TaxTMI 
TaxTMI 
2025 (3) TMI 287
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was justified in deleting the addition of Rs. 2,25,00,000/- by ignoring the facts as brought on record by the AO that the assessee company failed to prove the identity, genuineness and creditworthiness of the investor company as per the parameters of the legal provisions u/s 68 of the Act?" 3. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition, thereby not considering and not distinguishing the findings of the AO which is well supported by the ratio of the judgment of Hon'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 Fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....escribed u/s 68 of the Act?" 9. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT (A) was justified by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the identity, creditworthiness of the entities investing in the share capital and share premiums of the assessee company as genuine, a finding which is factually incorrect, thereby rendering the decision, which is perverse?" 10 "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified in ignoring the ratio of Hon'ble 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 decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gyaarna Gems & Jewellery Pvt. Ltd. (earlier known as M/s. Top Flow Property Pvt. Ltd.) had filed its return of income for A.Y.2012-13 on 25.09.2012, declaring an income of Rs.660/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act. 4. The A.O during the course of the assessment proceedings observed that the assessee company had received share application money of Rs.2.25 crore from five share applicants, as under: S. No. Name Address Amount 1. Jatadhari Marketing Pvt. Ltd. 3rd Floor, 55, Ezra Street, Kolkata (WB)- 700 001 5000000 2. Needful Vioncom Pvt. Ltd. 3, Marshi Devendra 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 be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a/w. their complete addresses, certificates of incorporation, copies of their returns of income, computation of income, annual returns and, thus, discharged the primary onus that was cast upon it as regards proving its claim of having received genuine share application money from the said investor companies, therefore, the A.O without dislodging the same by placing on record any material proving to the contrary was not justified in treating the entire amount of share application money as unexplained cash credit u/s. 68 of the Act. As the assessee by pressing into service the financial statements of the share applicants/investor companies, had claimed before the CIT(Appeals) that the said respective 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ै। क्योकि निर्धारण कार्यवाही के दौरान करदाता से ही शेयर होल्डरों का पता पूछा गया था परन्तु उनके द्वारा जो पता दिया गया उसी 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 evidence....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cannot be ground for treating its capital as bogus. Regarding the other points raised, the issues are discussed as under. In short there is no evidence that the companies are providing accommodation entries. It has been held in various decisions that small ness of income is not a criteria to treat an investor not- creditworthiness. His state of affairs has to be seen from funds available as per the balance sheet. Ld AO has simply brushed aside the reply of the assessee informing about the changed address and name of shareholders. He did not examine the documents submitted to establish the genuineness of share capital. On perusal of the documents submitted the audited balance sheet of M/s. Jatadhari Marketing Pvt Ltd (newly known as M/s. Wondrous Marketing 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 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in the assessee-Co. In the case of M/s Ecstatic Traders Pvt Lid scrutiny assessment u/s143(3) for the AY12-13 had been completed on 14-3- 15 by the ITO, ward-5(3), Kolkata and addition of Rs.5.36 crores had been made by the AO on account of share application money and substantial demand of Rs.2.43 crores has also been raised in the case of alleged share applicant. In case of M/s. Overflow Merchandise Pvt Ltd (newly known as M/s Ecstatic Merchandise Pvt Ltd) as on 31-3-12 the share applicant had sufficient creditworthiness to invest the alleged money of Rs.50 lakhs in the assessee-Co. In the case of this company scrutiny assessment u/s143(3) for the AY12-13 had been completed vide assessment order dated 4-3-15 in which addition of Rs.7.16 crores had been made by the AO. In the case 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtunity to the assessee. With these observations gr.nos.2 and 2.1 in the appeal of the Revenue are disposed of. Consequently, gr.no.3 in the CO becomes infructuous." The HC remanded the matter to the AO to objectively examine the whole issue in the light of para 18.2 of the tribunal's order as above. All the shareholder companies are assessed to IT as per the assessment orders mentioned above. Also the acknowledgments of filing of their IT returns by those companies were submitted before the Id AO. As per the ITR, computation of income for the AY12-13 of all the share applicants, audited financial statements for the AY12-13 of all the share applicants, copy of bank statements of the assessee-co, which shows the receipt of share application money and ledger accounts of share capital from the books of the assessee-co the 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her, if there was statement of a person or any other material indicating tax evasion by the appellant, or persons in control of its management, the material relied upon should have been made available to the appellant in its entirety. From the records, it appears that this was not done. It has been held by the Hon'ble Apex Court that taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the 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 ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the shares of the assessee-Co. The assessee has also furnished the copy of the assessment order passed u/s143(3) in the case of 4 companies, viz., Beetal Plantation P Ltd, Integrator Consultants P Ltd, Pragati Foods P Ltd and Unit Commercial P Ltd. The assessee has produced certificate of inCorpn issued by the ROC in the case of all companies. Copy of bank account of all the companies is produced which shows the amount debited for acquiring the shares in the assessee-Co. On the basis of the above evidence, we have no hesitation to hold that the identity of all the 6 shareholder companies is duly established, all the companies are registered with the ROC, they are assessed to IT and they have also responded in response to the summons issued by the AO. Therefore, identity of these companies cannot be disputed. So far as creditworthiness is concerned, we find that the share capital as well as share premium/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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to their share capital. The Revenue has not been able to show why the decision of Lovely Exports (P) Ltd (2009) (SC) does not apply to the facts and circumstances of the case." Further there has to be material on record to support that the 'on- money' collected in cash was routed back into the SVP Group companies in the form of share application and later reinvested in purchase of further lands for new projects. Also there was no material to conclude that some of the investors were 'paper' companies. They had been regularly assessed to tax and had produced their books during made the investment In Five Vision Promoters (P) Ltd (2016) (Del HC), held as under: The Revenue had been unable to deny the factual position that only 11 of the 20 companies in Table I had actually been searched. The material on record showed that directors of 18 companies of the 20 companies were examined by the AO in the course of the 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 plac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 of the shareholders stands established and it is shown that they had in fact invested money in the purchase of the Assessee's shares, 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. 29. A Full Bench of this Court in Sophia Finance Ltd held in the context of sec 68 that: (i) The Assessee has to prima facie prove "(1) the identity of the creditor/ subscriber, (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....High Court in the case of ACIT Vs Venkateshwar Ispat (P) Ltd reported in 319 ITR 393 have dealt similar instances. As per the decision in M/s Lovely Exports (supra) if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company. The honourable jurisdictional High Court Chhattisgarh has in the case of ACIT vs Venkateshwar Ispat Pvt Ltd 319 ITR 393 Chhattisgarh 2010, 41 DTR 350 justified the deletion of addition by ITAT. Briefly stated, the facts of the case are that the assessee-company filed its return for the assessment year 1989-90.h The Assessing Officer during assessment proceedings, not satisfied with the explanation of the assessee, added Rs.13,36,000 towards holdings of the shareholders, whose confirmation could not be adduced. Before the Commissioner of Income-tax (Appeals), the assessee sought permission for adducing additional evidence under rule 46A of the Income-tax Rules, 1962, which was accepted and appeal of the assessee w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of the jurisdictional High Court has been rendered on identical facts. Hence, it is impermissible to deviate from the ratio laid down therein and against the law of judicial precedents. Recently vide order dated 18.1.2018 the jurisdiction ITAT Raipur has on the basis of similar facts in the case of ITA Nos. 225 to 231/RPR/2014 DCIT, Central Circle Raipur vs R.R. Energy Ltd has ruled in assessee's favour. Following all these decisions, in view of the above facts, the addition of share capital is hereby deleted. Therefore the addition of share capital as assessee's income is hereby deleted and grounds of the assessee are allowed. 3.0 Appeal is allowed." 8. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 9. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 10. As the assessee company has assailed the validity of the jurisdiction that was assumed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gs. The Ld. DR had relied on the judgment of the Hon'ble High Court of Punjab & Haryana in the case of Amarjit Singh Tut Vs. Union of India, (2012) 347 ITR 585 (Punjab). 13. As the assessee company had challenged the validity of the assessment framed by the A.O u/s. 143(3) of the Act, dated 31.03.2015 for the reason that no order of transfer u/s. 127 of the Act was passed by the Pr. CIT, Kolkata at the stage of transferring the case of the assessee to the A.O at Raipur, therefore, to verify the factual position the Ld. Sr. DR was directed to obtain a report from the A.O. 14. Before proceeding any further, we may herein observe that the appeal of the revenue was taken up for hearing way back as on 25.11.2022, which, thereafter, was adjourned for one or the other reason on 25 occasions. On a careful perusal of the file, we find that the Ld. DR on the majority of the dates had requested for some time so that the order of transfer u/s.127 of the Act could be obtained. However, we find that despite the fact that sufficient opportunities running over more than a year had been allowed to the department, but nothing has been placed on record which would prove that any order of transf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1), Kolkata vide his aforesaid email correspondence dated 18.09.2023, had stated that as was earlier informed the order u/s. 127 of the Act was not traceable as it was related to a very old case. Also, the ITO- 4(1), Kolkata had once again suggested the A.O to obtain a copy of the order from the CIT. V. Letter dated 25.08.2014 of the ITO-4(1), Kolkata addressed to CIT- II, Kolkata • The ITO-4(1), Kolkata referring to certain facts had requested the CIT-II, Kolkata that the PAN of the assessee, viz. Bhagyaarna Gems & Jewellery Pvt. Ltd. (earlier known as M/s. Top Flow Property Pvt. Ltd.) may be migrated to the ITO-1(1), Raipur. VI. Letter dated 09.11.2023 of the Addl. CIT (ITAT), Raipur to Pr. CIT- II, Kolkata • The aforesaid letter (through email acknowledgement) revealed that the Addl. CIT (ITAT) Raipur had requested the Pr. CIT-II, Kolkata for providing a copy of the order passed in the case of the assessee u/s.127 of the Act. VII. Letter dated 17.10.2023 of ITO-4(1), Raipur addressed to Jt. CIT, ITAT, Raipur • The ITO-4(1), Raipur in his aforesaid letter had stated that he had requested the ITO-4(1), Kolkata to provide a copy of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¢ Jt. CIT, Range-1, Raipur vide his letter dated 17.10.2023 addressed to the Jt. CIT (ITAT) Raipur, had, inter alia, stated that though ITO-4(1), Raipur had made all efforts to obtain a copy of order u/s.127 of the Act but the same could not be found till date. The Jt. CIT, Range-1, Raipur had requested that some further time may be sought from the Tribunal. IX. Letter dated 18.10.2023 of the Jt. CIT, ITAT, Raipur • • The Jt. CIT, ITAT, Raipur vide his letter dated 18.10.2023 addressed to the Jt. CIT, Range-1, Raipur had requested him to submit his report a/w. copy of order u/s. 127 of the Act on or before 03.11.2023. X. Letter of the Jt. CIT, Range-1, Raipur, dated 17.10.2023 • • The Jt. CIT, Range-1, Raipur vide his aforesaid letter dated 17.10.2023 addressed to the Jt. CIT, ITAT, Raipur, had once again stated that the copy of order of transfer u/s. 127 of the Act could not be traced and requested that some further time may be sought from the Tribunal. XI. Letter dated 06.11.2023 of the Jt. CIT, ITAT, Raipur. • • The Jt. CIT, ITAT, Raipur vide his letter dated 06.11.2023 had requested the Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ITO-4(1), Kolkata (ii) Mail 22.08.2023 ITO-4(1), Kolkata (iii) Mail 04.09.2023 ITO-4(1), Kolkata (iv) Mail 18.09.2023 ITO-4(1), Kolkata (v) Mail 17.10.2023 ITO-4(1), Kolkata (vi) F. No. ITO-4(1)/RPR/127/2023-24 19.10.2023 Pr.CIT, Kolkata-2 (vii) F. No. ITO-4(1)/RPR/127/2023-24 19.10.2023 Pr. CIT-1, Raipur (viii) Mail 13.01.2024 ITO-4(1), Kolkata XVII. Letter dated 12.04.2024 of the Jt.CIT, ITAT, Raipur • • The Jt. CIT, ITAT, Raipur vide his letter dated 12.04.2024 had placed on record of the Tribunal, a copy of the report of the ITO-4(1), Raipur, dated 10.04.2024. The ITO-4(1), Raipur in his report dated 10.04.2024 had, inter alia, stated that the order u/s 127 of the Act was not available with the department. At the same time, it was stated by him that as the assessee had not objected to the validity of the jurisdiction of the AO as required per the mandate of section 124(3)(a) of the Act, therefore, he was precluded from raising the same in the course of the present appellate proceedings. XVIII Letter dated 04.04.2024 of the ITO-4(1), Raipur addressed to the DCIT, I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(succeeded by ITO-4(1), Raipur) i.e. the A.O who had framed the assessment u/s.143(3) of the Act, dated 31.03.2015 is found available on record. 17. We, thus, based on the aforesaid facts shall proceed with and adjudicate the solitary issue for which our indulgence has been sought i.e. as to whether or not the assessment order passed by the ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 can be sustained in absence of any order of transfer u/s. 127 of the Act passed by the Pr. CIT, Kolkata? 18. Before proceeding any further for adjudicating the aforesaid issue, i.e. sustainability of the order passed by the ITO-4(1), Raipur u/s.143(3) of the Act, dated 31.03.2015 in absence of any order of transfer u/s.127 of the Act of the Pr. CIT, Kolkata, we deem it fit to briefly cull out the facts involved in the present case. 19. On a perusal of the record, it transpires that the assessee company viz. M/s. Top Flow Property Pvt. Ltd. (present name i.e. M/s. Bhagyaarna Gems & Jewellery Pvt. Ltd.) was incorporated vide certificate of incorporation dated 10.01.2012 issued by the Registrar of Companies, West Bengal, Page 103 of APB. The assessee company had filed its return of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sent appeal hinges around two issues, viz. (i) whether or not the CIT, Kolkata-2, Kolkata had validly transferred the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur?; and (ii) whether the transfer of the case of the assessee company to an A.O not sub-ordinate to the same CIT who originally exercised jurisdiction over it could have been carried out without passing an order after giving the assessee company a reasonable opportunity of being heard in the matter and recording his reasons for doing so as required per the mandate of Section 127 of the Act? 24. Apropos the first issue, we are of a firm conviction that in terms of Section 120 of the Act, pursuant to a CBDT direction, it though might have been possible for the CIT, Kolkata-2, Kolkata to have authorized vesting the exercise of powers and performance of functions of one Income- tax authority subordinate to him to another Income-tax authority subordinate to him, but are afraid that there was no power vested with him u/s. 120 of the Act to have transferred the jurisdiction to an A.O who was not sub-ordinate to him. We, say so, based on the clearly worded sub- section (2) of Section 120 of the Act, wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eneral or Principal Chief Commissioner or Chief Commissioner or Principal 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 Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal 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 C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd after recording his reasons for doing so, pass the order; and (ii) where the Directors General or Chief Commissioners or Commissioners are not in agreement, the order transferring the case may, similarly, be passed by the Board or any Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. 27. Accordingly, as in the case of the present assessee company before us, the case was to be transferred from ITO-4(1), Kolkata to ITO-1(1), Raipur, i.e. the officers were not sub-ordinate to the same CIT, therefore, as per the clearly worded sub-section (2) of Section 127 of the Act, the CIT, Kolkata-2, Kolkata i.e. from whose jurisdiction the case was to be transferred, after giving the assessee company a reasonable opportunity of being heard in the matter and after recording his reasons for doing so was obligated to pass an order. We, thus, in terms of our aforesaid observations are of a firm conviction that the obligation of passing an order of transfer as per sub-section (2) of Section 127 of the Act was required to be statutorily complied with and could not have been dispensed with for valid assumptio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 inter city transfer, is not required. Now keeping the position of law in mind let the letter/notice dated 21st October, 2009 issued by the respondent no.2 be examined. In order to appreciate the issue it is necessary to refer to the relevant portion of the impugned intimation issued....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 us) 29. Also, we find that the Hon'ble High Court of Orissa in the case of Vedanta Resources Ltd. Vs. Assistant Commissioner of Income Tax, International Taxation, Bhubaneshwar (supra), had observed, that as per Section 127(2) of the Act, no such transfer of jurisdiction to an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Section 127(2)(a) of the Act was nothing but a machinery provision, therefore, the CIT had the power of transfer even without assigning any reason and, thus, had approved the transfer of the case. For the sake of clarity, the observations of the Hon'ble Apex Court are culled out as under: "4. As the income-tax/assessment file of the appellant assessee has been transferred from one AO in Tamil Nadu to another AO in Kerala and the two AOs are not subordinate to the same Director General or Chief CIT or CIT, under s.127(2)(a) of the Act an agreement between the Director General, Chief CIT or CIT, as the case may be, of the two jurisdictions is necessary. 5. The counter-affidavit filed on behalf of the Revenue does not disclose that there was any such agreement. In fact, it has been consistently and repeatedly stated in the said counter- affidavit that there is no disagreement between the two CITs. Absence of disagreement cannot tantamount to agreement as visualized under s. 127(2)(a) of the Act which contemplates a positive state of mind of the two jurisdictional CITs which is conspicuously absent. 6. In the above circumstances, we will hold that the transfe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....Y.1988-89. The assessee challenged the notice u/s. 148 of the Act, dated 13.03.1995 by filing a writ petition on the ground that the ITO, Jalandhar who had initiated reassessment proceedings had no jurisdiction over his case. 33. The Hon'ble High Court, observed that as the assessee was posted at Pune when he was in the service of the Army and had filed his return of income with the Income-tax Officer, Pune, therefore, if the assessment proceedings were to be reopened or if the income for the relevant assessment year was to be reassessed, it was the Income-tax Officer who assessed the same in the first instance alone who had the jurisdiction to proceed in the matter under Section 147 r.w.s.148 the Act, unless the case had been transferred by a competent authority to another Assessing Officer under Section 127 of the Act, in which case the latter would have jurisdiction to proceed against the assessee. The Hon'ble High Court after deliberating at length on the provisions of Section 127 of the Act had, inter alia, observed that in the absence of any transfer order no A.O other than the one who initiated the proceedings or completed the assessment shall have jurisdiction to contin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is clear that in the absence of any transfer order no Assessing Officer other than the one who initiated the proceedings or completed the assessment shall have jurisdiction to continue with the proceedings or even to reopen a concluded assessment. It is common ground between the parties that the file of the petitioner pertaining to the assessment year 1988-89 has not been transferred from the jurisdiction of the Assessing Officer, Pune, to the Income-tax Officer, Jalandhar (respondent No. 2 herein). As a matter of fact, no order of transfer has been passed by the competent authority under Section 127 of the Act for any assessment year and, therefore, the proceedings for reassessment initiated by respondent No. 2, are wholly without jurisdiction. We have, therefore, no hesitation in quashing the impugned notice dated March 13, 1995 (annexure P-4 with the writ petition), issued by respondent No. 2 under Section 148 of the Act." (emphasis supplied by us) 34. Also, we find that 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 Tribunal after relying on the judgment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 153C or after the completion of the assessment, whichever is earlier. 37. Having given a thoughtful consideration to the aforesaid claim of the ld. DR, we are unable to fathom that as to how the restriction contemplated in sub-section (3) of Section 124 of the Act, which is confined to questioning the jurisdiction of an Assessing Officer, can have any bearing qua the adjudication of the claim of the assessee regarding the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer passed u/s. 127 of the Act by the CIT-2, Kolkata. 38. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. On the other hand sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same pla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....silal B. Raisoni & Sons Vs. ACIT, Central Circle-1, Nashik & Anr, WP No.13391 of 2018 had, inter alia, observed that the time limit for raising objection to the jurisdiction of the Assessing Officer prescribed under sub section (3) of Section 124 has a relation to the Assessing Officer's territorial jurisdiction. It was further observed that the time limit prescribed would not apply to a case where the assessee contends that the action of the Assessing Officer is without authority of law and, therefore, wholly without jurisdiction. Also, the Hon'ble High Court of Bombay in the case of CIT-1, Nagpur Vs. Lalitkumar Bardia, (2017) 84 taxmann.com 213 (Bom.) had addressed the contention of the department that where the assessee had not objected to the jurisdiction within the time prescribed under sub-section (3) of Section 124 of the Act, then, having waived its said right, it was barred from raising the issue of jurisdiction after having participated in the assessment proceedings. The Hon'ble High Court, had observed, that the waiver can only be of one's right/privilege but non-exercise of the same will not bestow jurisdiction on a person who inherently lacks jurisdicti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....td. v. Navrang Studios, Sardar Hasan Siddiqui v. STAT, A.R. Antulay v. R.S. Nayak, Union of India v. Deoki Nandan Aggarwal, Karnal Improvement Trust v. Parkash Wanti, U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., State of Gujarat v. Rajesh Kumar Chimanlal Barot, Kesar Singh v. Sadhu, Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and CCE v. Flock (India) (P) Ltd.)" 41. We find that the Hon'ble Supreme Court in its recent order passed in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Elaborating further, the Hon'ble Apex Court had observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter referring to Section 124(3) of the Act, had observed, that if the assessee does not object to the territorial jurisdiction at the earliest, then, it is to be deemed to be waived. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "13....................... It is well settled that objection as to territorial jurisdiction has to be raised at the earliest and is otherwise deemed to have been waived. On the same analogy, notice under section 143(2) cannot be held to be void for want of jurisdiction. Reference may be made not only to Section 21 CPC but also to Section 124(3) of the Act. In the objection raised by the petitioner, Annexure P-5, only plea raised was that the notice was beyond limitation and there was no objection to the jurisdiction. On being asked, learned counsel for the petitioner was unable to show the question of territorial jurisdiction having been raised at any time prior to 2.12.2009 when such objection was put forward for the first time in reply of the petitioner, Annexure P-12 put forward to Chandigarh authority. By the time objection was raised for the first time, notice had already been issued by the Chand....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 142(1) of the Act, and thus, had not questioned the jurisdiction of the A.O, therefore, there was no justification for the High Court to have set-aside the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar. Elaborating on the scope of Section 124(3)(a) of the Act, the Hon'ble Apex Court observed that the same precluded the assessee from questioning the jurisdiction of the A.O if he does not do so within 30 days of receipt of notice u/s. 142(1) of the Act. 46. Before proceeding any further, it would be relevant to point out that a plain reading of sub-section (3) of Section 120 of the Act reveals that the "jurisdiction" vested with the A.O is classified into four categories, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. As in the present case before us, the assessee company has not assailed the vesting of jurisdiction with the ITO-4(1), Raipur on either of the aforesaid four categories, but has rather assailed the failure of the authorities to strictly comply with the mandate of law for transferring of its case i.e. from ITO-4(1), Kolkata to ITO-1(1), Raipur....