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TMI Blog2025 (3) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- by ignoring the facts as brought on record by the AO that the assessee company failed to prove the identity, genuineness and creditworthiness of the investor company as per the parameters of the legal provisions u/s 68 of the Act?" 3. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition, thereby not considering and not distinguishing the findings of the AO which is well supported by the ratio of the judgment of Hon'ble Gujurat High Court in the case of Pavan kumar M Sanghvi Vs ITO (2018) 404 ITR 601 (Guj), wherein it is mentioned that it is also settled legal position that the onus of the assessee, of explaining nature and source of credit, does not get discharged merely by filing confirmatory letters, or demonstrating that the transactions are done through the banking channels or even by filing the income tax assessment particulars'?" 4. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition which is contrary to the ratio of the decisions in CIT Vs Precision Finance Pvt Ltd 1994 2008 ITR 465, wherein it was held that it is for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the Ld. CIT (A) was justified by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the identity, creditworthiness of the entities investing in the share capital and share premiums of the assessee company as genuine, a finding which is factually incorrect, thereby rendering the decision, which is perverse?" 10 "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified in ignoring the ratio of Hon'ble Delhi High Court in the case of CIT-II vs. Jansampark Advertising & Marketing (P.) Ltd. reported in [2015] 56 taxmann.com 286 (Delhi) held that "though it is obligation of assessing officer to conduct proper scrutiny of material, in even of assessing officer failing to discharge his functions properly, obligation to conduct proper inquiry shifts to commissioner (Appeals) and they cannot simply delete addition made by assessing officer on ground of lack of inquiry." 11 "Whether on points of law and facts & circumstances of the case, the Ld. CIT(A) was justified in giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring an income of Rs.660/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act. 4. The A.O during the course of the assessment proceedings observed that the assessee company had received share application money of Rs.2.25 crore from five share applicants, as under: S. No. Name Address Amount 1. Jatadhari Marketing Pvt. Ltd. 3rd Floor, 55, Ezra Street, Kolkata (WB)- 700 001 5000000 2. Needful Vioncom Pvt. Ltd. 3, Marshi Devendra 5000000 3. Overflow Merchandise Pvt. Ltd. 5th Floor, 52, Weston Street, Kolkata (WB)- 700 012 5000000 4. Shivratri Tradelink Pvt. Ltd. 4th Floor, 74, Burtolla Street, Burra Bazar, Kolkata9WB)-700 007 5000000 5. Trump Traders Pvt. Ltd. 5th Floor, 83/85, Netaji Subhash Road, Dalhousie, Kolkata (WB)-700 001 5000000 On being queried, the assessee company in its attempt to substantiate its claim of having received genuine share application money from the aforesaid parties filed before the A.O the copies of share application forms, copies of return of income, balance sheets, profit & loss account and bank statements of the share applicant companies. The A.O in order to verify the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roving its claim of having received genuine share application money from the said investor companies, therefore, the A.O without dislodging the same by placing on record any material proving to the contrary was not justified in treating the entire amount of share application money as unexplained cash credit u/s. 68 of the Act. As the assessee by pressing into service the financial statements of the share applicants/investor companies, had claimed before the CIT(Appeals) that the said respective investor companies/share applicant companies had substantial creditworthiness to make respective investments towards share application money, therefore, the CIT(Appeals) called for a "remand report" from the A.O. In compliance, the A.O filed his "remand report" and a copy of the same was made available to the assessee to file its rejoinder. 7. The CIT(Appeals) after deliberating at length on the facts of the case in the backdrop of a host of judicial pronouncements, concluded that the onus that was cast upon the assessee company to prove the identity, creditworthiness and genuineness of the transactions of receipt of share application money from the five share applicant companies was duly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 366;न करदाता से ही शेयर होल्डरों का पता पूछा गया था परन्तु उनके द्वारा जो पता दिया गया उसी पते पर पत्राचार किया गया। He relied on the decision in the case of Oasis Hospitalities Pvt. In the present case the appellant has provided complete details of all the share applicants in form of complete name, complete address, copy of ITR, copy of balance sheet, copy of bank statements, ROC papers & annual returns. copy of the entire documentary evidences. Where as the decision of Oasis Hospitalities P Ltd the addition on account of share application money u/s 68 was sustained as in that case in one year (2007) the assessee had not furnished any proof of the identity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a criteria to treat an investor not- creditworthiness. His state of affairs has to be seen from funds available as per the balance sheet. Ld AO has simply brushed aside the reply of the assessee informing about the changed address and name of shareholders. He did not examine the documents submitted to establish the genuineness of share capital. On perusal of the documents submitted the audited balance sheet of M/s. Jatadhari Marketing Pvt Ltd (newly known as M/s. Wondrous Marketing Pvt Ltd) as on 31-3-12 the balance of shareholders fund is Rs.7.21 crores, long term borrowing is Rs.5.10 crores and non- current liabilities is Rs.2.83 crorers. The company has non-current investment of Rs.12.03 crores which was the investment made companies including the assessee company. An amount of Rs.50 lakhs has been invested in the assessee-Co and from this, it is very clear that the alleged share applicant had sufficient creditworthyness to invest the alleged money of Rs.50 lakhs in the assessee-Co. In the case of this investor, scrutiny assessment u/s143(3) for the AY12-13 had been completed vide assessment order dated 26-3-15 by the ITO, ward-2(4), Kolkata, in which addition of Rs.6.97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores has also been raised in the case of alleged share applicant. In case of M/s. Overflow Merchandise Pvt Ltd (newly known as M/s Ecstatic Merchandise Pvt Ltd) as on 31-3-12 the share applicant had sufficient creditworthiness to invest the alleged money of Rs.50 lakhs in the assessee-Co. In the case of this company scrutiny assessment u/s143(3) for the AY12-13 had been completed vide assessment order dated 4-3-15 in which addition of Rs.7.16 crores had been made by the AO. In the case of Kansal Fincap Ltd (2014) 42 taxmann.com 147 (Del HC)) it has been held that if the any amount has been assessed in the hands of shareholders and he has investment money in the assessee company out of this fund, then the addition cannot be made in the hands of assessee company. In that case the AO held that the assessee was unable to discharge the onus, and prove genuineness of the receipt of Rs.63 lakhs as 'SAM'. Bank accounts statement of the said 11 companies/share applicants disclosed that they were providing accommodation entries to the beneficiaries. Accordingly, addition of Rs.63 lakhs was made. Another addition of Rs.31,500 was made as commission paid by the assessee to the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed to IT as per the assessment orders mentioned above. Also the acknowledgments of filing of their IT returns by those companies were submitted before the Id AO. As per the ITR, computation of income for the AY12-13 of all the share applicants, audited financial statements for the AY12-13 of all the share applicants, copy of bank statements of the assessee-co, which shows the receipt of share application money and ledger accounts of share capital from the books of the assessee-co the other two ingredients of share capital i.e identity and genuineness of share capital is established. U/s 68, the ld AO has jurisdiction to undertake enquiries with regard to the amount credited in the books of the accounts of an Assessee. This could be any sum whether in the form of sale proceeds or receipt of share capital money. First, the AO is to enquire whether the alleged shareholders in fact exist or not. The truthfulness of the assertion by the Assessee regarding the nature and the source of the credit in its books of accounts can be examined by the AO. Where the identity the shareholders stands established and it is shown that they had in fact invested money in the purchase of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed to have exercised it in a proper and judicious manner- Simon Carves Ltd (1976) (SC). In my considered opinion, this is not the case where addition should have been made u/s153C, but u/s147/143(3) after A.Y 12-13, Appeal No100/15-16 making proper enquires. In the present facts of the case, the addition is not legally sustainable and is deleted. Appellant gets relief of Rs 25,00,96,500." The ITAT concurred with this view- The revenue urges that the CIT(A) and the ITAT both grievously erred in cancelling the additions made. It is submitted that the genuineness of the transactions and the credit worthiness is suspect in the circumstances of the case. Ld counsel relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt debited for acquiring the shares in the assessee-Co. On the basis of the above evidence, we have no hesitation to hold that the identity of all the 6 shareholder companies is duly established, all the companies are registered with the ROC, they are assessed to IT and they have also responded in response to the summons issued by the AO. Therefore, identity of these companies cannot be disputed. So far as creditworthiness is concerned, we find that the share capital as well as share premium/reserve of all the companies is several times more than the amount invested by them in the share capital of the assessee-Co. All the companies are assessed to IT, therefore, in cur our opinion, the creditworthiness far as genuineness of these companies cannot be disputed. So of the transaction is concerned, we find that the amount has come by cheque, the assessee has furnished the copy of the bank account of the company from where the cheque was issued, been disclosed in the schedules amount invested in the shares of investment attached with the of the assessee-Co has b-sheet of each company. Each company is assessed to IT and the shares were allotted to each company on the basis of the share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial to conclude that some of the investors were 'paper' companies. They had been regularly assessed to tax and had produced their books during made the investment In Five Vision Promoters (P) Ltd (2016) (Del HC), held as under: The Revenue had been unable to deny the factual position that only 11 of the 20 companies in Table I had actually been searched. The material on record showed that directors of 18 companies of the 20 companies were examined by the AO in the course of the remand proceedings and found from the books of accounts that the share capital stands duly recorded in their books of accounts. Thus, there was no justification for drawing an adverse inference particularly since no contrary material was placed on record by the revenue. The decision of this Court in Nova Promoters & Finlease (P) Ltd (2012) 342 ITR 169 (Del HC) was distinguishable on facts since in that case, 2 directors of the shareholder companies admitted to maintaining benami accounts and providing accommodation entries, whereas in the present cases there were no such statements. Also, here the AO did not take any steps to rebut the confirmation and evidence tendered by the shareholders. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be regarded as capital. Where the Assessee offers no explanation at all or the explanation offered is unsatisfactory, the sec. 68 may be invoked. 29. A Full Bench of this Court in Sophia Finance Ltd held in the context of sec 68 that: (i) The Assessee has to prima facie prove "(1) the identity of the creditor/ subscriber, (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/ subscriber". (ii) If the relevant details of the address of PAN identity of the creditor/ subscriber are furnished to the Deptt along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc., it would constitute acceptable proof or acceptable explanation by the Assessee. (iii) The Deptt would not be justified in drawing an adverse inference only because the creditor/ subscriber fails or neglects to respond to its notices. (iv) The onus would not stand discharged if the creditor/subscriber denies of repudiates the transaction set up by the Assessee nor should the AO take such repudiation at face value and construe it, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Pvt Ltd 319 ITR 393 Chhattisgarh 2010, 41 DTR 350 justified the deletion of addition by ITAT. Briefly stated, the facts of the case are that the assessee-company filed its return for the assessment year 1989-90.h The Assessing Officer during assessment proceedings, not satisfied with the explanation of the assessee, added Rs.13,36,000 towards holdings of the shareholders, whose confirmation could not be adduced. Before the Commissioner of Income-tax (Appeals), the assessee sought permission for adducing additional evidence under rule 46A of the Income-tax Rules, 1962, which was accepted and appeal of the assessee was allowed on the basis of additional evidence adduced by the assessee as also keeping in view of the fact that for subsequent assessment year, the share holders investment was confirmed during the assessment proceedings.. The appeal preferred by the Revenue was dismissed by the ITAT. Before the honourable HC, it was submitted on behalf of the department that apart from the reasons assigned by the respondent, the Tribunal, wherein it has been held that the investment has been verified on the basis of the additional evidence adduced by the assessee, in view of the lates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s income is hereby deleted and grounds of the assessee are allowed. 3.0 Appeal is allowed." 8. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 9. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 10. As the assessee company has assailed the validity of the jurisdiction that was assumed by the A.O for framing the assessment vide his order passed u/s. 143(3) of the Act, dated 31.03.2015, for the reason that the impugned assessment was framed without any order of transfer u/s. 127 of the Act, based on which, it's case was transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur, therefore, we shall first deal with the same. 11. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee company, at the threshold of hearing of the appeal, submitted that as the case of the present assessee was transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur de-hors any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we may herein observe that the appeal of the revenue was taken up for hearing way back as on 25.11.2022, which, thereafter, was adjourned for one or the other reason on 25 occasions. On a careful perusal of the file, we find that the Ld. DR on the majority of the dates had requested for some time so that the order of transfer u/s.127 of the Act could be obtained. However, we find that despite the fact that sufficient opportunities running over more than a year had been allowed to the department, but nothing has been placed on record which would prove that any order of transfer u/s.127 of the Act was passed by the Pr. CIT, Kolkata. For the sake of clarity, we deem it fit to cull out in a chronological manner the reports/correspondence that have been placed on record by the Ld. DR on the various dates of hearing of the appeal, as under: I. Letter dated 22.08.2023 (sent though email) by the ITO-4(1) Raipur to ITO-4(1), Kolkata * On a perusal of the aforesaid correspondence forwarded through email, it transpires that the ITO-4(1), Raipur had made a reference of. viz. (i) the order sheet entry dated 22.08.2014, wherein it was mentioned that a letter was sent through email from CIT- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Addl. CIT (ITAT), Raipur to Pr. CIT- II, Kolkata * The aforesaid letter (through email acknowledgement) revealed that the Addl. CIT (ITAT) Raipur had requested the Pr. CIT-II, Kolkata for providing a copy of the order passed in the case of the assessee u/s.127 of the Act. VII. Letter dated 17.10.2023 of ITO-4(1), Raipur addressed to Jt. CIT, ITAT, Raipur * The ITO-4(1), Raipur in his aforesaid letter had stated that he had requested the ITO-4(1), Kolkata to provide a copy of the order u/s.127 of the Act. It was stated by him that the ITO-4(1), Kolkata vide his email reply, dated 01.09.2023 had informed that as the record was very old and not readily available, therefore, the order u/s. 127 of the Act could not be traced. Also, it was suggested by him that the Pr. CIT-II, Kolkata may be contacted for providing a copy of the order. The ITO-4(1), Raipur had further stated that he had though once again through email dated 18.09.2023 requested for a copy of the order u/s. 127 of the Act, but he was again informed that the same was not traceable a/w. a suggestion that the CIT, Kolkata may be contacted for the same. * ITO-4(1), Raipur in his letter had further stated that thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 addressed to the Jt. CIT, ITAT, Raipur, had once again stated that the copy of order of transfer u/s. 127 of the Act could not be traced and requested that some further time may be sought from the Tribunal. XI. Letter dated 06.11.2023 of the Jt. CIT, ITAT, Raipur. * * The Jt. CIT, ITAT, Raipur vide his letter dated 06.11.2023 had requested the Pr. CIT-2, Kolkata that the order u/s. 127 of the Act passed by the then CIT/Pr.CIT may be provided on or before 28.11.2023. The Jt. CIT, ITAT, Raipur had further informed the Pr. CIT-2, Kolkata that the PAN jurisdiction over the case of the assessee was migrated from ITO-4(1), Kolkata to ITO-1(1), Raipur vide reference No.104002826131, dated 05.09.2014. XII. PAN migration sheet filed before us by the ITO-4(1), Raipur reveals as under: S. No. PAN Transfer From Transfer To Transfer Order No. Transfer Date 1 AAECT0981A WARD 4(1) RAIPUR WARD 4((1) RAIPUR/ 200000042075 06/10/2000 2. AAECT0981A WARD 4(3), RAIPUR WARD 4((1) RAIPUR 104003957628 22/09/2015 3 AAECT0981A WARD 1(1) RAIPUR WARD 4(3), RAIPUR 104003038211 11/01/2015 4 AAECT0981A WARD 4(1), KOLKATA WARD 1(1), RAIPUR 104002826131 05/09/2014 XIII. Remin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appellate proceedings. XVIII Letter dated 04.04.2024 of the ITO-4(1), Raipur addressed to the DCIT, ITO-4(1), Raipur. * * The ITO-4(1), Raipur vide his letter dated 04.04.2024 had, inter alia, informed the Jt. CIT, ITAT, Raipur that as per the jurisdiction details the PAN of assessee was transferred from Kolkata to Raipur in pursuance of the order of the then CIT-II, Kolkata but the same was not available in the assessment folder. It is also stated that as the case of the assessee for the subject year i.e. 2012-13 was selected for scrutiny, therefore, the migration of the PAN from Kolkata to Raipur could not have been carried out in absence of an order of transfer u/s 127 of the Act of the CIT/Pr. CIT as there was involvement of RSA token of the CIT/Pr. CIT for transferring the PAN from one Pr. CIT to another Pr. CIT. 15. As the department despite having been allowed substantial time period had failed to place on record a copy of the order of transfer passed by the CIT-2, Kolkata u/s.127 of the Act, therefore, considering the fact that in case any such order would have been passed by the CIT-2, Kolkata transferring the case of the assessee company from ITO-4(1), Kolkata t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est Bengal, Page 103 of APB. The assessee company had filed its return of income for the subject year i.e. A.Y.2012-13 (1st year) with the ITO-4(1), Kolkata on 25.09.2012 declaring an income of Rs.660/-, Page 85 of APB. Thereafter, the case of the assessee company was selected for scrutiny assessment and notice u/s. 143(2) of the Act, dated 12.08.2013 was issued by the ITO-4(1), Kolkata, Page 1 of APB. Also, the ITO-4(1), Kolkata, had, thereafter issued notice u/s. 142(1) of the Act, dated 25.06.2014, wherein the assessee company was called upon to place on record certain information/documents, Page 2 of APB. 20. Information was shared by the DDIT (Inv.)-III, Raipur with the ITO- 4(1), Kolkata that M/s. Bhagyaarna Gems & Jewellery Pvt. Ltd. (previously known as M/s.Top Flow Property Ltd.) had inaugurated its franchisee showroom at Sadar Bazar, Raipur on 07.10.2013. It was further informed that survey operation u/s. 133A of the Act was carried out at the business premises of M/s. Bhagyaaarna Gems & Jewellery Pvt. Ltd., Sadar Bazar, Raipur on 11.10.2013. 21. As is discernible from the "order sheet" noting, the case of the assessee company pursuant to an order u/s. 120 of the Act, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 120 of the Act, which reads as under: "120(2) The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it." (emphasis supplied by us) Our aforesaid conviction is fortified by the judgment of the Hon'ble High Court of Orissa in the case of Vedanta Resources Ltd. Vs. Assistant Commissioner of Income Tax, International Taxation, Bhubaneshwar, (2023) 150 taxmann.com 57 (Orissa), dated 09.02.2023, wherein it was, inter alia, held as under: "16. While in terms of Section 120 of the Act, it might be possible for the CIT (IT), New Delhi to transfer jurisdiction from one Assessing Officer to another within his jurisdiction, there is no power under Section 120 of the IT Act to transfer jurisdiction to an AO who is not subordinate to the CIT (IT), Delhi. For that purpose, it is only Section 127(2)(a) of the IT Act that could apply. In similar circumstances, the Delhi High Court in an order dated 13th May 2022 in W.P.(C) No.9713/2019 (Louis Dreyfus Company Asia Pte. Ltd. v. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner or Principal 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 Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. (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 cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the case was transferred. 28. Our aforesaid view that as per the mandate of law a transfer order is statutorily required to be passed by the prescribed authority u/s.127 of the Act, and an A.O cannot on his own transfer an income tax file to another officer in the absence of the aforesaid order is squarely covered by the judgment of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO and Ors. (2010) 329 ITR 283 (Cal). For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "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 : "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10 lac for the assessment year 2007-2008, the jurisdiction to/of your case automatically gets vested with the Jurisdictional DCIT- Circle-54, Kolkata as per above Directives. You are kindly informed hereby that no order u/s 127 of the Income Tax Act 1961 by the Ld. Commissioner of Income Tax - XIX, WB is required to be passed for getting the assessment records transferred from ITO Ward-54(2), Kolkata to DCIT Circle- 54, Kolkata by virtue of the provisions of sub-section 3 of section 127 of the Income Tax Act, 1961. For your ready reference the provisions of the said section is appended below. Section 127 sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording a reasonable opportunity of being heard in the matter to him. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "15. A perusal of Section 127(2) of the Act indicates that it envisages transfer of cases of an Assessee to an Assessing Officer (AO) not subordinate to the same Commissioner, who originally exercises jurisdiction over the Assessee. In the present case, it is CIT (IT)-1, New Delhi who would have to pass orders transferring jurisdiction of the cases of VRL to O.P. No.1 in Bhubaneswar. The latter is not subordinate to the CIT (IT)-1, New Delhi, but to his counterpart in Kolkata. In such event, under Section 127(2)(a), no such transfer of jurisdiction can take place without affording the Assessee a reasonable opportunity of being heard in the matter. The Department in the present case has not been able to produce any such order, transferring the jurisdiction vis- à-vis VRL from the CIT (IT)-1, New Delhi to Opposite Party No.1 in Bhubaneswar." 30. Also, support is drawn from the Judgment of the Hon'ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissioner of Income Tax, (2016) 388 ITR 489 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court is, therefore, interfered with and the transfer is accordingly set aside. 7. The appeal is allowed in the above terms." 31. Further, we find that the Hon'ble High Court of Delhi in the case of Louis Dreyfus Company Asia PTE. Ltd. Vs. CIT (International Taxation)-2 & Ors., W.P (C) 9713/2019 & C.M. 40084/2019, dated 13.05.2022, had observed that as no transfer order was passed u/s. 127 of the Act, therefore, the impugned notice issued u/s. 148 of the Act, dated 30.03.2019 by the DCIT, Circle-3(1)(2) (IT), Mumbai being without jurisdiction was liable to be quashed. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "Keeping in view the fact that no transfer order has been passed under Section 127 of the Act, the impugned notice dated 30th March, 2019 issued by respondent no.3 is without jurisdiction. Consequently, the notice dated 30th March, 2019 is quashed and the present writ petition along with pending application stands disposed of. If the law permits the respondents/Revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred from the jurisdiction of the A.O., Pune, to the ITO, Jalandhar, therefore, in absence of any order of transfer having been passed by the competent authority u/s.127 of the Act for any assessment year, the proceedings for reassessment initiated by the ITO, Jalandhar, were wholly without jurisdiction. The Hon'ble High Court based on its aforesaid observations quashed the notice u/s.148 of the Act, dated 13.03.1995 issued by the ITO, Jalandhar. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "5. Under the aforesaid provision, the Director-General or Chief Commissioner or Commissioner can transfer any case at any stage of the proceedings from one Assessing Officer subordinate to him to another. If both the Assessing Officers are not subordinate to the same Director-General or Chief Commissioner or Commissioner, then the transfer can be made on the respective Directors-General or Chief Commissioners or Commissioners agreeing and in the event of disagreement, by the Board or any such Director-General or Chief Commissioner or Commissioner authorised by it. The section expressly provides that on such a transfer it is not necessary to rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. (supra) had decided the issue in favor of the assessee, observing that a transfer order is statutorily required to be passed by the prescribed authority u/s.127 of the Act, and an A.O cannot on his own transfer an income tax file to another officer in absence of the aforesaid order u/s.127 of the Act. 35. We shall now deal with the contention of the Ld. DR that as the assessee company had not called in question the jurisdiction of the ITO- 1(1), Raipur [succeeded by ITO-4(1), Raipur] within the specified time period contemplated under sub section (3) of Section 124 of the Act, i.e. within a period of one month from the date on which it was served with the notice u/s. 143(2) of the Act, dated 20.02.2015, therefore, it was divested of its right from assailing the same for the first time before the Tribunal. 36. Before proceeding any further, it would be relevant to cull out Section 124(3) of the Act, which reads as under: "124 (1) xxxxxxxx (2) xxxxxxx (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Section 143 or Section 148 or sub-section (1) of Section 153A or sub-section (2) of Section 153C. In sum and substance, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub- section (3) of Section 124 is confined to a case where the assessee objects to the assumption of jurisdiction by the A.O, and not otherwise. 39. At this stage, we may herein refer to certain judicial pronouncements that had in the past held the field on the aforesaid issue. The Hon'ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Tax Appeal Nos. 19 to 30 of 2017, dated 05.04.2021 and that of the Hon'ble High Court of Gujarat in the case of CIT Vs. Ramesh D Patel (2014) 362 ITR492 (Guj.), had held, that as Section 124 of the Act pertains to territorial jurisdiction vested with an AO under sub-section (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which places an embargo on an assessee to raise an objection as regards the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of Kanwar Singh Saini Vs. High Court of Delhi, 2012 (4) SCC 307. The Hon'ble Apex Court in its aforesaid judgment, had held, that it is the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court. The Hon'ble Apex Court further observed that if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Also, the Hon'ble Apex Court clarified that an issue can be raised at any belated stage of the proceedings including in appeal or execution. Elaborating further, it was observed by the Hon'ble Apex Court that the finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. It was further observed by the Hon'ble Apex Court that acquiescence of a party equally should not be permitted to defeat the legislative animation and the court cannot derive jurisdiction apart from the statute. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Kanw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performed by that authority itself. (Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT Vs. Anjum M.H. Ghaswala; State of Uttar Pradesh Vs. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid............. xxxx xxxx xxxx xxxx xxxx 32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench).There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes Vs. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. No prejudice is shown to have been caused to the assessee." (emphasis supplied by us) We, thus, are of the view that the aforesaid judgment of the Hon'ble High Court rather provides that Section 124(3) of the Act casts an obligation upon the assessee to call in question the jurisdiction of the A.O within the time period therein stipulated only in a case where objection pertains to territorial jurisdiction and not otherwise. 44. Apropos the judgment of the Hon'ble Apex Court relied upon by the A.O in the case of Kalinga Institute of Industrial Technology Vs. DY. CIT (2023) 151 taxmann.com 433 (SC), it would be relevant to cull out the facts as were involved in the aforesaid case. (i) the assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without jurisdiction; (ii) the jurisdiction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar was after filing of the return of income changed and got vested with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar; (iii) it was the assessee's case that as the jurisdiction to issue notice u/s. 143(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur as was statutorily required per the mandate of Section 127 of the Act, therefore, it is the validity of the impugned assessment order passed by the A.O i.e. ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 in absence of an order of transfer passed u/s. 127 of the Act which has been challenged by the assessee company. 47. At this stage, we may herein reiterate that the Hon'ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissioner of Income Tax, (supra), emphasizing on the statutory requirement of passing of an order u/s.127(2)(a) of the Act where the assessee's case was transferred from one A.O to another, and the said AO's were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the Director General, Chief Commissioner or Commissioner as the case may be, of the two jurisdictions is necessary. 48. We, thus, in terms of our aforesaid observations are of a firm conviction that as the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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