TaxTMI 
TaxTMI 
2024 (7) TMI 1180
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....ng jurisdiction. (b) The Ld. CIT(A) ignored the fact that the bank statement shows that the assessee has been receiving funds from Priority Exports Pvt. Ltd., a tainted / shell company as discussed in detail in assessment order. (c) The ld. CIT(A) erred in upholding genuineness of the loan transactions ignoring the fact that though the company Priority Exports Pvt. Ltd., has legal existence, but having no creditworthiness having meagre income of Rs. 265/- and existing as a pass through entity and is therefore, a shell entity as expounded by the Hon'ble Mumbai Tribunal in the case of DCIT Vs. Leena Power Tech Engineers Pvt. Ltd., [2021] 130 Taxmann.com 341 [Mumbai. Tri.] :- (i) A shell entity, by itself, is not an illegal entity, but it is their act of abetment of, and being part of, financial maneuvering to legitimize illicit monies and evade taxes, that takes it actions beyond what is legally permissible. (ii) These entities have every semblance of a genuine business- its legal ownership by persons in existence, statutory documentation as necessary for a legitimate business and a documentation trail as a legitimate transaction would normally....
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....y reference. g) That the objections of the Assessee to re-opening was disposed off by the learned A.O. vide his Order dated 07/11/2019. The copy of the approval / sanction u/s. 151 of the Act from the Principal Commissioner of Income Tax-3, was also annexed alongwith the disposal of the objection of the Assessee. The Rejection order alongwith Sanction u/s. 151 of the Act is enclosed herewith for your ready reference. h) That various Notices u/s. 142(1) of the Act to the Assessee and Notices u/s. 133(6) to Priority Exports Private Limited, the lender was issued, In response to the notice u/s. 142(1), to the Assessee and notice to Priority Exports Private Limited u/s. 133(6) various documentary evidences were filed with the learned A.O. like Income Tax Return Acknowledgment, confirmation of unsecured loans, audited financial statement, copy of bank statement. i) That the learned A.O. disregarded the documentary evidence under the pretext that the entities from which the lender i.e. Priority Exports Private Limited have received funds have not responded to the notices of the learned A.O. u/s. 133(6) and also because the nomenclature used in the books of acco....
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....the first time the name of Priority Exports Private Limited cropped up during the re-assessment proceedings after issue of notice u/s. 148 and the disposal of objection of the Assessee. For the first time the name of Priority Exports Private Limited was mentioned in the Notice u/s. 142(1) dated 29.10.2019. Hence, the very reason or re-opening are based on factually incorrect fact which is impermissible in eyes of law, as it does not confer jurisdiction to the learned A.O. to re-open the completed assessment. 4.1.4 The Assess places its reliance on the following citations of the jurisdictional Hon'ble Bombay High Court for the said proposition:- i] Ankita A. Choksey vs. ITO & Ors 2019 TaxPub (DT) 0723 (Bom-HC) : (2019) 411 ITR 0207 ii] Arvind Sahdeo Gupta vs. ITO 2023 TaxPub(DT) 4810 (Bom-HC) iii] Tata Sons Ltd vs. Dy. CIT & ors. 2022 TaxPUB (DT) 1486 (Bom-HC) : (2022) 286 TAXMAN 0587 4.5 The Reasons for Re-opening are vague and based on guesswork as no nexus or live link with the Assessee is established alongwith the nature of transaction with the Assessee: 4.5.1 That the reasons are also completely silent regarding earlier regu....
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....9 ITR 0541 b) Hindustan Lever Ltd. v. R.B. Wadkar(No. 1) 2004 TaxPub(DT) 1424 (Bom-HC): (2004) 268 ITR 0332 4.8 Change of Opinion: 4.8.1 The earlier assessment was done u/s. 143(3) of the Act. Since 4 years had elapsed the learned A.O had to mention as to which fact was not disclosed truly and fully by the Assessee. There is no such mention as to which facts have not been disclosed truly and fully by the Assessee in the Reasons of Re-opening. 4.8.2 During the original assessment queries were raised regarding unsecured loans and after receiving the document evidence of the Assessee the learned A.O. was satisfied regarding the nature, genuineness, creditworthiness and identity. Hence, no addition was made. 4.8.3 In this regards, the Assessee wishes to place its reliance on the following citations; a) Hindustan Lever Ltd. v. R.B. Wadkar (No. 1) 2004 TaxPub(DT) 1424 (Bom-HC): (2004) 268 ITR 0332. b) Punia Capital (P) Ltd. v. Asstt. CIT 2023 TaxPub(DT) 1203 (Bom-HC): (2023) 292 ΤΑΧΜΑΝ 0380 c) Firstsource Solutions Ltd. v. Dy. CIT & Ors. 2018 TaxPub (DT) 8132 (Bom-HC) d) Peninsula L....
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.... i] CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 0236 ii] Ranbaxy Laboratories Ltd. V. Commissioner of Income Tax; (2011) 336 ITR 0136 iii) Juliet Industries Ltd. v. Income Tax Officer 2018 TaxPub(DT) 6846 (Mum-Trib): (2018) 067 ITR (Trib) 0371 iv) CIT v. Adhunik Niryat Ispat Ltd. 2012 TaxPub(DT) 0591 (Del-HC): (2011) 063 DTR 0212 4.11 Lack of Pecuniary Jurisdiction of the learned A.O. to assess the income of the Assessee: 4.11.1 It is humbly submitted that as per the CBDT INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1- 2011 the pecuniary jurisdiction to assess the income of the Assessee lied with the Asst. Commissioner of Income Tax / Dy. Commissioner of Income Tax and not with the learned A.O./ Income Tax Officer. Therefore the assessment order passed by the Income Tax Officer, Ward 4(1), Nagpur is void-ab-initio and is without pecuniary jurisdiction. 4.11.2 The Department in their grounds of Appeal have contended that in the case of Ashok Devichand Jain vs. Union of India & Ors, reported in (2023) 452 ITR 0043, the authority issuing notice had no jurisdiction in terms of CBDT INSTRUCTION NO.1/2011 [F.NO.1....
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....nough capital and reserves of its own to lend money to the Assessee. 4.13.4 That the learned A.O. sent notice u/s. 133(6) of the Act asking the company Priority Exports Private Limited to furnish various details including the factum of lending money to the Assessee which was duly responded by the Company Priority Exports Private Limited. The fact is also duly mentioned in the assessment order. Hence, the Assessee has duly discharged the onus of proving identity, genuineness of transaction and creditworthiness of the lender. 4.13.5 That the learned A.O. only on the basis of sources of Priority Exports Private Limited resorted to the addition u/s. 68. It is humbly submitted that as per the mandate of Jurisdictional High Court, the sources of a source cannot be questioned in the Assessment Year 2012-13. The amendment to Sec 68 of the Act is prospective in nature and is applicable from Assessment Year 2023-24. 4.13.6 The Assessee places its reliance on the following citations; i) CIT v. Lovely Exports (P) Ltd. 2009 TaxPub (DT) 0261 (SC): (2009) 319 ITR 0005; ii) CIT v. Gagandeep Infrastructure (P) Ltd. 2017 TaxPub(DT) 1238 (Bom-HC): (2017) 3....
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....eassessment notice in Delhi, such reassessment is held to be without jurisdiction Assessment having been made by assessing officer in Kolkata, in the absence of any order under section 127 transferring the case, reassessment notice issued by Assessing Officer at Delhi and all subsequent proceedings based on said notice are without jurisdiction. Smriti Kedia (Smt.) v. UOI [2011] 339 ITR 37 (Cal.)(HC) 4.3 Similarly in the case of ITO v. Rajender Prasad Gupta (2010) 48 DTR 489/135 TTJ 9 (Jodhpur)(Trib.) Assessee was assessed at Suratgarh, Notice issued by ITO at Delhi, matter later transferred to ITO Suratgraph, however Assessing officer did not issued fresh notice or recorded reasons. Tribunal held that the ITO did not have jurisdiction notice invalid. 4.4 The assessment framed by assessing officer who had not issued notice under section 148 of the Act is void-ab-initio - Notice was issued by the assessing officer who had no jurisdiction- Reassessment is held to be bad in law. The ITO-1 (5), Ludhiana reopened the assessment and issued notice dt. 30.03.2017 u/s 148 of the Act on the basis of reasons so recorded. In response to such notice, assessee filed ret....
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.... Sir, Sub.: Transfer of scrutiny case(s) records-reg. Please refer to the above. The following case(s) are being transferred to your good office as the monetary jurisdiction over the case(s) lies with your good office. The detail of the case(s) which is/are being transferred is as under. Sr, No. PAN Name AY Returned Income Jurisdiction 1 AAACU8325R Uttamcand Wadhwani Cold Storage Pvt. Ltd 2012-13 7,47,100/- ITO Wd 4(4) Ngp 2 AAACM8181B M/S Maharashtra Vehicles Pvt. Ltd 2012-13 19,87,236/- ITO Wd 4(2) Ngp 3 ABPPA7557G Mohd. Zubair Asharafi 2012-13 -- ITO Wd 4(1) Ngp 4 ADLPA7857K Nitin Murlidhar Agrawal 2017-18 -- ITO Wd 4(1) Ngp It is hereby stated that the PAN transfer request for confirmation may kindly be initiated through ITBA portal. The cases Sl. No. 3 & 4 are already being scrutinized for the A. Y. 2017-18 in your office. Therefore these cases are also being transferred to your good office. Yours faithfully, Encl.: Case record(s) (Arvind R. Renge) Asstt. Commissioner of Income Tax, Circle-4, Nagpur Copy submitted to: ....
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....1 11. Copy of instructions regarding income limits for assigning cases to Dy./Asstt. CIT/ITOs 22-23 12. Copy of jurisdiction distribution order u/s 120 of the I.T. Act, 1961 24-29 9. The gist of submission is reproduced below; GIST OF SUBMISSION 1. In this case assessee has filed his return of income u/s 139(1) on 30.09.2012 wherein income declared Rs. 26,43,280/- and agriculture income Rs. 1,94,759/-. The case was selected for scrutiny under CASS. The ACIT, Circle 4, Nagpur has passed an order u/s 143(3) on 31.12.2014 as assessed income of Rs. 26,43,280/- determined. Therefore, on the basis of returned income and assessed income of the assessee jurisdiction was pertaining to the ACIT, Circle - 4, Nagpur. 2. Further, it is also noticed that the assessee has filed his return of income for AY 2017-18 u/s 139(1) on 28.09.2017 wherein income declared of Rs. 4,44,070/- and agriculture income of Rs. 1,28,750/-. The case was selected for complete scrutiny under CASS. Further, the order u/s 143(3) was passed on 16.12.2019 wherein income was assessed at Rs. 4,44,070/-. On the basis of returned income, the jurisdiction on the case was pertaining to t....
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....ot be two Assessing Officers for the same assessee at the same time. 7. The Ld. CIT(A) quashed the assessment order on the basis of decision of jurisdictional High Court in the case of Ashok Devichand Jain in W.P. No. 3486 of 2019 dated 8th March, 2022. The decision of CIT(A) is not acceptable because the case is clearly distinguishable. In the case relied upon the notice u/s 148 was issued by the ITO. In the present case the ACIT, Circle - 4, Nagpur has issued the notice and properly transferred the case on the basis of income criteria to the ITO, Ward 4(1), Nagpur. 10. It is very clear that the jurisdiction as on the date of seeking approval was not with the ACIT because returns of non-corporate assessee upto Rs. 20,00,000/- was with Income Tax Officer. The total income for assessment year 2017-18 as per the income tax return acknowledgement was Rs. 4,40,070/-. Therefore, the proper jurisdiction was with the ITO Ward 4(1), Nagpur. Thus, it is clear that the notice was issued by a non-jurisdictional officer and the assessment being conducted pursuant thereto cannot be held to be valid. Subsequent transfer of assessment records by ACIT Circle, Nagpur to ITO Ward 4(1) Na....
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....gh 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 (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 c....
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....come 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 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 w....
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....her officer in absence of the aforesaid order u/s. 127 of the Act. For the sake of clarity, the observations of the Tribunal are culled out as under: "11. Apropos the claim raised by the A.O, i.e. ITO-2(1), Bhilai in her letter dated 14.03.2024 (supra) that as the jurisdiction over the assessee's case remained within the same range, therefore, there was no requirement for the Pr. CIT to pass any order of transfer u/s. 127 of the Act, the same is found to be both factually and principally wrong. The case of the assessee had been transferred from ITO-1(4), Bhilai to ITO-2(1), Bhilai, i.e from Range 1 to Range 2. Be that as it may, as per the mandate of Section 127 of the Act transfer of any case from one A.O to any other A.O would mandatorily require recording of reasons for doing so on the part of the concerned authority, viz. Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is further provided in subsection (1) of Section 127 of the Act that wherever it is possible to do so the appropriate authority shall afford a reasonable opportunity of being heard in the matter to the ....
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....tion under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee." (emphasis supplied by me) 13. Also, my 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 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 relevant 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 opportun....
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....mined. In order to appreciate the issue it is necessary to refer to the relevant portion of the impugned intimation issued by the respondent no.2 which is as under: "Since your income has exceeded minimum threshold limit of Rs. 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, locali....
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.... and in fact, the case of the assessee had been transferred simplicitor on the basis of a letter dated 11.04.2018 addressed by ITO- 1(4), Bhilai to ITO-2(1), Bhilai; therefore, it is a clear case of invalid assumption of jurisdiction on the part of the ITO- 2(1), Bhilai who in absence of any valid assumption of jurisdiction had framed the assessment vide his order u/s. 147 r.w.s. 144 of the Act, dated 30.11.2018. I, thus, in terms of my aforesaid observations quash the assessment framed by the ITO-2(1), Bhilai u/s. 147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction on his part. 15. As I have quashed the assessment framed by the A.O u/s. 147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and dealing with the grounds of appeal raised by the assessee, based on which, the additions made by the A.O has been assailed before me, which, thus, are left open." 18. Also, I find that ITAT, Kolkata in the case of D. Craft Entertainment P. Ltd. Vs. ITO, ITA No.1461/Kol/2017 dated 12.10.2018 after relying on the judgment of the Hon'ble High Court of Calcutta in t....