9911796707
TMI Blog2024 (7) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... case can only be done u/s 127 of the IT Act, 1961. The defect is incurable and is not amenable to be corrected under Section 292BB also. Accordingly, we find no merit to interfere with the cogent order passed by the CIT(A). In fact, upon perusal of the judgment of Ashok Devichand Jain v. Union of India Ors [ 2022 (3) TMI 1466 - BOMBAY HIGH COURT] we find that it is in favour of the assessee. Thusnotice issued u/s 148 is clearly without jurisdiction and consequent assessment order has no legal legs to stand upon. Decided in favour of assessee. - Shri V. Durga Rao, Judicial Member And Shri K.M. Roy, Accountant, Member For the Assessee : Smt Adida H. Chimthanawala, CA For the Revenue : Shri Kailash C. Kanojiya, CIT DR ORDER PER K.M.ROY, A.M. The present appeal has been preferred by the Department challenging the impugned order dated 17/01/2024, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned NFAC-CIT(A), [ learned CIT(A)-NFAC ], for the assessment year 2012-13. 2. The department has raised following grounds of appeal: (a) The Ld. CIT(A) erred in allowing the additional ground no.1 ignoring the fact that in the present case the notice u/s. 148 was rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the Assessee alongwith Form 3CD is enclosed herewith for your ready reference. c) The case of the Assessee was selected for scrutiny and various notices u/s. 142(1) of the Income Tax Act, 1961 (Act) were issued to the respondent Assessee seeking various details and documentary evidences including unsecured loans obtained by the Assessee. The photocopy of the various notices u/s. 142(1) of the Act alongwith the replies of the Assessee is enclosed herewith for your ready reference. d) After thorough Scrutiny of the Assessee's case the learned A.O. was pleased to pass an Order u/s. 143(3) of the Act on 31/12/2014. The photocopy of the Assessment Order u/s. 143(3) of the Act is enclosed herewith for your ready reference. e) That the Assessee received notices u/s. 148 of the Act as the learned A.O. had certain information from the DDIT, Unit IV, Kolkata that the Assessee is the beneficiary of the amount obtained from certain shell concerns. Pursuant to the Notice u/s. 148 the respondent Assessee filed the return and requested for Reasons for Re-opening. The extracts of the Reasons for Re-opening is enclosed herewith. f) The Assessee filed his objection to the Reasons for Re-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the Appellate Order is enclosed herewith. m) That the Revenue however challenged the order of the learned Commissioner of Income Tax (Appeals) before this Hon'ble Bench by raising grounds of appeal which are enclosed herewith. 4. Additionally, in a written synopsis, the undernoted averments were made: 4.1 That the learned A.O. lacked the jurisdiction as the condition precedent for re-opening of the assessment of the Assessee was absent, as the reasons recorded are factually incorrect: 4.1.1 The extracts of the relevant portion of the Assessee s objection regarding list of entities whose names are appearing the Reasons for Re-opening are mentioned below: The following is the list of all the entities which has found place in the recording for reasons for re-opening: Sr.No. Name of the Party 1 M/s. Jagdamba Complex Pvt Ltd. 2 Saptrishi Suppliers 3 Praneta Industries 4 Advance Technologies 5 Safford Mercantile Pvt Ltd. 6 M/s. Nihal Mercantile Pvt. Ltd. 7 M/s. Pashupati Enclave Pvt. Ltd. 4.1.2 The aforesaid extracts will reveal that the Assessee has not taken any amount from any of the entities listed above which were appearing in the Reason for Re-opening. 4.1.3 That for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction entered into by the entities with the Assessee, it speaks about investment in shares, whereas the Assessee is an individual hence, there is no question of receiving any amount against allotment of shares. 4.6.3 Even prima facie there is no satisfaction of the learned A.O. that any income of the Assessee has escaped assessment. This is the case of borrowed satisfaction which is impermissible in law. 4.6.4. The Assessee places its reliance on the following citations: a) Pr. CIT v. Meenakshi Overseas (P.) Ltd . 2017 TaxPub (DT) 1791 (Del-HC): (2017) 395 ITR 0677 b) Gandhibag Sahakari Bank Ltd. v. Dy. Commissioner of Income Tax 2023 TaxPub(DT) 6100 (Bom-HC): (2023) 458 ITR 0157 4.7 It is humbly submitted that it is the mandate of law that the reasons cannot be substituted, improved or supplemented at the later stage. 4.7.1 The Assessee wishes to place its reliance on the following judgments: a) Nirupa Udhav Pawar v. Asstt. Commissioner of Income Tax 2021 TaxPub (DT) 6185 (Bom-HC): (2021) 439 ITR 0541 b) Hindustan Lever Ltd. v. R.B. Wadkar(No. 1) 2004 TaxPub(DT) 1424 (Bom-HC): (2004) 268 ITR 0332 4.8 Change of Opinion: 4.8.1 The earlier assessment was done u/s. 143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court as laid down in GKN Driveshafts (India) Ltd. v. Income Tax Officer reported in 2003 TaxPub (DT) 0734 (SC): (2003) 259 ITR 0019 4.9.5 The Assessee wishes to place its reliances on the following citations; i) Ankita A. Choksey v. ITO Ors. 2019 TaxPub (DT) 0723 (Bom-HC) : (2019) 411 ITR 0207 ii) Arvind Sahdeo Gupta v. ITO 2023 TaxPub (DT) 4810 (Bom-HC) 4.10 No Addition made on loans from concerns as stated in the recorded reasons: 4.10.1 As per the celebrated decision of Hon'ble Bombay High Court in Jet Airways CIT v. Jet Airways (I) Ltd reported in (2011) 331 ITR 0236 it was observed that no other addition can be made under explanation 3 of Sec 147. 4.10.2 The Assessee relies on the following citations; i ] CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 0236 ii] Ranbaxy Laboratories Ltd. V. Commissioner of Income Tax; (2011) 336 ITR 0136 iii) Juliet Industries Ltd. v. Income Tax Officer 2018 TaxPub(DT) 6846 (Mum-Trib): (2018) 067 ITR (Trib) 0371 iv) CIT v. Adhunik Niryat Ispat Ltd. 2012 TaxPub(DT) 0591 (Del-HC): (2011) 063 DTR 0212 4.11 Lack of Pecuniary Jurisdiction of the learned A.O. to assess the income of the Assessee: 4.11.1 It is humbly submitted that as per the CBDT I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmation from the parties, Audited financial statement, bank statement, Income Tax Return. The initial burden was duly discharged by the Assessee to prove the genuineness of transaction, identity and creditworthiness of the lender. 4.13.2 It is humbly submitted that the Assessee is also one of the directors of the Priority Exports Private Limited with which the Assessee proposed to have enter into the business of import of coal. 4.13.3 That the financial statements of Priority Exports Private Limited will reveal that it had enough capital and reserves of its own to lend money to the Assessee. 4.13.4 That the learned A.O. sent notice u/s. 133(6) of the Act asking the company Priority Exports Private Limited to furnish various details including the factum of lending money to the Assessee which was duly responded by the Company Priority Exports Private Limited. The fact is also duly mentioned in the assessment order. Hence, the Assessee has duly discharged the onus of proving identity, genuineness of transaction and creditworthiness of the lender. 4.13.5 That the learned A.O. only on the basis of sources of Priority Exports Private Limited resorted to the addition u/s. 68. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not any other assessing officer or authority or department. Therefore the jurisdiction of Assessing Officer to reopen an assessment under section 147 depends upon issuance of a valid notice and in absence of the same entire proceedings taken by him would become void for want of jurisdiction. ACIT v. Resham Petrotech Ltd. (2012) 136 ITD 185 (Ahd.)(Trib.) 4.2 Assessment in Kolkata - Reassessment notice in Delhi, such reassessment is held to be without jurisdiction Assessment having been made by assessing officer in Kolkata, in the absence of any order under section 127 transferring the case, reassessment notice issued by Assessing Officer at Delhi and all subsequent proceedings based on said notice are without jurisdiction. Smriti Kedia (Smt.) v. UOI [2011] 339 ITR 37 (Cal.)(HC) 4.3 Similarly in the case of ITO v. Rajender Prasad Gupta (2010) 48 DTR 489/135 TTJ 9 (Jodhpur)(Trib.) Assessee was assessed at Suratgarh, Notice issued by ITO at Delhi, matter later transferred to ITO Suratgraph, however Assessing officer did not issued fresh notice or recorded reasons. Tribunal held that the ITO did not have jurisdiction notice invalid. 4.4 The assessment framed by assessing officer who had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------ F.No.ACIT/Cir.4/NGP/Transfer of Scrutiny Cases/2018-19, Dated: 28.08.2019 To, Income Tax Officer, Ward 4(1), 4(2),4(4) Nagpur. Sir, Sub.: Transfer of scrutiny case(s) records-reg. Please refer to the above. The following case(s) are being transferred to your good office as the monetary jurisdiction over the case(s) lies with your good office. The detail of the case(s) which is/are being transferred is as under. Sr, No. PAN Name AY Returned Income Jurisdiction 1 AAACU8325R Uttamcand Wadhwani Cold Storage Pvt. Ltd 2012-13 7,47,100/- ITO Wd 4(4) Ngp 2 AAACM8181B M/S Maharashtra Vehicles Pvt. Ltd 2012-13 19,87,236/- ITO Wd 4(2) Ngp 3 ABPPA7557G Mohd. Zubair Asharafi 2012-13 -- ITO Wd 4(1) Ngp 4 ADLPA7857K Nitin Murlidhar Agrawal 2017-18 -- ITO Wd 4(1) Ngp It is hereby stated that the PAN transfer request for confirmation may kindly be initiated through ITBA portal. The cases Sl. No. 3 4 are already being scrutinized for the A. Y. 2017-18 in your office. Therefore these cases are also being transferred to your good office. Yours faithfully, Encl.: Case record(s) (Arvind R. Renge) Asstt. Commissioner of Income Tax, Circle-4, Nagpur Copy submitted to: 3. The Pr. Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case was selected for scrutiny under CASS. The ACIT, Circle 4, Nagpur has passed an order u/s 143(3) on 31.12.2014 as assessed income of Rs. 26,43,280/- determined. Therefore, on the basis of returned income and assessed income of the assessee jurisdiction was pertaining to the ACIT, Circle - 4, Nagpur. 2. Further, it is also noticed that the assessee has filed his return of income for AY 2017-18 u/s 139(1) on 28.09.2017 wherein income declared of Rs. 4,44,070/- and agriculture income of Rs. 1,28,750/-. The case was selected for complete scrutiny under CASS. Further, the order u/s 143(3) was passed on 16.12.2019 wherein income was assessed at Rs. 4,44,070/-. On the basis of returned income, the jurisdiction on the case was pertaining to the ITO Ward 4(1), Nagpur. 3. The ACIT, Circle - 4, Nagpur has received an information from O/o Deputy Director of Income Tax (Inv.), Unit-4(1), Kolkata on 01.03.2019, on the basis of information received the ACIT, Circle - 4, Nagpur has recorded the reason and put up for approval for reopening u/s 147 of the Act in the case of M/s Mittal Energies of India Prop. Shri Nitin Murlidhar Agrawal (PAN : ADLPA7857K) for AY 2012-13 to the Pr. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred the case on the basis of income criteria to the ITO, Ward 4(1), Nagpur. 10. It is very clear that the jurisdiction as on the date of seeking approval was not with the ACIT because returns of non-corporate assessee upto Rs. 20,00,000/- was with Income Tax Officer. The total income for assessment year 2017-18 as per the income tax return acknowledgement was Rs. 4,40,070/-. Therefore, the proper jurisdiction was with the ITO Ward 4(1), Nagpur. Thus, it is clear that the notice was issued by a non-jurisdictional officer and the assessment being conducted pursuant thereto cannot be held to be valid. Subsequent transfer of assessment records by ACIT Circle, Nagpur to ITO Ward 4(1) Nagpur is also illegal, since transfer of case can only be done u/s 127 of the IT Act, 1961. The defect is incurable and is not amenable to be corrected under Section 292BB also. Accordingly, we find no merit to interfere with the cogent order passed by the CIT(A). In fact, upon perusal of the judgment of Ashok Devichand Jain v. Union of India Ors, (2023) 452 ITR 43, we find that it is in favour of the assessee. In this case the primary grounds that has been raised are; 1. That the Income Tax Officer who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector General or Chief 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 (whether with or without concurrent jurisdiction) 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 Director General or Chief Commissioner or Commissioner - (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order; (b) Where the Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. (Emphasis supplied). It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that 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 includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-2008, 2008-2009 and the earlier years as intimated in the letter/notice dated 30th July, 2009 issued by the respondent no.1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla (supra) and in S.L.Singhania (supra) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgement in Subhas Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.O would mandatorily require recording of reasons for doing so on the part of the concerned authority, viz. Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is further provided in subsection (1) of Section 127 of the Act that wherever it is possible to do so the appropriate authority shall afford a reasonable opportunity of being heard in the matter to the assessee. Although sub- section (3) of Section 127 of the Act dispenses with the requirement of affording a reasonable opportunity of being beard to the assessee in a case where the transfer of case 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, but it does not dispenses with the statutory requirement of recording of the reasons for doing so by the concerned authority. As such, in the case before me, where jurisdiction over the case of the assessee had been transferred to ITO-2(1), Bhilai f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: 127.(1) The Director General or Chief 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 (whether with or without concurrent jurisdiction) 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 Director General or Chief Commissioner or Commissioner (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (3) of the Income Tax Act, 1961 states/reads as: From the foregoing provisions it is clear that the Commissioner of Income Tax is not required to pass any order transferring the case from/to any Assessing Officer(s) if the offices of all such officers are situated in the same city, locality or place. (Emphasis supplied). It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that 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 includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-2008, 2008-2009 and the earlier years as intimated in the letter/notice dated 30th July, 2009 issued by the respondent no.1 is also bad in law. The argument of the respondents that in case of intra city transfer no ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t open. 18. Also, I find that ITAT, Kolkata in the case of D. Craft Entertainment P. Ltd. Vs. ITO, ITA No.1461/Kol/2017 dated 12.10.2018 after relying on the judgment of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO Ors (supra) had adjudicated the aforesaid issue in favor of the assessee. For the sake of clarity, the observations of the Tribunal are culled out as under: 6. We find that no notice u/s. 143(2) was issued by ITO, Wd-6(1), Kolkata before completing the assessment. We note that ITO, Wd-34(2), Kolkata did not enjoy the jurisdiction over the assessee company by virtue of both the earlier Notification No.228/2001 dated 31.07.2001 (CBDT) as well as the latest Notification No.50/2014 dated 22.10.2014 of CBDT as discussed above. Therefore, the assessment completed by ITO, Wd-6(1), Kolkata on the strength of the notice issued u/s. 143(2) of the Act by ITO, Wd-34(2), Kolkata (who did not enjoy jurisdiction) is non-est in law and, therefore, is bad in law and consequently null in the eyes of law. Moreover, we also take note that Pr. CIT/CIT-12, Kolkata under whom ITO, Ward-34(2), Kolkata functioned has not issued any order of transfer of the jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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