2016 (2) TMI 1198 - AT - Income Tax

Transfer u/s 127 - jurisdiction of AO - Held that - Merely on the basis of PAN data base, the jurisdiction of AO cannot be decided. In the present case admittedly the assessee had filed the return giving Gurgaon address and, therefore, on the basis of territorial area, the jurisdiction lay with ACIT Circle 1(1), Gurgaon. This jurisdiction could not be transferred to DCIT Circle 47(1), New Delhi without the order being passed u/s 127, as per which the Commissioner has to provide a reasonable opportunity of being heard to the assessee and record his reasons before the case is transferred to the jurisdiction of another Commissioner, We, therefore, are in agreement with the findings of ld. CIT(A) that the assessment order passed by AO of Circle 47(1), New Delhi was without jurisdiction, hence the order is bad in law. Ground no. 1 is dismissed.

Summary

Issues:
Jurisdictional transfer of assessment order from one Commissioner to another without passing order u/s 127, Addition of income u/s 69C for credit card payments, Admissibility of additional evidence without affording opportunity to AO.

Jurisdictional Transfer:
The case involved an appeal against the order passed by the ld. CIT(A)-XXX, New Delhi regarding the jurisdictional transfer of the assessment order from ACIT Circle 1(1), Gurgaon to DCIT Circle 47(1), New Delhi. The ACIT Circle 1(1) had issued the original notice under section 143(2) at the address of the assessee in Gurgaon, indicating that the jurisdiction primarily lay with ACIT Circle 1(1), Gurgaon. The jurisdiction of the Assessing Officer (AO) is determined based on territorial area, persons, income, and cases, not merely on the PAN database. As the case was not transferred with a proper order u/s 127, providing a reasonable opportunity to the assessee and recording reasons, the assessment order passed by the AO of Circle 47(1), New Delhi was deemed without jurisdiction, rendering it invalid. The Tribunal upheld the CIT(A)'s findings on this issue, dismissing ground no. 1 of the department's appeal.

Addition of Income u/s 69C:
The Assessing Officer had made an addition of Rs. 33,64,665 under section 69C as the assessee failed to provide any explanation with supporting documents regarding credit card payments. However, the CIT(A) allowed the appeal on the grounds that the credit card payments were made from explainable sources of income, namely the assessee's salary and his brother's partnership firm. The payments were considered legitimate as they were made through cheques. The Tribunal did not delve into the merits of this issue as the jurisdictional transfer had already been deemed invalid, rendering the discussion on the addition of income under section 69C moot.

Admissibility of Additional Evidence:
The department raised concerns regarding the CIT(A) accepting additional evidence and deleting the addition without affording an opportunity to the Assessing Officer. The Tribunal did not address this issue in detail as the jurisdictional transfer issue rendered the discussion on the admissibility of additional evidence irrelevant. Ground nos. 2 and 3 of the department's appeal were considered infructuous due to the dismissal of the appeal on the jurisdictional transfer issue. Ground no. 4 was of a general nature and did not impact the outcome of the appeal.

In conclusion, the Tribunal dismissed the department's appeal, upholding the CIT(A)'s decision to quash the assessment order due to the lack of proper jurisdictional transfer procedures. The issues related to the addition of income under section 69C and the admissibility of additional evidence were not addressed in detail, as the jurisdictional transfer issue was deemed sufficient to dismiss the appeal.