The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has quashed an order assessing Rs 759 crore as income in the hands of Tata Sons as due provisions were not followed as regards jurisdiction over the assessment and transfer of the case.
The Company filed its income tax returns for the year 2003-04 declaring an income of Rs. 22 crores. The revenue, however rejected the return and assessed the income to Rs. 759 crores.
Calling the order as bad in law and illegal, the assessee contended that the additional CIT had failed to establish that he possessed legal and valid jurisdictions under Section 120(4)(b) of the Income Tax Act to pass this order.
Under the said provision, the additional CIT can exercise the powers of an assessing office only if he is specifically directed by higher authorities. Further, section 127(1) provides that a proper order transferring the case needs to be passed by the commissioner, after recording the reasons for doing so.
On second appeal, the Tribunal observed that the department had not been able to demonstrate that the additional CIT, who had passed the assessment order, had valid authority.
According to the Tribunal, there was no written order for transfer made available to the ITAT. Based on these facts and previous judicial decisions, including that of the ITAT in the case of Tata Sons for earlier years, the ITAT quashed the assessment order. The cross appeal filed by the I-T department was also dismissed.
“The ratio laid down in the decision of Tata Sons Ltd. (supra) and other decisions relied on by the Bench therein, aptly applies to the facts of the present case. Therefore, adhering to the principle of judicial discipline, we follow the decision of the Tribunal referred to above and hold that in the facts of the present case, the Addl. CIT in the absence of a valid order u/s 120(4)(b) as well as section 127(1) of the Act could not have exercised powers of an Assessing Officer to pass the impugned assessment order. Accordingly, the impugned assessment order is annulled/quashed. Consequently, the appeal filed by the revenue does not survive,” the Tribunal said.
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