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TMI Blog2022 (8) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the transfer order u/s 127 cannot be foregone. No such procedure has been followed by department as confirmed by the Ld. AO and also upheld by Ld. CIT(A) Ground on merit. 2. That the Ld. Assessing Officer has erred in making the addition of Rs. 700000/- u/s 69C because: a) Expense was never a 'unexplained expenditure', due to the fact that assessee had already explained the nature of expenditure and source thereof on." 3. Brief facts of the case are that assessee is an NRI, who was a resident of Hongkong, decided to shift to India along with his family. The assessee filed his return of income for assessment year 2012-13 on 27.07.2012 declaring total income of Rs. 1,55,660/-. The return of income was processed u/s 143(1) and was picked up for scrutiny by issuing notice u/s 143(2) of the I.T. Act, 1961 on 12.08.2013. Account of change of jurisdiction a fresh notice u/s 143(2) of the Act was issued on 20.10.2014 which was duly served upon the assessee. During the assessee submitted to the AO vide letter dated 12.11.2014 that the assessee had purchased a plot of land situated in Jaipur for disclosed consideration of Rs. 5,21,000/- which was paid by cheque. The AO issued summ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961, are being initiated separately. 5. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has reiterated its arguments. The ld. CIT(A) for the reason stated in his appellant order has rejected arguments and submissions made by the assessee. 6. Aggrieved by the CIT(A) order, the assessee is in appeal before us. Before the CIT (A), the assesee has reiterated at his submissions, which was not taken on record by the CIT (A). Before us the ld. AR for assessee submitted a detailed Written submissions which are as under:- Notice u/s 143(2) dated 12/08/2013 was received thru e-mail on 03/09/2013 from DDIT, International Taxation, New Delhi. DDIT, New Delhi did not enjoy either the territorial jurisdiction u/s 124 or by virtue of section 120 of the Act. Therefore, the assessee requested vide e-mail, on 03/09/2013 for change of jurisdiction to jaipur. Thereafter, assessee was not served any notice of hearing u/s 127(3) or order of transfer u/s 127(1)/(2). Change of jurisdiction was made on 03/07/2014 as per the notings of AO in the `Assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concurrent jurisdiction) to any other Assessing Explanation.-In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.] A perusal of the above statutory provision u/s 127(1) reveals that powers to transfer `case' (either pending or completed) from one Assessing Officer to another Assessing officer, when both are subordinate to the same senior officers, lie with the Senior Officers of the rank of PCIT/DG/CIT. Only exception when opportunity of hearing to assessee is foregone is when the transferring and transferee Assessing Officer are situated in same locality, city or place. However, requirement of passing the order by Senior officers i.e. PCIT/DG/CIT cannot be dispensed with, in any case. In Ajanta Industries vs. CBDT [1976] 102 ITR 281, the Hon'ble Supreme Court has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (2) has been dispensed with, other statutory formalities which include issuing an order is required to be complied with. Similarly, the transfer of files for the assessment years 2007-08, 2008-09 and the earlier years as intimated in the letter/notice issued by respondent No. 1 was also bad in law. The argument of the respondents that in the case of intra city transfer no order was required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla v. Union of India [1965] 56 ITR 14 (SC) and in S.L. Singhania v. Asstt. CIT/CWT [1992] 193 ITR 275/65 Taxman479 (Delhi) wherein the validity of the orders were under challenge, meaning there by an order recording transfer has to be on the records. Since it was opined that it was imperative on part of the respondents to issue an order under section 127(3), the letters/notices under challenge were to be set aside and quashed. The writ petition was to be allowed."(Copy of the judgement attached at PB No. 48 to 52) 1.7 Similar issue came up inthe case of an NRI assessee, for consideration before the Hon'ble ITAT in the case of [2019] 107 taxmann.com 452 (Hyderabad-Trib.) Vijay Vikram Dande Kurnool ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be given to the assessee and it was only the Principal Director General or Principal Commissioner who could transfer case under section 127 ? Held at para 10(concluding para): "10. We find that under sub-section 3 of section 127, it is provided that provisions of sub-section 1 & 2 are not applicable and no such opportunity is to be given to the assessee, where the transfer is from any AO, to any other AO where the Offices of such officers are situated in the same city, locality or place. We find that the AO at Kurnool had transferred the file to the AO at Hyderabad and therefore, even if they are both under the jurisdiction of the same Pr. CIT at Hyderabad, the notice u/ s. 127(1) has to be given to the assessee and it is only the Pr. Director-General or the Pr. CIT or Pr. CIT who can transfer the case u/ s. 127 of the Act. No such procedure has been followed by the Deptt. Therefore, we are of the opinion that the issuance u/s 143(2) by the Dy. CIT(IT)-1, Hyderabad is without any authority and also beyond the period of six months from the date of filing of returns and therefore, is barred by limitation and hence, not sustainable and the consequent assessment order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticipation. GROUNDS ON MERIT GROUND NO. 2(a) That the Ld. Assessing Of ficer has erred in making the addition of Rs. 700000/- u/s 69C because: a) Expense was never a 'unexplained expenditure', due to the fact that assessee had already explained the nature of expenditure and source thereof on 09/02/2015. Ld. AO neither showcaused nor sought any explanation before making addition u/s 69C. Following is the chronological sequence of assessment proceedings: DATE ACTION TAKEN 12/11/2014 Assessee discloses in reply about the investment of Rs. 521000/- thru cheque on 17/01/2012 in 'Land Plot' along with a copy of Agreement with seller (i.e. Choti Devi)' 19/11/2014 Assessee furnishes the details of cash withdrawals from the bank accounts in reply to queries by AO along with copies of all Indian and Foreign Bank Accounts. 21/01/2015 &29/01/2015 AO issues notices u/s 142(1) asking the assessee to furnish a chart showing the details of cash withdrawal and utilization of the same including personal expenses 09/02/2015 Assessee furnishes the details of cash expenses and also mentions that Rs. 700000/- was paid to Choti Devi on 01/10/2011, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt or perceptions of culpability or on the quantum of the amount, involved. Any ambiguity or any ifs and buts in the material collected by the Assessing Officer must necessarily be read in favour of the assessee, particularly when the question is one of taxation, under a deeming provision. Thus, neither suspicion/ doubt nor the quantum shall determine the exercise of jurisdiction by the Assessing Officer. In the case of the assessee, revenue collected the evidence of expenses of Rs. 700000/- and incidentally, the assessee explained the expense even before the confrontation of material. Thereafter, revenue has failed to bring any other material or evidence questioning the source of expense. Ground No. 2(b) The statement u/s 131 was recorded at the back of the assessee, without presence, information and his knowledge, and he was supplied the copy of statement for the first time on 12/02/2015 by the Ld. AO, after voluntary and suo-moto disclosure on 09/02/2015 by the assessee. Assessee omitted to mention the expense in his reply on 12/11/2014 which he corrected in his subsequent reply on 09/02/2015, however the Ld. AO has treated the expense as concealed and undisclosed. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s present with whom said part discussions' took place. During the discussions, AO had admitted that assessee had already disclosed the amount, which he unearthed by taking the statement u/s 131. 2.4 Above conduct of the AO was not in accordance with CBDT Circular No: 14 (XL-35) dated April 11, 1955. It states: "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department" Ground No. 2(c)Ld. AO had completely ignored the fact that assessee had cash balance of Rs. 1934976/-, before making payment of Rs. 700000/- on 01.10.2011 to Choti Devi. Recipient of the cash i.e. Choti Devi also acknowledged the receipt of Rs. 700000/- on 01.10.2011 in her statement u/s 131. Section 69C requires the source of such expense to be satisfactorily explained by the assessee. Ld. AO has, however, harped upon the disclosure of expense and never examined or asked for the source or satisfactory source of the expense. 2.5 It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was executed between the appellant and Smt. Choti Devi was made on 11.01.2012 which showed consideration of Rs. 5,21,000/- being paid by cheque 13.01.2012. However, the cash deposit in the bank account of Smt. Choti Devi was made on 01.10.2011. In her statement recorded u/s 131, Smt. Choti Devihad confirmed that the said cash was given Shri Brijesh Sharma on 01.10.2011. As the cash was given by the appellant on 01.10.2011 much before the date of agreement executed on 11.01.2012. It was not possible that cash was paid before the agreement to resolve the dispute as the appellant had earlier submitted before AO that the dispute had arisen after the agreement. Further, the agreement disclosing total consideration of Rs. 5,21,000/- when the actual consideration was Rs. 12,21,000/- clearly shows that the consideration payment of 7,00,000/- was undisclosed and was in the nature of "on-money" paid over and above the stated consideration. Clearly, there was an intention on the part of the appellant to hide the actual consideration and under state the same. Had it been the official consideration, there was no reason to keep it outside the disclosed agreement to sell. There was no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of Additional Director International Taxation, International Taxation, Jaipur also. When the assessee raised this ground before ld. CIT(A), it was held that in this case, no order u/s 127 is required to be passed. He also mentioned that assessee had participated in the proceedings and now cannot take such ground. The question which falls for consideration is whether under section 127 of the Act, an Assessing Officer on his own can transfer an income-tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the relevant provisions in section 127 of the Act which is as under: ''Power to transfer cases. 127. (1) The Principal Director General or] Director General or (Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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