clear that the issue regarding the dispute of the jurisdiction of AOs is purely administrative matter and any grievance of the appellant in this regard should have been addressed to the Director General or Chief Commissioners or Commissioners concerned and cannot fall within the purview of the appellate jurisdiction of the Commissioner(Appeals). It is not out of place to mention here that under the provisions of the Income tax statute, there is no inherent right of appeal; if a right of appeal is not given by the statute, no appeal would lie, (Harihar v CIT 9 ITR246, CIT v Garware Nylon, 212 ITR 242, Bhagat v CIT, 4 ITC 33). Therefore, if a right of appeal, against a particular act or order of the AO is not given by the statue, no appeal would lie. Those orders against which an appeal can be filed by an assessee, before the CIT(A))are listed out in Section 246A of the Act.
The question as to whether an AO has jurisdiction within the section 124 of the Act, to asses any person, therefore, cannot be the subject matter of appeal. The appellate authorities are not competent to decide the AO's jurisdiction (Ref. to page 1647 of 'The Law & Practice of Income Tax' by Kanga & Palkhiwala, Ninth Edition. The grievance of the appellant being administrative in nature cannot be taken cognizance of by me. This ground of appeal is therefore strongly rejected."
4.1 Other issues were also decided by the CIT(A) by which the orders of the AO have been confirmed.
5 Similarly, the appeal of the assessee has been dismissed for AY 1994-95 also. Now, the assessee is in appeals here before us for both of these years.
6 The ld counsel of the assessee, who appeared before the Tribunal, strongly submitted that the AO was not having jurisdiction to pass the assessment for both these years. The jurisdiction itself was challenged before the ITO; however, without considering the submissions, the AO has rejected the contentions of the assessee in routine manner. The ld CIT(A) has also not taken into consideration this aspect as by observing that the assessee should have moved the jurisdiction issues before the Director General or with the Chief Commissioner or Commissioner concerned, dismissed the ground. It was submitted that the AO issued notice and the assessee challenged before him that he has no jurisdiction; therefore, this was the duty of the AO to find out his jurisdiction and then he should have proceeded further. It was further submitted that the additions have been made by the AO only on the basis of show cause notice issued by the Central Excise Department. Neither the case of the assessee has been examined nor any other information was sought and by passing the orders in brief in one para only, huge additions have been made in both these years. There is no application of mind at the end of the AO as well as at the end of the CIT(A). Detailed written submissions containing 90 pages were field before the CIT(A); however, they were not considered. Therefore, without application of mind and without jurisdiction, the assessments so completed are bad in law and liable to be annulled. Reliance was placed on the cases reported in 87 ITR 539; 200 ITR 697; 138 ITR 391 and 128 ITR 14. Attention of the Bench was drawn on the provisions of sec. 124 by which the jurisdiction of the AO is provided.
6.1 The ld DR, on the other hand submitted that there are various locations in the same area and there are hundreds of assessee in the same building. The area of the assessee was mixed up in two ranges i.e. Range 15(2) and Range 16(2); therefore, the AO has sought report through Inspector, who has also submitted that the area of jurisdiction is mixed up with the Range 15(2) and 16(2) which need bifurcation. In view of these facts, the AO proceeded to complete the assessment and therefore, the AO does not lack of jurisdiction. The CIT(A) has rightly rejected the issue by observing that if jurisdiction was not with the present AO, who passed the assessment then the assessee should have objected the jurisdiction issues before the Director General or the Chief Commissioner or Commissioner concerned and not to the AO. Therefore, he supported the orders of the authorities below.
6.2 In reply, the ld counsel of the assessee stated that this was the duty of the AO to verify whether he has jurisdiction upon a particular case or not. The assessee has intimated the AO that he has no jurisdiction; however, in spite of these facts, the AO still proceeded to make these assessments, which are bad in law.
7 We have heard the rival submissions and considered them carefully. We have considered the statement of facts enclosed along with the appeal memo, various case laws and the orders of the authorities below in detail. After going through the orders of the authorities below, it is seen that the AO has completed the assessment in routine manner not taking into consideration the objections of the assessee and the details filed before him. The observations and the findings of the AO given at page 2 of his order which are reproduced somewhere above in this order clearly proved this fact that the AO has not applied his mind properly for the purpose of assuming jurisdiction and making the addition in the hands of the assessee for both these years.
7.1 The AO mentioned in para 2 at page 2 of his order in respect to the objections raised before him regarding the jurisdiction. The AO himself has admitted that the area was mixed up and requires clear cut bifurcation; however, he has not bothered whether the area in which the assessee situates pertaining to his jurisdiction or not. Report from the Ward Inspector Shri R S Patil was also sought who has also clearly stated that the jurisdiction of Lamington Road was totally mixed up. Once it is found that the area of jurisdiction is mixed up then it was the duty of the AO to verify the fact in respect of his jurisdiction that whether he has jurisdiction over the assessee's case or not. However, as stated above, without enquiring this fact, the AO proceeded to complete the assessment and without discussing the reply filed on behalf of the assessee or without taking into consideration any details into consideration, he passed an order by making a huge addition of Rs. 1,01,92,569/- for AY 1993-94 and addition of Rs. 3,32,24,424/- for AY 1994-95.
7.2 The assessee again challenged the jurisdiction issue before the CIT(A) for both these years. However, the ld CIT(A), XV, Mumbai by passing order on 24.1.2003 dismissed this ground by observing that though present AO does not have jurisdiction; however, in view of the provisions of sec. 246, the technical ground cannot be raised in appeal, dismissed the ground for both these years. Another ground was taken that copy of the reasons recorded has not been given to the assessee; therefore, the order is null and void.
7.3 After considering these submissions, the then ld CIT(A) held that without recording the reasons or without giving copy of the reasons recorded, the order is null and void; accordingly, these grounds for both these years were accepted.
7.4 The department filed appeal before the Tribunal, before it copies of the reasons recorded by the AO were furnished. The Tribunal, after taking into consideration the copy of the reasons recorded, set aside the order of the CIT(A) and remanded the matter back to the file of the CIT(A) to decide all these issues afresh. This order of the Tribunal was passed on 14.8.2006. Thereafter, the appeals of the assessee for both these years were taken for hearing by the present CIT(A) on various dates. The jurisdiction issue was again taken and was considered by the CIT(A). The CIT(A) has rejected this ground also for both these years. The findings of the ld CIT(A)'s order dated 1.8.2007 have been reproduced somewhere above in this order.
8 Now, after considering the statement of facts and other material on record, we note the factual background of the case as under:
8.1 M/s Chetna Zarda Company (the assessee) is a partnership firm carrying out the business of manufacturing and sale of variety of chewing tobacco products having its Head Office at 1/213 Navjivan Co-op Society, Lamington Road, Mumbai 400 008. It had assessed to tax with the Asst Commissioner of Income Tax, Circle 12(2), Matru Mandir, Mumbai. Subsequent to the notification no. SO 732(E) dated 31.7.2002, Schedule-I at Sl No.133 issued by the CBDT dated 31.7.2001, the jurisdiction over the case stood transferred to CIT-XV, Mumbai. Subsequent to the notification issued by the CBDT revising the jurisdiction of Commissioners and the Chief Commissioners all over India, the Chief Commissioner issued another notification of jurisdiction of various Ranges and the Commissioners charge within the jurisdiction of Chief Commissioner, Mumbai. Page 1 of the local notification clearly states that the jurisdiction of CIT-XV is over non-company and non-salary assessees of Ward C and Ward D having their address within Pin Code 400 008. As per this notification, CIT XVI will have jurisdiction of similar assessees of Ward D whose address does not fall within the Pin Code 400 008. Detailed range-wise jurisdiction of the CIT-XV, Mumbai is given at page 17 of the jurisdiction circular issued by the Chief Commissioner, Mumbai. The contents of this notification are shown at page 10 to 12 of the statement of facts placed on record. From this notification, it is clear that the assessee which is not a company and which is also not a salaried person and which has its address falling within the territorial area bearing Pin Code no.400 008, would be under the exclusive jurisdiction of Range -15 functioning under Commissioner of Income tax XV, Mumbai and not that of Range 16 under Commissioner of Income Tax XVI, Mumbai, 8.2 It is further seen that prior to issue of this notification, jurisdiction over the case was with CIT(XII), Mumbai. The assessee was regularly assessed to tax with AC Cir 12(2). Notice u/s 148 by the then jurisdictional AO, AC Cir 12(2) was issued on 31st March 2000. Within the prescribed time limit, the assessee wrote to AC Cir 12(2) stating that the original returns filed for the AYs 1993-94 and 94-95 may be treated as returns filed u/s 148. The Then jurisdictional AO, AC Cir. 12(2) issued notices u/s 143(2) dated 23.1.2001 but adjourned the cases sine die because of notification of revising jurisdictions were issued by the competent authorities. Thereafter, subsequent to the issue of notices revising the jurisdictions post-restructuring of the department, it was for the first time that AC Cir 16(2) issued notices u/s 142(1) and 143(2) on 21st March 2002. These notices were served on the assessee on 22.3.2002 fixing the case on 26.3.2002. The assessee's representative within four days appeared before the AC Circle 16(2) and questioned his jurisdiction and also asked for a copy for reasons recorded for reopening the assessments vide letter dated 23.3.2002.
8.3 It is also seen that without referring the questions of jurisdiction to the Commissioner/Chief Commissioner and without giving the assessee opportunity of being heard, the AO passed the assessment orders for the AY 1993-94 and 1994-95 on 27.3.2002. It is surprising that once jurisdiction of the AO was challenged before him itself then without enquiring about the jurisdiction whether he has jurisdiction over the assessee's case or not proceeded to complete the assessment. In our considered view, the action of the AO was capricious and illegal. The AO himself has admitted that he sought report from Ward Inspector Shri R S Patil. Vide his report dated 13.3.2002, the Inspector has reported that the jurisdiction of Lamington Road is totally mixed up and there was no clear cut bifurcation of area which needs bifurcation. Instead of verifying the jurisdiction, the AO proceeded to complete the assessments that too in a routine manner. It is clear that the area of Navijvan Co-op Hsg Society, where the assessee situtates is covered by Pin Code 400008 and the area covered by Pin Code 400008 falls under the jurisdiction of Range 15 and not under the Range 16 under which jurisdiction of the present AO falls.
9 The Hon'ble Supreme Court in the case of Raza Textiles Ltd in 87 ITR 539(SC) has held that;
"No authority, much less a quasi - judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly."
It is further held that;
"it is incomprehensible to think that a quasi judicial authority like the ITO can erroneously decide a jurisdictional fact and thereafter proceed to impose levy on the citizen."
9.1 The ratio of the decision of the Hon'ble Supreme Court is squarely applicable on the facts of the present case as in the present case, the AO knowing that the area of jurisdiction is mixed up even then without ascertaining his jurisdiction over the assessee's case proceeded to complete the assessments.
9.2 The AO should have referred the matter to the Commissioner of Income Tax as per provisions of sec. 124(2) r.w.s 124(4). The provisions of section 124(2) and 124(4) are very clear which read as under:
Sub.section 2 of section 124:
"Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or where the question is one relating to areas within the jurisdiction of different Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify."
Sub.section 4 of section 124:
"Subject to the provisions of sub-section (3),where an appellant calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section(2) before the assessment is made."
Sub.sec. 2 of section 124 provides the procedure for resolution of dispute regarding jurisdiction over an assessee and sub. Section 4 of section 124 provides that where a question of jurisdiction arose then the AO shall refer the matter for determination of jurisdiction under sub.sec. 2 before the assessment is made.
9.3 Thus, in a case where the jurisdiction of the AO is challenged, the provisions of sub-sec.2 of sec. 124 come into play and the AO, in case he does not agree with the assessee, must forward the assessee's objection to the Chief Commissioner for resolving the issue of jurisdiction. In view of the express provisions of sub-sec. 4 of section 124, the AO has no authority to decide the issue of jurisdiction on his own. Such an action of the AO is clearly illegal.
9.4 The Hon'ble Allahabad High Court in the case of Dinanath Hemraj vs CIT reported in 1927 ILR 49(All) has held that;
"If the AO makes such an assessment without referring the challenge to jurisdiction, the assessment shall be without jurisdiction and, therefore, null and void, except in a case which falls for consideration under the provisions of sub sec. (5) of sec. 124."
9.5 It is seen that provisions of sub.sec.(5) of sec. 124 do not apply to the facts of the present case as sub.sec. 5 of sec. 124, comes into play only when the addresses of the assessee's offices or branches are scattered over territories falling under the jurisdiction of more than one officer. The assessee has only one office which is situated in Navjivan Society, Lamington road, Mumbai 400 008.
9.6 The Pubjab & Hariyana High in the case of Joginder Singh in 128 ITR 14 has held that;
"The language of section 124(4) of the I T Act, 1961 requiring the determination of the questions of jurisdiction of an ITO is mandatory. That where an appellant raises an objection regarding the jurisdiction of a particular ITO, the IT authorities are bound to decide the questions."
10 In the present case, the assessee challenged the jurisdiction of the ITO; however the ITO without deciding the question of jurisdiction proceeded to make the assessments 10.1 Constitution Bench of the Hon'ble Supreme Court in the case of Central Potteries Ltd in AIR 1966 SC 932 has laid down the following dictum:
"In this connection it should be remembered that there is a fundamental distinction between want of jurisdiction and irregular assumption of jurisdiction, and that whereas an orders passed by an authority with respect to a matter over which it has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity. It may be liable to be questioned in those very proceedings, but subject to that it is good, and not open to collateral attack Therefore, even if the proceedings for assessment were taken against a non registered dealer without the issue of notice u/s 10(1) that would be a mere irregularity in the assumption of jurisdiction and the order of assessment passed in those proceedings cannot be held to be without jurisdiction and no suit will lie for impeaching them on the ground that section 10(1) had not been followed."
11 In the present case, AC Cir 16(2) totally lacked the jurisdiction. As per the notification issued by the CBDT and Chief Commissioner, Mumbai the revised jurisdiction over the case was with Range 15(2). Therefore, so far as the AC, Cir 16(2) was concerned, there was no jurisdiction over the assessee's case. If the AC Cir 16(2) could have made little efforts to enquir about the proper jurisdiction then it was very easy for him to find out whether he had jurisdiction over the case of the assessee. There was sufficient time to transfer the case to AC, Cir 15(2), who possess the jurisdiction; however, the present AO passed order on 27.7.2002 and that too without affording any opportunity to the assessee; therefore, this action, in our considered view was motivated and illegal.
11.1 No doubt, if the assessee does not have challenged the jurisdiction of the AO within the time prescribed by sec. 124(3) of the Act then, of course, he cannot challenge the jurisdiction thereafter i.e. after completion of the assessments. However, in the present case the assessee has challenged the jurisdiction of the AO within the prescribed time limit and the AO, without following the procedure of referring the objection to the Commissioner/Chief Commissioner proceeded to complete the assessments; in our considered view is void-ab-initio 11.2 The Hon'ble Patna High Court in the case of Mahalli Ram Ram Ranjan Dass in 156 ITR 885 has considered the issue in respect of jurisdiction. The Hon'ble High Court reviewed the entire gamut of case law on the subject including the decision of the Hon'ble Delhi High Court in the case of Kanjimal & Sons in 138 ITR 391(Del) has held that jurisdiction cannot be obtained illegality; however, if there is irregularity then the irregularity can be removed.
11.3 In fact, in that case the return for AY 1963-64 was filed in Oct 1964 before the ITO 'A' Ward, Patna. The ITO 'A' Ward, issued notices u/s 142(1) and 143(2) and the assessee appeared before him and produced the books of account. However, on Dec 30th, 1967, the Commissioner passed an order regarding the jurisdiction of the various ITOs and directed that the cases of the assessees under Ward No.30 will remain under the jurisdiction of the ITO 'A' Ward, but the cases of the assessees having income from hotel business were to be assessed by the ITO, 'C' Ward. As the assessee had income from a hotel business, the ITO 'C' Ward, issued notices to the assessee u/s 142(1) of the Act and even when the assessee objected to the jurisdiction of the ITO 'C' Ward, he completed the assessment. The Appellate Asst Commissioner set aside the assessment and this order was upheld by the Tribunal.
11.4 On a reference, it was held that;
"This was not a case of total lack of jurisdiction. In the present case, the irregularity had occurred at the stage after a petition was filed objection to the jurisdiction of ITO 'C' Ward to proceed with the case and the ITO without referring the matter to the Commissioner for deciding the matter himself completed the assessment. Thus, the irregularity was at that stage and so the case had to be restored to that stage. The Appellate Assistant Commissioner was justified in setting aside the assessment order for making afresh assessment according to law and the Appellate Tribunal was justified in upholding the order of the Appellate Assistant Commissioner."
11.4 The view taken by the Hon'ble High Court is basically that in a case where the proceedings have been initiated legally by an officer who held valid jurisdiction over the case, the illegality supervenes at the stage where the officer lacking jurisdiction issues statutory notices and thereafter makes the assessment. The Hon'ble High Court held that in such a case the Appellate Assistant Commissioner was right in setting aside the assessment with the direction that the ITO should first refer the matter to the Commissioner for disposal of the assessee's objection in accordance with the provisions of sec. 124(4) of the Act and if the Commissioner decides that the AO had the jurisdiction, the order would be valid. If, however, the Commissioner decides that the concerned AO had no jurisdiction over the case, the assessment order will fall being a nullity.
12 From the following facts also, it can easily be ascertained that the present AO was not having proper jurisdiction.
12.1 Notices issued u/s 143(2) dated 21.10.2002 issued by the ITO mentions the Pin Code as 400008. The return filed by the assessee for AY 2001-02 on 31st Oct mentions the Pin Code as 400 008. Notice issued u/s 142(1)/143(2) for AY 1995-96 dated 19.11.1996 mentions the Pin Code as Mumbai 400008. Letter dated 29.2.1996 issued by the Commissioner of Income tax, Computer Operations mentions the Pin Code as 400 008. Thus the statutory records maintained by the department mentions the Pin Code as 400008.
12.2 The address mentioned on the return submitted for AY 94-95, the year under question clearly shows the Pin Code as 400 008. It is further seen that the firm has obtained the clarification from the postal department that Navjivan Co-op Hsg comes under Pin Code 400008. Moreover, and above all these facts notices issued u/s 148 clearly mentions the Pin Code as 400008.
13 After going through all these relevant details and other records placed in the paper book, it is seen that the AO's observation that the area of jurisdiction having Pin Code 400 007 and 400 008 has been mixed up does not sound well for the reason that two notifications were issued clarifying the jurisdiction of Range 15 and Range 16. Pin Code 400 008 was with Range 15 and area having Pin Code 400 007 was with Range 16. No efforts whatsoever have been done as stated above by the AO before proceeding to complete the assessments. Therefore, in our considered view the assessments so completed are bad in law because there was no proper jurisdiction with the AO.
13.1 It is also seen that the AO's conduct subsequent to the passing of the assessment orders is also very material as the assessee filed appeal against the assessment order on 29.4.2002 with CIT(A) XVI as advised by the AO in the demand notice attached to the assessment order. The CIT(A) XVI, advised the assessee to seek transfer of the appeal from CIT(A) XVI to CIT(A) XV as the jurisdiction over the assessee vested with CIT(A)XV. As per the directions of the CIT(A),XVI, the assessee vide letter dated 1.8.2002 requested for transfer of the files from CIT(A) XVI to CIT(A(), XV. It is seen that in the meantime after the first few days of April itself, the present AO, who passed the assessment order for both these years transferred the assessment records to ITO Ward 15(2) himself. Meaning thereby, he was knowing that he has no jurisdiction over the case of this assessee.
13.2 From these facts, it is clearly established that the present AC Cir 16(2) did not possess jurisdiction over the case of the assessee.
14 We have also seen the orders of the CIT(A) who rejected the ground by observing that there was no provisions u/s 246 to raise the issue before the appellate authorities and observation that the assessee should move to the Director General or Chief Commissioner of Commissioner as the case may be for ascertaining proper jurisdiction. In our considered view, these observations of the ld CIT(A) are not correct. The provisions of sec. 124 are very clear by which it is provided that if a person objects the jurisdiction of a concerned AO, then it is the duty of the AO to refer the matter of jurisdiction of the higher authorities. Therefore, these findings of the ld CIT(A) are not correct and against the provisions of law.
15 In view of these facts and taking into consideration the provisions of law and various case laws, it is amply proved that the present AO who completed the assessments for these two years was not equipped with jurisdiction; therefore, we have no hesitation in quashing these assessments by holding that the assessments were null and void. Accordingly, we quash these assessments for both these years.
16 Since we have allowed the legal ground relating to jurisdiction in favour of the assessee; therefore, all other grounds have become academic in nature which does not required any adjudication upon at this point of time.
17 In the result, the appeals of the assessee are allowed.
Order pronounced on 16.12.2009
Sd/- Sd/-
(J SUDHAKAR REDDY )
( R K GUPTA )
Accountant Member
Judicial Member
Place: Mumbai : Dated: 16th Dec 2009
Raj*
Copy forwarded to:
1
Appellant
2
Respondent
3
CIT
4
CIT(A)
5
DR
/TRUE COPY/
BY ORDER
Dy /AR, ITAT, Mumbai
ITA No. 5876 & 5877/Mum/07
13