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TMI Blog2024 (10) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... legal contention raised by the assessee is not found to be tenable in light of the evidences submitted by the department. Order of transfer u/s 127 was not issued for change of incumbent by the Ld. PCIT - We find force in the contentions of the Ld. AR that the jurisdiction vested with ITO,W-1(3) could not be validly transferred to ACIT-1(1) by way of a proper order of transfer us 127. Also, nothing is brought to our notice that a valid reopening notice was issued by the Ld. ACIT-1(1) within stipulated time as mandated by the Law, therefore, he was devoid of valid assumption of jurisdiction to frame the assessment in the present case u/s 144 r.w.s. 147 thus, in terms of aforesaid observations, the assessment framed by ACIT, Circle- 1(1), dehors valid assumption of jurisdiction is liable to be quashed, thus, we direct to do so. As we have quashed the assessment framed by the ACIT, Circle-1(1) framed u/s 144 r.w.s. 147 dated 10.12.2018 for want of valid assumption of jurisdiction, therefore, we refrain from adverting to and to dealing with the other grounds of appeal raised before us by the assessee, challenging the additions / disallowances made by Ld. AO and to the extent sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the ITO. The A.O. has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment and, therefore, the assumption of jurisdiction by Ld. A.O. is invalid and, as such, action u/s.148 is not sustainable and has to be quashed. The assessee relies on the Hon'ble Supreme Court judgement dated 4th January 2019, in the case of Pr.CIT-5 vs Manzil Dinesh Kumar Shah 101 Taxman reading as under(Paper Book page no. 1). IT: SLP dismissed against High Court ruling that reassessment notice issued under section 148 just to verify information received by Assessing Officer from VAT Department relating to purchase made by assessee from hawala dealers, was not justified. 2. The Ld. ACIT erred in not appreciating that the Notice u/s.148 issued by ITO on 26th March, 2018 was never served on the assessee. Hence, the re-assessment order passed by the Ld. ACIT dated 10th December, 2018 without issuing any fresh notice u/s.148 by him is without jurisdiction and, therefore, ought to be quashed. Even the notice affixed on 23rd November, 2018 is beyond limitation period of six years after end of assessment year in question. 3. The Ld. ACIT while issuing Notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation, proceedings were initiated u/s 147 of the Act, thereby a notice u/s 148 was issued on 26.03.2018 by ITO-1(3), Raipur. However, no compliance was made by the assessee. Subsequently, the case of the assessee was transferred to the office of ACIT-1(1), Bhilai. Fresh notice u/s 142(1) of the Act was issued on 01.10.2018 requesting her to file ITR electronically, but the notice was returned un-served, stating as refused to accept by the assessee. Another notice u/s 142(1) dated 20.11.2018 mentioning therein as final opportunity was sent to the assessee through inspector, however, after making necessary inquiries the inspector was unable to trace out the whereabouts of the assessee, therefore, the notice was served through affixture at the last known address of the assessee before two witnesses. This exercise of service of notice through affixture also became futile with no results, as the assessee remain unresponsive. Under such facts and circumstances, considering the limitation involved, the Ld. AO left with no choice except to discharge the obligation cast on him to complete the assessment on exparte basis u/s 144 of the Act, on the basis of material available on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to check and revert back qua the factual position of the aforesaid disputes assailed by the Ld. AR of the assessee. 8. Ld. Sr. DR in the next hearing had submitted a report from the Ld. AO dated 05.02.2024, the same is extracted as under: 9. Based on aforesaid report of the Ld. AO, it was the submission of Ld. Sr. DR that the first notice u/s 148 of the Act was issued on 26.03.2011, for AY 2011-12, however, the notice sent was refused to be taken therefore the notice has to be considered as duly served intime upon the assessee, copy of the envelope is also enclosed in the report of the Ld. AO, extracted hereinabove. Apropos, the issue of transfer of the assessment jurisdiction from ITO-1(3) to ACIT-1(1), Bhilai, Ld. Sr. DR referred to the order u/s 127(1) passed by Ld. PCIT dated 12.09.2018, enclosed with the AO s report, wherein at item No. 74, name of the assessee, her PAN No. and AY for which the transfer order was passed, are reflecting. It is the submission that, under such facts and circumstances, it cannot be said that the case of the assessee was transferred without any order u/s 127(1) of the Act. 10. On merits of the case, it is the submission of department that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced on 12th March, 2024, copy of Transfer Order dated 12th September, 2018 was available in the assessment records. But/ as per this Transfer Order, dated 12th September, 2018 in the case of Smt. Pankojani Walter, there is transfer of jurisdiction from ITO- 1(2), Bhilai to ACIT-1(1), Bhilai instead of ITO-1(3), Raipur to ACIT-1(1), Bhilai. While checking the assessment records, once again, it was found that there is no Transfer Order from ITO-1(3), Raipur to ITO-1(2), Bhilai, Accordingly, Hon'ble Bench directed the Ld. D/R to check this aspect and revert. In this case, there are three assessing officers as under:- (A). ITO-1(3), Raipur, who initiated re-assessment proceedings and issued notice u/s.148 dated 26th March, 2018. (B). ITO-1(2), Bhilai - there is absolutely no reference to ITO-1(2), Bhilai in the assessment order. As per Transfer Order u/s.127(1) dated 12th September, 2018 by PCIT-2, Raipur, there is transfer of jurisdiction under Sl.No.74 from ITO-1(2), Bhilai to ACIT-I(I), Bhilai. copy of this Transfer Order appears at page no. 162 to 167 of Paper Book Vol.I (C) In the Assessment Order dated 10th December, 2018 of Smt. Pankojani Walter, there is reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to Rs.2,14,86,217/- is actually purchase of liquor from State Excise Department and sealing bottling charges paid by the assessee on which TCS of 1,94,630/-and Rs.27,434/- has been collected by the Department as appearing in Form 26AS The break-up of Rs.2,14,86,217/- considered as interest on securities' is as under:- S.No. Particulars Amount 1 Sealing Bottling Charges Rs. 27,43,336.00 2 Liquor purchase Rs. 187,10,863,00 3 Bank interest Rs. 32,018.00 Total: Rs. 214,86,217.00 Thus the entire assessment order is based , mere suspicion. 11.5 In the absence of copy of reasons recorded in the assessment records, there is no existence of reasons for belief. Assessee relies on several judgements given in the written submission on page no. 18 to 24. 2nd GROUND OF CROSS-OBJECTION: The Ld. ACIT erred in not appreciating that the Notice u/s.148 was never served on the assessee. Hence, the re-assessment order passed by the Ld. ACIT dated 10th December, 2018 without issuing any fresh notice u/s.148 by him is without jurisdiction and, therefore, ought to be quashed. Even the notice affixed on 23rd November, 2018 is beyond limitation period of six years after end of assessment year in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al -453 ITR 786 SC 31 3 Copy of Hon'ble Supreme Court judgement in the case of ITO vs K.Devasis Patro - 153 Taxman 198 SC 32 4 Copy of Hon'ble Supreme Court judgement in the case of ITO vs Keenara Industries(P) Ltd 153 Taxman 205 SC 33 to 34 2.1 In this case, re-assessment proceedings were initiated by The ITO-1(3), Raipur by issuance of notice u/s.148 dated 26th March, 2018 whereas assessment order dated 10th December, 2018 was passed by ACIT-1(1), Bhilai without recording any fresh reasons and without issuing any fresh notice u/s. 148 of the Income-tax Act, 1961. 2.2 Since, in this case, reasons to believe that there was escapement of income, were recorded and issuance of notice u/s.148 was issued by The ITO-1(3), Raipur, who finally did not exercise the relevant jurisdiction, such reasons/issuance of notice u/s.148 are non-est being jnflagrant violation of the express provisions of Section-147 r.w.s. 2(7A) of the Income tax Act. Section-2(7A) reads as under:- Assessing Officer means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director of the Income-tax who is vested with the relevant jurisdiction by virtue of directions or orders iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to be quashed. Where the ITO-1(3), Raipur initiated re-assessment proceedings in the case of assessee by issuance of notice u/s.148 dated 26th March, 2018, since jurisdiction over the assessee's case pursuant to Transfer Order u/s.127(1) of the Income-tax Act, 1961 dated 12th September, 2018 was vested with ITO-1(2), Bhilai, in the said circumstances, ITO 1(3), Raipur clearly lacked jurisdiction for initiating reassessment proceedings and, therefore, it was liable to be quashed. In this connection, assessee relies on Hon'ble Raipur Tribunal judgement in the case of Mir Zardari Qureshi vs ACIT - 151 Taxmann.com 408 (Rai. Trib.) dated 27th March, 2023. In this case, notice u/s.148 was issued by ITO-1(3), Raipur on 26th March, 2018. Further, assessment has been completed by yet another officer, ACIT-I(I), Bhi/ai on 10th December, 2018. At this stage, it may be beneficial to make a reference to the provisions of Section- 147. Section-147 of the Income-tax Act -reads as under: Income escaping assessment 147. If the assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal as well as assessment orders are available, the same should be preferred as against judgement of other states. Copy of Hon'ble Raipur Tribunal judgement in the case of ITO-3, Bhilai vs Smt. Leela Bal Yadav ITA No.224/BLPR/2011 in liquor business appears on page no.62 to 66 of the Paper Book Vol.l wherein the Hon'ble Raipur Tribunal has applied 2% rate of profit on page no.65 to 68 of Paper Book Vol.l. The assessee/s case has to be compared with the profit of comparable cases from the same locality/state. Copies of various assessment orders of various assessees trading in same liquor business as that of the assessee from the same locality and almost the same period forms part at page no. 123 to 136 of the Paper Book Vol. III as under:- S. Name of the Assessee A.Y. Turnover (In Crore) Income assessed (Rs, in Crore %ge of income assessed/turnover Assessed by ITO 1 Shri. Nakul Chandra Ray, Raipur. 12-13 14.53 17.68 1.20% ITO-3(3), Raipur (C.G.) 2 Kusum Bai Sahu, Salehabhatha, Baghbahara, Mahasamund. 12-13 6.83 10.16 1.48% ITO, ward, Mahasamund. 3 Sevak Ram, Khursiparr Mahasamund 12-13 17.68 23.27 1.35% ITO-3(3), Raipur (C.G.) 4 Aaditya Banerjee, Rajeev Nagar, Rai urg 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout escapement of income, for which assessment was to be reopened. Therefore, the first legal contention raised by the assessee is not found to be tenable in light of the evidences submitted by the department. 15. Apropos, the second contention of the Ld. AR that the order of transfer u/s 127 of the Act was not issued for change of incumbent by the Ld. PCIT in the present case, therefore, on that count itself the assessment is not sustainable and liable to be quashed. On this issue, it was the submission of Ld. AR that though the department is now furnished an order u/s 127(1) for transfer of the case from ITO-1(2) to Bhilai to ACIT-1(1), Bhilai but nothing transpires from the records that ITO-1(2) was ever holding the jurisdiction over the case of the assessee. It is an admitted fact born from records that the notice for reopening u/s 148 dated 26.03.2018 was issued by ITO-1(3). The fact emanating from assessment order asserts that the case was transferred from ITO-1(3) (originator of reopening by issue of notice u/s 148) to the ACIT-1(1), Bhilai (who finally had completed the assessment), whereas the order of transfer u/s 127(1) dated was 12.09.2018 issue by Ld. PCIT-2, Raipur w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7A) of the Act, Assessing Officer means the Asstt. Commissioner or Deputy Commissioner or Asstt. Director or Deputy Director or the Income Tax Officer, who is vested with the relevant jurisdiction . Applying the provisions of section 147, 148 r.w.s. 2(7A) the notice of reopening assessment can validly be issued only by the assessing officer, who is vested with the relevant jurisdiction over the case of the assessee, while exercising provisions of section 147 r.w.s. 148 for reopening assessment. 17. In view of aforesaid observations, we find force in the contentions of the Ld. AR that the jurisdiction vested with ITO,W-1(3) could not be validly transferred to ACIT-1(1) by way of a proper order of transfer us 127. Also, nothing is brought to our notice that a valid reopening notice was issued by the Ld. ACIT-1(1) within stipulated time as mandated by the Law, therefore, he was devoid of valid assumption of jurisdiction to frame the assessment in the present case u/s 144 r.w.s. 147 of the Act, thus, in terms of aforesaid observations, the assessment framed by Ld. ACIT, Circle- 1(1), dehors valid assumption of jurisdiction is liable to be quashed, thus, we direct to do so. 18. As we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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