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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 ..... e company had been transferred to ITO-1(1), Raipur from ITO-4(1), Kolkata pursuant to the order passed u/s.120 dated 08.08.2014 of the CIT, Kolkata- 2, Kolkata cannot be accepted and thus, fails. Whether transfer of the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur i.e. inter se the A.O's who were not sub-ordinate to the same CIT could have been carried out without passing an order as required under sub-section (2) of Section 127 of the Act.? - As the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but had rather assailed the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer that was statutorily required to have been passed by the CIT-2, Kolkata u/s. 127 of the Act, therefore, it would not be circumscribed by the restriction contemplated under sub-section (3) of Section 124 of the Act. Accordingly, we are of a firm conviction that the judgment of Kalinga Institute of Industrial Technology [2019 (3) TMI 1996 - ORISSA HIGH COURT] is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'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 assessee to prove the identity of the creditors, the creditworthiness and genuineness of the transaction and mere furnishing of particulars is not enough? 5. "Whether on points of law and on facts & circumstances of the case, the Ld. CITIA) was justified in deleting the addition which is contrary to the ratio of the decisions of Hon'ble Supreme Court in the case of A. Govindarajulu Mudaliar Va CIT (1958) 34 ITR 807 (SC), CIT Vs M. Ganapathi Mudaliar (1964) 53 ITR 623 (SC), which cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 primary fact upon which without conclusion is based?" 12. "The order of the Id. CIT(A) is erroneous both in law and on facts". 13. "Any other ground that may be adduced at the time of hearing" 2. Also, the assessee company has filed an application under Rule 27 of the Income Tax Appellate Tribunal, Rules, 1963 raising the following preliminary objection: "Ground No.1 "On the facts and circumstances of the case and in law, assessment made u/s 143(3) dt. 31-3-15 by ITO-4(1), Raipur is inva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evendra 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 veracity of the aforesaid transactions of receipt of share application money issued through post notice(s) u/s.133(6) of the Act to all the aforesaid share applicant companies. However, all the notices/letters were received back by the A.O with an endorsement of "not-known" by the postal authority. The A.O brought the aforesaid facts to the notice of the assessee company and directed it to substantiate the identity, creditworthiness of the investor companies a/w. genuineness of the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective 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 discharged. Accordingly, the CIT(Appeals) based on his observations vacated the addition of Rs.2.25 crore (supra) that was made by the A.O u/s.68 of the Act. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: "2.3 I have gone through the submission of the assessee and perused the assessment order. Facts are that during the assessment proceedings, the assessee was required to furnish the details of share application money received at Rs. 2.25 crores and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2368; 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, genuineness of the transaction. It may be noted that in other 2 years (i.e., 2008 & 2010) were in favor of the assessee-Oasis Hospitalities P Ltd as the primary onus laid upon was duly discharged by the assessee-Oasis Hospitalities P Ltd. In the instant case, the assessee-Co has provided full detail of all the shareholders and also all the documentary evidences regarding share application money received by the assessee-Co and also the new name & new complete address of the shareholders w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 crores on account of share application money had been made by the revenue and substantial demand of Rs.3.17 crores had already been raised in the case of alleged share applicant. From perusal of the balance sheet of M/s. Needful Vincom Pvt Ltd (newly known as M/s. Wondrous Vincom Pvt Ltd) as on 31-3-12 it is seen that out of the total investment of Rs.6.76 crores Rs.50 lakhs (ie., 8.86% of the total investment of the shareholder) is invested in the assessee-Co and from this, it is evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 aforesaid companies to procure the entries. The assessee, succeeded in the first appeal on merits. The FAA observed that the assessee had placed on record share application forms, data from the Registrar of Companies, board resolution of the aforesaid 11 companies, affidavit, PANs and ack form of the returns. He referred to the Lovely Exports (P) Ltd (2008) (SC) and other cases. He observed that the AO had not made out a case for taxing the 'SAM' received through banking channels. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Assessee's shares, and then the amount received 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. If the assessee has discharged it onus by furnishing all the documents then as per decision in the case of Vodafone India Services (P) Ltd (2014) 50 taxmann.com 300 (Bom HC), the 'share premium' being on the 'capital amount' cannot be subjected to tax as income. On identical facts th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 relied upon a tabular chart prepared by the AO to submit that most of the share applicants had paid little or no IT and that analysis of the bank statements furnished by such investors revealed that the amounts were deposited in cash and also routed through different entities. It was submitted that whereas the identity of the investors was no doubt established, neither the genuineness nor credit worthiness could be said to have been satisfied to pass the test of bona fide transactions. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium/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 application form. Therefore, in our opinion, the genuineness of the transaction is also duly established. The AO doubted the creditworthiness or the genuineness of the transaction on the basis of mere presumption and suspicion without properly appreciating the evidences on record. In view of the above, we entirely agree with the above finding of the Id CIT(A)." The AO has to establish that there was re-routing of funds of the assessee in the form of share capital. If this fact is not est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. The common address of shareholders was not a valid basis to disregard the claim of the Assessee in view of the decision of this Court in Winstral-Petrochemicals (P) Ltd (2011) 10 taxmann.com 137 (Del HC). The subsequent sale of the shares subscribed was not germane to the que of the genuineness of the share capital amount received by the Assessees. Once the capital raised stood explained, the issue of disinvestment by the shareholder subsequently was a non-issue. The addition if at all w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial 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, without more, against the Assessee. (v) The AO is duty-bound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transaction and veracity of the repudiation. Considering the above submission and case decisions relied on, the assessee- Co has duly proved the identity of the share applicants through the copy of ITRs, assessment orders u/s 143(3); has proved creditworthiness of the share applicants through the audited balance sheet wherein it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion 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 latest judgment of the hon'ble Supreme Court in the matter of CIT v. Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5; [2008] 216 ITR (St.) 195, investment by the alleged bogus shareholders in a company cannot be regarded as the undisclosed income of the assessee-company, though individual investors can be proceeded against by the Department. The Court has deliberated that in the matter of Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5, the question before the hon'ble Supreme Court was- wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 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 order of transfer passed u/s.127 of the Act by the CIT, Kolkata, therefore, the A.O had wrongly assumed jurisdiction and framed the assessment vide his order passed u/s.143(3) of the Act, dated 31.03.2015. Elaborating on his contention, the Ld. AR submitted that as the case of the present assessee was transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur i.e. from one A.O to another A.O who were not sub-ordinate to the same Pr. CIT, therefore, an order of transfer was mandatorily requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment, 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-II, Kolkata for transferring PAN of the assessee to ITO-4(1), Raipur; and (ii) the order sheet entry dated 14.10.2014, wherein it was stated that the PAN of the assessee had been migrated to ITO-1(1), Raipur as was requested by the ITO-4(1), Kolkata. Also, it is found mentioned in the aforesaid letter dated 22.08.2023 that no migration order or order u/s. 127 of the Act is found in the assessment folder of the assessee for A.Y.2012-13. The ITO-4(1), Raipur in the backdrop of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 though he had tried his best to get a copy of the order u/s.127 of the Act from the O/o. Pr. CIT-1, Raipur, but it could not be traced out. It is also stated by him that he had once again requested the ITO-4(1), Kolkata vide his email dated 17.10.2023 to contact the office of the Pr. CIT-II, Kolkata to obtain the copy of order u/s. 127 of the Act. * The ITO-4(1), Raipur vide his aforesaid letter dated 17.10.2023 had informed the Jt. CIT, ITAT, Raipur that as the order u/s. 127 of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT, 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. Reminder letter dated 09.11.2023 of the Addl. CIT, ITAT, Raipur * * The Addl. CIT, ITAT, Raipur vide his reminder letter dated 09.11.2023 had requested the Pr. CIT-II, Kolkata for providing a copy of the order u/s. 127 of the Act passed in the case of the assessee company. XIV. Letter dated 28.11.2023 of the St. DR, ITAT, Raipur * * The Ld. Sr. DR vide her letter dated 28.11.2023 had requested for a copy of the order passed u/s. 127 of the Act. XV. Letter dated 14.12.2023 of the Jt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 to ITO-1(1), Raipur, then as per the mandate of sub-section (1) r.w. sub-section (3) of Section 127 of the Act, an opportunity of being heard would have been afforded to the assessee company, the Ld. AR was queried about the same. In reply, as the Ld. AR had stated that the assessee company was unaware about any such order of transfer much the less any opportunity of being heard having been afforded to it, therefore, he was directed to place on record an "affidavit" of the director of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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, dated 08.08.2014 of the CIT-2, Kolkata was transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur. Also, as per the "order sheet" entry dated 14.10.2014 the PAN of the assessee company at the request of ITO-4(1), Kolkata vide his letter dated 25.08.2014 addressed to the CIT, Kolkata-2, Kolkata was transferred to ITO-1(1), Raipur. 22. At this stage, we may herein observe that the case of the assessee company was initially transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur and, thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner 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. Commissioner of Income Tax (International Taxation-2) quashed the notices issued to the Petitioner by the DCIT in Mumbai when in fact that case was subject to the jurisdiction of the DCIT (IT) in New Delhi." Accordingly, we are of the view that the claim of the Ld. Departmental Representative (for short 'DR'), which in turn, is based on the "order sheet" noting dated 08.09.2014 (supra) that the case of the assessee company had been transferred to ITO-1(1), Raipur from ITO-4(1), Kolkata pursuant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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 city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred." (emphasis supplied by us) On a perusal of sub-section (2) of Section 127 of the Act, it transpires that the same therein contemplates that where the A.O or A.Os from whom the case is to be transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 (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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 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 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction 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), wherein the Hon'ble Apex Court emphasizing on the 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. The Hon'ble Apex Court, had observed, that though it was the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 petitioner has a grievance, it shall be at liberty to take the remedies in accordance with law." 32. Also, we are reminded of the judgment of the Hon'ble High Court of Punjab & Haryana in the case of Lt. Col. Paramjit Singh Vs. CIT & Ors, (1996) 220 ITR 446 (P&H). In the case before the Hon'ble High Court, the assessee who had retired as a lieutenant Colonel from the army on 31.08.1990 was posted at Pune in the State of Maharashtra. The assessee had filed his return of income for A.Y.1988-89, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reissue any notice when the same has already been issued by the Assessing Officer from whom the case is transferred and the Assessing Officer to whom the case is transferred is entitled to proceed from the stage at which he receives the case from his predecessor. It is also provided that wherever it is possible to do so, the assessee shall be given a reasonable opportunity of being heard before an order of transfer is passed and that the competent authority will record his reasons for the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of one month from the date on which he was served with a notice under sub- section (1) of section 142 or sub-section (2) of section 115WE or sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 115WD or sub- section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Also, a similar view had been taken by the Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income-tax Vs. Nopany & Sons (2022) 136 taxmann.com 414 (Cal). In the case before the Hon'ble High Court the case of the assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was passed by the ITO, Ward-4 without issuing notice u/s 143(2), i.e. only in pursuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 Kanwar Singh Saini Vs. High Court of Delhi (supra) are culled out as under: "22. There can be no dispute regarding 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, and 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. Such an issue can be raised at any belated stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 the fulfilment of certain preconditions. (CIT Vs. Kelvinator of India Ltd.)" 42. We shall now advert to the judgments that have been relied upon by the Ld. DR to impress upon us that as the assessee company had not called in question the jurisdiction of the A.O i.e. ITO-4(1), Raipur within the time 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 by the said A.O, therefore, as per the mandate of sub-section (3) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Act in its case was with Jt.CIT(OSD)(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar was without jurisdiction and, thus, was liable to be quashed; (iv) the Hon'ble High Court of Orissa considering the fact that the jurisdiction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar, therefore, held the impugned notice issued u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but had rather assailed the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer that was statutorily required to have been passed by the CIT-2, Kolkata u/s. 127 of the Act, therefore, it would not be circumscribed by the restriction contemplated under sub-section (3) of Section 124 of the Act. Accordingly, we are of a firm conviction that the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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