IN INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER I.T.A.Nos.2073 & 2074/Mds./2014 Assessment years : 2005-06 & 2006-07 Smt.S.Ratna, Vs. Income Tax Officer, No.66,Upuukara Street, Ward-I(3), Kumbakonam Kumbakonam. [PAN AGGPR 6018 R ] ( Appellant) (Respondent) Appellant by : Mr.S.Sridhar,Advocate Respondent by : Mrs.R.Ilavarasi,JCIT,D.R Date of Hearing : 22-09-2016 Date of Pronouncement : 05-10-2016 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER These two appeals of assessee are directed against different orders of Commissioner of Income-tax (Appeals), Tiruchirapalli dated 05.06.2014 pertaining to assessment years 2005- 06 & 2006-07 passed u/s.271(1)(c) of Act. Since issues involved in all these Assessee s appeals are common in nature, these appeals are :- 2 -: ITA No. 1211/Mds./2016 clubbed together, heard together, disposed off by this common order for sake of convenience. We consider facts narrated in A.Y 2005-06. 2. facts of case are that asessee is in business of plying of buses, filed return of income for A.Y 2005-06 at `2,60,380/- on 03.02.2006 & A.Y 2006-07 at `11,00,560/- on 01.02.2007. survey u/s 133A was conducted on 24.09.2005 at business premises of assessee. During course of survey it was found that assessee had advanced substantial amounts on various dates to P.S.Sekar for investment in fixed deposits under ELDS with KMBF Ltd., Kumbakonam. Assessing Officer apart from making addition of `1,41,150/- on account of disallowance of 5% of batta expenses treated cash credits offered at `13 lakhs u/s 133A as concealed income for purpose of penalty u/s 271(1)(c) of I.T. Act. Thus Assessing Officer has treated amount of `14,41,150/- as concealed income and penalty proceedings were initiated. In her reply assessee has stated that addition of `1,41,150/- was accepted by her in order to purchase peace with department and cash credit of `13 laths offered during course of survey should not be treated as concealed income. However, Assessing Officer has not accepted explanation filed by assessee and placed his reliance in case of CIT Vs Vidhyagauri :- 3 -: ITA No. 1211/Mds./2016 Natwarlal (1993) 238 ITR 1991 (Guj) wherein Hon ble Gujarat HC has held that mere disclosure of undisclosed income as cash credit would not tantamount to disclosure, so as to save assessee from consequences of concealed income. Assessing Officer treated income disclosed during course of survey on account of cash credit as well as batta expenses as concealed income and accordingly levied minimum penalty at `4,55,918/- (A.Y.2005-06) and `5,45,853/- (A.Y.2006-07). Aggrieved with order of ld. Assessing Officer, assessee carried appeal before Ld.CIT(A). On appeal, Ld.CIT(A) confirmed levy of penalty. Aggrieved, now assessee is in appeal before us. 3. We have heard both parties and perused material on record. Admittedly, assessee in these cases came in appeal before this Tribunal challenging quantum addition in 447 & 448/Mds./2009 for assessment years 2005-06 2006-07 respectively vide order dated 28.05.2010, Tribunal observed that in these cases assessment orders were passed on 31.12.2007 for both assessment years 2005-06 & 2006-07. Accordingly, it was observed that Income Tax Officer,Ward-I(3) Kumbakonam did not have jurisdiction over assessee whether returned or assessed income as on First April of relevant financial year was more than 5 lakhs and in these cases, :- 4 -: ITA No. 1211/Mds./2016 assessment orders were passed Additional CIT, Kumbakonam, who has no jurisdiction and it was observed as follows:- 6. All above assessment orders wre passed on 31.12.2007 by Additional CIT,Kumbakonam Range, Kumbakonam. On other hand, ld.D.R defended action of AO. 7. After examining entire records, it was seen that assessment orders were pssed on 31.12.2007 and as pe records, as on 1.4.2008, total incomes computed in these cases was individually more than Rs.5 lakhs. In view of above notification (as extracted above), where ITO,Ward I(3), Kumbakonam to whom above files were transferred on 17.1.2008 by Kubakonam Range, Kumbakonam by proceedings dated 17.1.2008 undr C.R No.S/JCT/Kum/07-08 are contrary to Notification No.1/2006-07 dt.2.6.05 issued by CCIT,Tiruchirapalli. It is true that Sec.120 confers primary jurisdiction onvarious A.Os and sub section (3) of sec.120 prescribes criteria to be taken into account for such assumption of jurisdiction. CCIT has issued notification in pursuance of powers contained in sec.120(2) and has chosen income criteria to confer jurisdiction onvarious A.Os including present ITO. Sec.124 deals with jurisdiction of AO. soruce of power u/s.124 is directions or orders isused u/s.120 sub sections (1) or (2). Thus, primary jurisdiction is determined by orders passed u/s.120. Sec.120 deals with conferring of jurisdiction while sec.124 & 127 deal with source of jurisdiction. effect in jurisdiction whether it is pecuniary or territorial or in respect of :- 5 -: ITA No. 1211/Mds./2016 subject matter of case or strikes at very authority of court to pass any decree and such defect cannot be cured even by consent of parties. This principle was reiterated in Sunder Dass V. Ram Prakash RIR 1977 SC 1201 and Chiranfilal Shrilal Gonenka Vs. Jasjit Singh (1993) 2 SWCC 507. In Raja Jagadambika Pratap Narain Singh Vs. CBDT (1975) 100 ITR 698, Hon ble Supreme Court held that merely because order has been ceased by officer and has not been appealed against it does not become -----, transfer of files by JCIT to theITo Ward I(3), Kumbakonam, is patently illegal and ab initio void and such void transfer cannot confer jurisdiction on ITO, who is not competent to pass orders wherein total income computed by additional CIT was admittedly more than Rs.5 lakhs. 8. In view of matter we hold that all assessment orders which are subject matter of appeals before us lacked valid jurisdiction. Accordingly, all orders are quashed being without jurisdiction. concerned AO having valid jurisdictions at liberty to take further necessary action in these cases if law so permits specifically with reference to limitation etc., 3.1 In view of above, when assessment order itself is bad in law, which passed without jurisdiction, consequent penalty order on basis of which it was passed cannot stand on its own leg, which has to be quashed admittedly. Accordingly, we have no hesitation in annulling penalty order which is passed by AO having no :- 6 -: ITA No. 1211/Mds./2016 jurisdiction, i.e. Additional Commissioner of Income Tax. Accordingly both penalty orders are quashed. 4. However, concerned AO having valid jurisdiction, has at liberty to take further necessary action in these two cases, if law so permits specifically with reference to limitation etc. 5. In result, both appeals of assessee are allowed. Order pronounced on 05th October, 2016, at Chennai Sd/- Sd/- (G.PAVAN KUMAR) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 05th October, 2016 K S Sundaram Copy to: 1. Appellant 3. CIT(A) 5. DR 2. Respondent 4. CIT 6. GF S. Ratna v. Income-tax Officer, Ward-I(3), Kumbakonam