Tribunal dismisses jurisdiction challenge, allows appeal on valuation dispute.

The Tribunal dismissed the appeal ground challenging the validity of the transfer of jurisdiction under Section 127, citing that a formal order is not required for transfers within the same city. However, the Tribunal allowed the appeal ground related to the addition of Rs. 7,97,015/- as unexplained investment, emphasizing the AO's failure to refer valuation disputes to a DVO and consider the evidence provided by the assessee.

---

---

Issues Involved:
1. Validity of the transfer of jurisdiction under Section 127.
2. Addition of Rs. 7,97,015/- on account of unexplained investment.

Detailed Analysis:

Issue 1: Validity of the Transfer of Jurisdiction under Section 127
The assessee contended that the Income Tax Officer (ITO), Ward-3(3), Jaipur, assumed the role of the Assessing Officer (AO) without a valid transfer order under Section 127 of the Income Tax Act, 1961. The case was initially handled by ITO, Ward-3(4), Jaipur, and later transferred to ITO, Ward-3(3), Jaipur, via a transfer memo dated 18.05.2016 without a formal transfer order under Section 127.

The Tribunal observed that Section 127(3) of the Act allows for the transfer of jurisdiction within the same city without the necessity of recording reasons or giving the assessee an opportunity to be heard. Citing the Supreme Court decision in Kashiram Aggarwalla V Union of India and Others (1965) 56 ITR 14 (SC), the Tribunal concluded that the transfer of jurisdiction within the same city does not require a formal order under Section 127. Therefore, the Tribunal dismissed the assessee's ground on this issue.

Issue 2: Addition of Rs. 7,97,015/- on Account of Unexplained Investment
The assessee purchased a property jointly with another individual for Rs. 28,00,000/- during the financial year 2013-14. The Stamp Duty Authority valued the property at Rs. 43,94,029/-, and the AO added half of the difference amounting to Rs. 7,97,015/- to the assessee's total income as unexplained investment under Section 56(2)(vii)(b) of the Act.

The assessee argued that the property was residential, but the Stamp Duty Authority valued it as commercial. The assessee provided a valuation report from a registered valuer and other supporting documents, including an affidavit and a calculation sheet from the registration department, which indicated the property was residential. The AO did not refer the matter to the Department Valuation Officer (DVO) despite the assessee's claim that the stamp duty valuation exceeded the fair market value.

The Tribunal noted that the AO and the Commissioner of Income Tax (Appeals) [CIT(A)] failed to consider the evidence provided by the assessee, including the sale deed indicating the property was residential. The Tribunal cited the decision in Income Tax Officer vs. M/s Aditya Narain Verma (HUF) ITA No. 4166/Del/2013, which held that the AO should refer the valuation to a DVO if the assessee claims the stamp duty valuation exceeds the fair market value.

The Tribunal concluded that the AO and CIT(A) erred in not referring the valuation to a DVO and not considering the assessee's evidence. Therefore, the addition of Rs. 7,97,015/- was not justified, and the Tribunal allowed the assessee's appeal on this ground.

Conclusion
The appeal was partly allowed. The Tribunal dismissed the ground regarding the validity of the transfer of jurisdiction under Section 127 but allowed the ground concerning the addition of Rs. 7,97,015/- on account of unexplained investment. The Tribunal emphasized the necessity for the AO to refer valuation disputes to a DVO and consider all relevant evidence provided by the assessee.

---