TaxTMI 
TaxTMI 
2020 (12) TMI 559
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....lly passed the reassessment order u/s. 147/143(3) of the Act dated 29.09.2010 by making an addition of Rs. 20,640/- against assessee's Returned Income of Rs. 1060/-. According to Ld. A.R. on 22.03.2011, the name of the assessee company got changed from M/s. Alter Towers Pvt. Ltd. to M/s. OSL Developers Pvt. Ltd. and drew our attention to page 3 of the paper book where the copy of fresh Certificate of Incorporation consequent upon change of name has been issued by the Assistant Registrar of Companies, West Bengal is found placed therein in the PB. Further, it was brought to our notice that on 25/26.08.2011 search u/s. 132 of the Act was conducted in the assessee's premises. Thereafter on 28.08.2012 consequent to the search on 25.08.2011, the Ld Commissioner of Income Tax, Kolkata-II, (hereinafter CIT-II) exercising his powers u/s. 127 of the Act, transferred the jurisdiction of assessment from ITO, Ward-5(3), Kolkata to DCIT/ACIT, Central Circle-XVII, Kolkata (hereinafter DCIT, CC-XVII, Kolkata) on the request of the Ld Commissioner of Income Tax Act (hereinafter CIT-I) by letter dated 8/14.12.2011. [The copy of the order of transfer of assessee's case u/s. 127 from ITO,....
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....in the case of M/s. Ramshila Enterprise 383 ITR 546 (Cal) and upheld the contention of assessee on similar legal issue. So, he relied on the decisions of the Hon'ble High Court of Calcutta in M/s. Ramshila Enterprises (supra) and that of the Tribunal in M/s. Rungta Irrigation Ltd. (supra). In the light of the aforesaid submission and in the light of case laws it was urged by the Ld. AR that since the reassessment order dated 25.03.2014 passed by ITO, Ward-5(3), Kolkata is bad in law and it may be held as ab initio void. 3. Per contra, the Ld. CIT, DR Shri Imokaba Jamir vehemently opposed the plea of the Ld. A.R. of the assessee. According to him, the assessee is estopped from challenging the jurisdiction of ITO, Ward-5(3) as per sub-section (3) of section 124 of the Act, unless the assessee had duly raised the question of jurisdiction of AO within a month of receipt of statutory notices u/s. 142(1)/143(2)/148/153/153C of the Act. And since the assessee has not bothered to raise such objection to the notice of Assessing Officer (i.e. issued by ITO, Ward-5(3), Kolkata) the assessee is now barred from raising the jurisdiction of ITO, Ward-5(3). According to Ld. DR, since assessee....
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....n appeal before us. Vide copy of assessment order filed with appeal 8. 31.03.2014 Reassessment u/s. 153A/143(3) for the same assessment year (AY 2008-09) completed by DCIT, Central Circle-XVII. Paper book pages 10-12 9. 31.05.2016 Case of assessee retransferred u/s. 127 by Pr. CIT-I from DCIT, Central Circle to ITO 5(3). Paper-book page 24-26 (item no. 39, page 25). 5. In view of the aforesaid dates and sequence of events, the legal question to be adjudicated is, whether the ITO, Ward-5(3) was empowered on 25.03.2014 to give effect to the order of Pr. CIT-II dated 28.03.2013 passed u/s. 263 of the Act. This question needs to be answered in the light of the fact that by an earlier order dated 28.03.2013 passed u/s. 127 of the Act, by the then CIT-II, Kolkata had transferred the jurisdiction over the assessee's case from ITO, Ward-5(3), Kolkata to the charge of DCIT/ACIT, Central Circle-XVII, Kolkata, on the request of CIT-I dated 8/14.12.2011. 6. For understanding the legal position with regard to the jurisdiction of Income tax authorities, it is pertinent to make reference to the relevant pr....
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....ctions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification. 124. Jurisdiction of Assessing Officers (1) Where by virtue of any direction or order issued under sub-section (1) or subsection (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction- (a) in respect of any person carrying on....
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....sued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or subsection (2) of section 120.] 127. Power to transfer cases (1) The Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. 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 ....
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....previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard." 7. A bare reading of the foregoing provisions reveal that an Assessing Officer (hereinafter 'AO') has been vested with the jurisdiction to assess the income of an assessee by virtue of the directions or orders issued by the Board under sub-section (1) or sub-section (2) of section 120 of the Act. The direction u/s. 120(1) is given by the Board, for the exercise of the powers and performance of the functions by all or any of the Income Tax Authorities, as specified u/s. 116 of the Act. As per sub-section (2) of Section 120 of the Act, the Board may delegate its powers to Income tax authorities as specified in Section 116, for issuing the 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 that authority. We also note that the concurrent jurisdiction can be vested in more than one AO, which is discernible by a conjoint reading of Section 120(5) with Section 120(2) of the Act. Section 124(1) of the Act confers jurisdiction on an AO, by virtue of ....
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....24(5) saves the action of the AO who has territorial jurisdiction over the assessee in respect of the income earned by the assessee from the territorial jurisdiction vested in him by virtue of any directions or orders issued u/s. 120(1) or (2) of the Act. So, this saving provision which saves the action of an AO is limited to the income accruing or arising or received within the limits of his territorial area as conferred to him (AO) by order under sub-sec. (1) or (2) of sec. 120 of the Act and not otherwise. So, this saving provision will come into play only if in the first place the AO is vested with the jurisdiction by an order/direction issued under sub-sec. (1) or (2) of sec. 120 of the Act. Thus, as per the scheme of the Act, it can be seen that sections 120 and 124 vest jurisdiction on Income Tax Authorities and on AO respectively and, therefore, both sections i.e. sections 120 and 124 of the Act must be read in conjunction and harmoniously to decide the territorial jurisdiction which is prescribed by the direction or orders by the CBDT under sub-sec. (1) or (2) of sec. 120 of the Act. 8. Having taken note of the provisions of Section 120 & 124, we however find that Section....
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....of the Act, means all proceedings under the Act in respect of any year which may be pending on the date of such order or direction or it may have been completed on or before such date, and includes also all proceedings under the Income-tax Act which may be commenced after the date of such order or direction of any year. This definition of the expression 'case' implies that, once a transfer is made by the authority specified in sub-section (1) or (2) of section 127 of the Act who had the jurisdiction over an AO who in turn had jurisdiction over the assessee/person/entity, by virtue of direction/order issued under section 120(1) or (2) of the Act, then the entire assessment of the person i.e. pre-transfer and post-transfer as on date of transfer will stand transferred and thereafter for all purposes of the Income Tax Act, the AO of the assessee to whom the case is transferred, will be the Assessing Officer in respect of the said the assessee for pre and post proceedings from the date of transfer. In other words, once transfer order of a case of an assessee is issued u/s. 127 of the Act the legal effect will be that (i) all the proceedings of the assessee under the Act in resp....
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....rd-5(3), the AO i.e., ITO Ward-5(3) continued to have jurisdiction as per section 124 read with section 120(1) or (2) of the Act and, therefore, ITO, Ward-5(3) enjoyed jurisdiction to pass the reassessment order dated 25.03.2014 and his action was saved by section 124(5) of the Act. We are, however, unable to accept such contention for the following reasons. For adjudicating this contention, let us first examine the relevant provisions of sub-section (5) of sec. 124 of the Act and Explanation under section 127 of the Act, which read as follows: Sec. 124(5):-Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120. Sec. 127;- Explanation: In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedi....
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.... with Section 127 of the Act. In our opinion in the facts of this case, once the order u/s. 127(2) was passed on 28.08.2012 by the Ld. CIT-II, Kolkata unconditionally transferring the jurisdiction over the appellant's case to the charge of DCIT/ACIT, Central Circle-XVII, Kolkata; then by virtue of such an order, the jurisdiction enjoyed by ITO, Ward-5(3), Kolkata in terms of Section 124 read with Section 120(1) & (2) stood abrogated. Accordingly after 28.08.2012, the ITO, Ward-5(3), Kolkata could not have exercised any powers conferred on the AO by the Act for the purposes of any proceedings against the appellant. And in this case, we have noted that ITO, Ward-5(3) got back his power only on re-transfer of assessee's case to him when the order u/s. 127 was passed later on 31.05.2016, so the question of ITO, Ward-5(3), Kolkata giving effect to Pr. CIT-II order dated 28.03.2013 does not rise at all on 25.03.2014. Thus we find that in assessee's case the ITO, Ward-5(3) did not enjoy jurisdiction to assess the income of assessee as an AO between 28 December 2012 and 31 May 2016. 12. As noted earlier, the ITO, Ward-5(3), Kolkata ceased to be AO of assessee after the transfe....
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....ity u/s. 127 of the Act as far back as in the year 2012. In the circumstances therefore, as discussed above, once transfer of the case of the assessee is ordered u/s. 127 of the Act, the AO ITO, Ward-5(3), Kolkata who was vested with the jurisdiction by virtue of the direction or order issued under sub-section (1) or (2) of sec. 120 and section 124 of the Act stood divested of the same. As held by the Hon'ble jurisdictional High Court in M/s. Ramshila Enterprises Pvt. Ltd. (infra), since the jurisdiction was divested of the earlier AO by virtue of transfer order u/s. 127 of the Act, the earlier AO, which in this case is AO i.e. ITO, Ward-5(3), Kolkata ceased to be Assessing Officer after the date of transfer i.e. 28.08.2012 and therefore he (i.e. ITO, Ward-5(3), Kolkata) ought not to have issued statutory notices upon the assessee unless he had been re-empowered or vested by a fresh transfer order u/s. 127 of the Act (i.e. from DCIT, CC-XVII, Kolkata to ITO, Ward-5(3), Kolkata), which is not the case of the Revenue and though it did later happen in this case (Re-transfer as on 31.05.2016). In the circumstances therefore, the ITO, Ward-5(3), Kolkata could not have usurped the ju....