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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 ..... med to be no-objection from the side of assessee. However, the necessity of passing order u/s 127 cannot be dispensed with. It is undisputed fact that the AO at New Delhi had transferred the file to the AO at Jaipur and, therefore, even if they are both under the jurisdiction of the same Director-General or the Pr. CIT, the notice u/s 127(1) was to be given to the assessee and order u/s 127(3) was to be passed by Director-General or Pr. CIT who can transfer the case u/s 127 - No such procedure has been followed by the revenue. Therefore, we are of the opinion that the notice u/s 143(2) by DDIT, Jaipur is without jurisdiction and authority, and consequently the order passed u/s 143(3) is held to be void ab-initio. Appeal of assessee allowed. - IT(IT)A. No. 06/JP/2022 - - - Dated:- 31-8-2022 - DR. S. SEETHALAKSHMI, JM SHRI RATHOD KAMLESH JAYANTBHAI, AM IT(IT)A. No. 06/JP/2022 Assessee by : Shri Praveen Saraswat (C.A.) Revenue by : Ms. Monisha Choudhari (JCIT) ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) [hereinafter referred to as ld. CIT(A)]-42, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 7,00,000/-. The assessee explained that a dispute arose with the seller after the agreement and cash of Rs. 7,00,000/- was paid in settlement as the seller was not ready to handover the physical possession of the plot. The assessee submitted copy of relevant agreement dated 11.01.2012 to the AO. The AO observed that the agreement was executed between the appellant and Smt. Choti Devi on 11.01.2012 which showed consideration of Rs. 5,21,000/- being paid by cheque dated 13.01.2012. However, the cash deposit in the bank account of Smt. Choti Devi was made on 01.10.2021. In her statement recorded 131, Smt. Choti Devi had confirmed that the said cash was given by Shri Brijesh Sharma on 01.10.20211. The AO noted that cash was given by the assessee on 01.10.2011 much before the date of agreement executed on 11.01.2012. It was, therefore not possible that cash was paid before the date of agreement to resolve the dispute as the assessee had earlier submitted that the dispute had arisen after the agreement. The AO therefore, concluded that the payment of Rs. 7,00,000/- was made out of the undisclosed income and added the same. Aggrieved with the assessment, the assessee has filed this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department. The above reply implied that both AOs (of Jaipur and Delhi) were subordinate to the same Addl./Joint Commissioner based at Circle-1(1), New Delhi. Undisputedly, both of the assessing officers i.e. DCIT, Jaipur, and DDIT, Delhi were also subordinate to the same authority i.e. Director General of Income Tax (International Taxation), Delhi-1. 1.3 Justifying the non-issue of order u/s 127, Ld. CIT(A) also upheld the stand of AO in para 11.5 on page No. 16 of the appeal order, as under: Clearly, this was not a case where order u/s 127 was required to be passed. In fact, as the appellant having address of Jaipur, the correct jurisdiction lied with the AO in Jaipur. Such cases do not require transfer u/s 127 of the Income Tax Act, 1961 1.4 Section 127 of the Income Tax Act, 1961 lays down: [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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the functionality for effecting transfer of jurisdiction under Section 120and 127 of the Act on the system. It allows the details of Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. cases to be transferred -identified by PAN, source A.O. and destination A.O., to be entered and maintained in the system. AIS provides standard texts of transfer orders which can be adopted from the system and further customized. A draft transfer order can be prepared in AIS by the ITO / ACIT (Headquarters) and printed or viewed. This can be subsequently confirmed on the system by the concerned CIT / CCIT or DGIT. Once the order is confirmed, intimation letters and transfer memos can be printed. Thus, there is a well laid down system in the department to effect the transfer of case from one assessing officer to another assessing officer, subordinate to the same CIT/DG or to a different CIT/DG. Computer functionality i.e. AIS has been designed in a manner so that section 127 compliance is ensured. 1.6 Issue of mandatorily passing order u/s 127 came up for consideration before the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner who could transfer case under section127? Held at para 10 (concluding para: It was evident that respondent No. 2 had sought to justify his action by stating that the jurisdiction automatically got vested with the jurisdictional officer and no order under section 127 was required to be passed. It was opined that the letter/ notice issued by respondent No. 1 was patently illegal since in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) 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 Taxman 479 (Delhi) wherein the validity of the orders were under challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompetent authority. Legal position emerging from the various judgements can be summarized as under: a) Order u/ s 127 is to be passed, even if the case is being transferred for the administrative convenience of the department. b) Order u/s 127 is to be passed even if the case is being transferred irrespective of the intra-city or inter-city. c) Opportunity of hearing is to be granted to the assessee before the transfer of the case in all situations, except where both assessing officers are in the same city/ locality 1.9 Ld. CIT(A) has held (please see para 11.3, page 15 of appeal order) that assessee participated in proceedings and now cannot take such ground. Jurisdiction can not be called in question u/s 124 after the expiry of one month from the date of service of notice u/s 142(1). Ld. Officer further holds that no prejudice is caused by assessing at Jaipur and the transfer was done at the specific request of the appellant. Looking from any angle, these findings of ld. CIT(A) about deemed jurisdiction and belated objections are unjustified. Scheme of Income tax Law provides that when an officer has jurisdiction over the assessee, the same cannot be transferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by him u/s 131 on 07/01/2015. The statement also confirms the payment of Rs. 700000/ cash, as claimed by the assessee in his reply on 09/02/2015. (Please see PB No. 40 to 42) 14/02/2015 Assessee furnishes a 'Cash Flow Account' showing bank withdrawals of Rs. 22.20 Lacs and cash payments of Rs. 9.85 Lacs (including Rs. 7 Lacs paid to Choti Devi) from 01/4/2011 to 01/10/2011 (Please see PB No. 43 to 44) 05/03/2015 AO passes the assessment order making the addition of Rs. 700000/- u/s 69C without issuing any show-cause notice or seeking an explanation about for alleged 'Undisclosed Investment' u/s 69C 2.1 Section 69C states: Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof as the case may be, may be deemed to be the income of the assessee for such financial year . Thus, the section has three limbs, which ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Ld. AO. 2.3 AO conducted the assessment proceedings by basing on assumptions and presumptions, which is apparent from the following facts: (a) Statement u/s 131 of Ms. Choti Devi was recorded on 07/01/2015 in a confidential manner and without the presence and knowledge of the assessee or his A/R. AO had proceeded with the impression that this payment of Rs. 700000/- is undisclosed money spent by the assessee in cash, without tallying the cash withdrawals details already available with him, by way of replies of asseesee. (b) On continuous inquiries by AO by way of notices u/s 142(1) on 21/01/2015 and 29/01/2015, assessee, who is an NRI and not aware about the intricacies of assessment, checked all cash payments and informed about the Rs.700000/- cash payment made on 01/10/2011 to Choti Devi, vide his reply dated 09/02/2015. (c) When AO realized that his efforts of recording statement and catching the assessee red-handed, have gone in-vain, he i) Informed about having recorded the statement u/s 131 and delivered the copy of the statement on 12/02/2105 ii) Did not seek any explanation or issued any show cause notice on the expense of Rs. 700000/- iii) Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9C of the Act can be made, provided the transaction takes place during the financial year and the source of the expenditure remains unproved. In the present case, the assessee had duly explained the sources of the expenditure and even the recipient has confirmed the receipt of money in her statement under oath u/s131. Assessee had submitted a cash flow chart on 14/02/2015 (Please see PB No. 43 to 44) before the Ld. AO for further explaining the source and expenditure All cash withdrawals were verifiable from the copies of the bank statements furnished in the replies. The above cash flow fully establishes the source of the payment of Rs. 700000/- to Choti Devi. When the conditions precedent for invoking provisions of section 69C are absent and the expenditure has been explained, it was not open to the Assessing Officer to treat the same as deemed income under section 69C of the IT Act. Hence, the appeal of the assessee deserves to be allowed. 7. In first appeal the CIT(A) has confirmed the action of the AO by observing as under:- 13.2 It is observed that the appellant was asked by the AO to file the details of investment made. On 30.10.2014, the appellant submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was to deposit the entire consideration in the bank account and therefore would have accepted the entire consideration by cheques. As the payment of Rs. 7,00,000/- had already been made before the date of execution of the agreement, the same would not have shown the consideration at much lower amount. 13.4 It is pertinent to observed that in his letter dated 12.11.2014 filed before the AO, the appellant had shown investment the purchase of said land at a total consideration of Rs. 5,21,000/- only. If the actual consideration from disclosed source was Rs. 12,21,000/-, the appellant would not have shown the same at Rs. 5,21,000/-. 13.5 The over all conduct of the appellant shows that he made payment of on-money in purchase of the plot from his undisclosed sources. The claim of making it out of withdrawals from bank account is not credible as the appellant would not have hidden this fact from the AO until the statement of smt. Choti Devi was recorded. It is therefore, concluded that the payment of Rs. 7,00,000/- was made out of the undisclosed income and the addition of the same u/s 69C of the Act is confirmed. This ground of appeal is dismissed. 8. On the other hand, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner,- (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction), to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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