TaxTMI 
TaxTMI 
2024 (7) TMI 1209
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.... of appeal which reads as under: "Additional Gr. No. 1 "1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the addition of Rs. 40,08,521 made u/s. 68 on account of unexplained cash credit, when the assessee was not under obligation to maintain books of account u/s. 44AA which is sine-qua-non for making addition u/s. 68 which presupposes a credit of the aforesaid amount in the 'books of account of the assessee' maintained for the previous year; hence, addition of Rs. 40,08,521 is liable to be deleted. Additional Gr. No. 2 "2. On the facts and circumstances of the case and in law, ld. AO has erred in making addition of Rs. 40,08,521 on the count of unexplained cash credits u/s. 68, when it was not the issue of 'limited scrutiny' assessment under CASS; it is in violation of CBDT Instruction No. 7/2014; No. 20/2015; No. 5 of 2016; ld. AO cannot go beyond the issues mentioned in the reasons for selection of 'limited scrutiny' assessment under CASS; ld. AO is barred from looking into unconnected/independent issue(s) other than those mentioned in the reasons for 'limited scrutiny' selection; in a....
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....he same. My aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 3. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') at the threshold of hearing of the appeal has submitted that he is not pressing the additional ground of appeal No. 2. Considering the submission of the Ld. AR, additional Ground of Appeal No. 2 is dismissed as not pressed. 4. Succinctly stated, the assessee had e-filed her return of income for A.Y. 2015-16 on 07.03.2016 declaring an income of Rs. 2,08,830/-. The return of income filed by the assessee was processed as such u/s. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 5. During the course of the assessment proceedings, it was observed by the A.O.. that the assessee along with her husband had invested an amount of Rs. ....
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....had framed the assessment in the present case, therefore, the impugned assessment was liable to be quashed. Based on the aforesaid facts, the Ld. AR submitted that as the A.O., i.e. ITO-4(2), Raipur had grossly erred in law and facts of the case in assuming jurisdiction and had framed the assessment in absence of any order of transfer of the case from ITO-2(1), Raipur, therefore, the assessment order so passed by him cannot be sustained and was liable to be struck down on the said count itself. The Ld. AR in support of his aforesaid contention had relied on the following judicial pronouncements: (i) Kusum Goyal Vs. ITO (2010) 329 ITR 283 (Cal. HC) (ii) Roop Das Vs. ITO, ITA Nos. 310 & 311/RPR/2023 dated 09.04.2024. (iii) D Craft Entertainment P Ltd. Vs. ITO, ITA No. 1461/Kol/2017 dated 12.10.2018 10. Per contra, the Ld. Departmental Representative (for short 'DR') had relied on the orders of the lower authorities. 11. As the validity of the jurisdiction assumed by the A.O., ITO-4(2), Raipur who had framed the assessment had been challenged by the assessee, therefore, the Ld. DR sought some time to obtain a report on the aforesaid issue from the A.O.. 12. The Ld. DR....
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.... Commissioner or Commissioner,- (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief 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-s....
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....t 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 sub-section (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 assessee. Although sub-section (3) of Section 127 of the Act dispenses with the requirement of affording a reasonable opportunity of being beard to the assessee in a case where the transfer of the case 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, but it does not dispenses with the statutory requirement of recording of the reasons for doing so by the concerned authority. As such, in the case before me, where jurisdiction over the case of the assessee had been transferred to ITO-4(2), Raipur from ITO-2(1), Raipur, i.e. within the same city, though no requirement o....
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....ioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief 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." (Emphasis supplied) From a reading of the language of section 127(3) it is evident that when a file is transferred from one assessing officer to another whose offices are located in the same city, locality or place, though other statutory formalities are required to be complied with, the opportunity of hearing as postulated in section 127 (1) and (2) in case of intercity transfer, is not required. Now keeping the position of law in mind let the letter/notice dated 21st October, 2009 issued by the respon....
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....a (supra) where it has been held that in case of transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G.A.No. 81 of 2010 is also allowed. No order as to costs" (emphasis supplied by me) 17. Also, a similar issue had been dealt with by the ITAT, Raipur in the case of Roop Das Vs. ITO, Ward-2(1), Bhilai, ITA Nos. 310 & 311/RPR/2023 dated 09.04.2024 wherein, the Tri....
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....lai from ITO-1(4), Bhilai, i.e. within the same city, though no requirement of affording a reasonable opportunity of being heard to the assessee was required, but the pre-condition contemplated under sub section (1) of Section 127 of the Act, i.e., recording of reasons for doing so by the appropriate authority could not have been done away with. 12. My aforesaid view that the requirement of recording reasons u/s. 127(1) of the Act for transferring of a case from one A.O. to another is mandatorily required, is supported by the judgment of the Hon'ble Supreme Court in the case of Ajanta Industries Vs. Central Board of Direct Tax (1976) 102 ITR 281 (SC). It was, inter alia, observed by the Hon'ble Apex Court that requirement of recording reasons u/s. 127(1) of the Act is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the files although not communicated to the assessee. It was further observed that recording of reasons and disclosure thereof is not a mere idle formality. The Hon'ble Apex Court observed that now when law requires reasons to be recorded in a particular order affecting prejudicially the int....
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....n agreement, then the Director General or Chief 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 Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief 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." (Emphasis supplied) From a reading of the language of section 127(3) it is evident that when a file is transferred from one assess....
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....ment of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla (supra) and in S.L.Singhania (supra) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgement in Subhas Chandra Bhaniramka (supra) where it has been held that in case of transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings u....
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....ITO, Ward-34(2), Kolkata functioned has not issued any order of transfer of the jurisdiction as contemplated u/s. 127 of the Act to ITO, Wd-6(1), Kolkata. The Hon'ble jurisdictional High Court in Kusum Goyal (2010) 329 ITR 283 (Cal) has clearly spelt out that the ITO on its own cannot transfer the jurisdiction without order from the competent authority. In this case, we note that there is no mention in the assessment order of any transfer order passed by the concerned CIT-12, therefore, the contention of the ITO, Ward-6(1), Kolkata that the jurisdiction has been transferred from ITO, Wd-34(2) to ITO, Wd-6(1), Kolkata is also without authority and vitiates the transfer of jurisdiction as claimed by the AO in the assessment order and thus this fact also vitiates the assessment order. In the light of the above as well as the contention of the assessee that no opportunity of hearing was rendered to it by ITO, Wd6(1), Kolkata before framing assessment u/s. 144 of the Act which omission on the part of AO also is against principles of natural justice and the impugned assessment u/s 144 of the Act is fragile for non-adherence of principles of natural justice on the part of AO. Therefor....