TaxTMI 
TaxTMI 
2022 (7) TMI 1591
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....g the course of proceeding, the authorities came to know that there were financial irregularities being committed by the assessee and, therefore, the activities of the assessee were neither genuine nor being carried out in accordance with its objects. Hence the Ld. PCIT(Central) issued notices u/s 12AA(3) read with section 13(1)(c) of the act on 13.11.2019 wherein the assessee was given opportunity of being heard on the issues. The assessee responded to the notices and made a detailed submission. However, the Ld. PCIT(Central) did not accept the submission of assessee and concluded that the activities of the assessee were neither genuine nor being carried out in accordance with its objects. With these findings the Ld. PCIT(Central) observed that the registration u/s 12AA being enjoyed by the assessee were liable to be cancelled. Accordingly, the Ld. PCIT(Central) passed an order on 23.12.2019 by which the registration u/s 12AA was cancelled with retrospective effect from 01.04.2011. Being aggrieved by this order of Ld. PCIT(Central), the assessee has filed this appeal challenging the cancellation of registration u/s 12AA. 4. The assessee has raised following grounds: "(....
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....in law, impugned order dated 23.12.2019 passed by Ld. Pr. CIT(Central), Bhopal and the show cause notice dated 13.11.2019 issued by the Ld. Pr. CIT(Central), Bhopal both are bad in law, invalid, illegal and without jurisdiction. The Registration so cancelled u/s 12AA of the Income Tax Act 1961 is contrary to the provisions of law and fact of the case and the order so passed be quashed. 6. At the start of hearing, the Ld. AR made a request to admit the Additional Ground. Ld. AR submitted that the Additional Ground is purely a legal ground and go to the root of the matter. Therefore, these Additional Ground may be admitted in view of decision of Hon'ble Supreme Court in National Thermal Power Co. Ltd. (1998) 229 ITR 383 (SC). We confronted the Ld. DR on admissibility of the Additional Ground, whereupon the Ld. DR did not express any objection. Therefore, the Additional Ground was admitted. 7. On a careful consideration of various Grounds raised in the original Appeal Memos and the Additional Ground, it was thought fit to first take-up the Additional Ground because the Additional Ground challenges the very illegality of the order passed by the Ld. PCIT(Central). 8. The gr....
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....ntries in column (4) of the said Schedule in accordance with the orders issued by the respective Commissioners of Income-tax; (c) authorises the Additional Commissioners of Income-tax or Joint Commissioners of Income-tax referred to in clause (b) above, to issue orders in writing for the exercise of the powers and performance of the functions by the Assessing Officers, who are subordinate to the said Additional Commissioners of Income-tax or Joint Commissioners of Income-tax in respect of cases or classes of cases, in respect of which such Additional Commissioners of Income-tax or Joint Commissioners of Income-tax are authorised by the Commissioners of Income-tax under clause (b) above. SCHEDULE (Relevant portion reproduced) S.NO. Designation Headquarters Territorial Area Cases or classes of cases (1) (2) (3) (4) (5) 3. Commissioner of Income-tax (Exemption), Bhopal Bhopal States of Madhya Pradesh and Chhattisgarh All cases of persons in the territorial area specified in column (4) claiming exemption under clauses (21), (22), (22A), (22B), (23), (23A), (23AAA), (23B), (23C), (23F), (23FA), (24), (46) and (47) o....
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....1, the relevant paras are reproduced below: "11. First of all, we would like to deal with legal objection raised by the assessee with regard to the jurisdiction of Pr.CIT(Central) in issuance of show cause notice and in passing of consequent order. In this respect, our attention was drawn towards Section 120(3) and CBDT Circular No. 52/2014 and 53/2014 both dated 22/10/2014. As per provisions of Section 120(3) of the Act, the criteria of Jurisdictions of Income Tax Authorities has been provided by the CBDT and as per provisions of Sec.120(3) of the Act, there are four criteria for deciding the jurisdiction and the same are reproduced below: (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised by it may have regard to any one or more of the following criteria, namely: -- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. Therefore, in furtherance of the said provisions, the CBDT vide notification Nos. 52/2014 and 53/2014 both dated 22/10/2014 had given powers to ld. CIT....
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....e impugned order on 22.03.2019 u/s 12AA(3) and 12AA(4) of the Act. 14. We found that the above facts and proceedings of power of transfer U/s 127 was only for a limited purpose of Co-Ordinate Assessment. Neither any search & Seizure action nor any notice u/s 153A or 153C of the Act or assessment u/s 153A or 153C of the Act in the case of assessee were initiated and there was only a survey u/s 133A of the Act in the case of assessee. The assessment has been completed u/s 148/143(3) of the act vide order dated 19.12.2018. As the assessment has been completed, the purpose of transfer u/s 127A has also been completed. Although No notices regarding the transfer of the cases u/s 127 have been sent to the assessee for the purpose of Co-ordinate assessment and the purpose of transfer was only Co-Ordinate Assessment as clearly mentioned in the transfer letter 19.08.2016. The assessment was completed u/s 148 r.w.s 143(3) 19.12.2018 and the proposal was sent to the Pr. CIT(C) which has been received on 31.12.2018 in the office of Pr. CIT(C) on 23.01.2019 after a lapse of more than one month. 15. Even otherwise, in the said notification, there is no mention where CIT(E) can t....
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....f 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-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. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation.--In section 120 and this section, the word "c....
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....area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions 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. ....
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.... Commissioner of Income Tax has been Authorized for whole of Rajasthan by the CBDT by its Notification dated 22.10.2014. In support of the above contention, the ld AR has relied on the decision in the case of Dilip Tanaji Kashid vs. M.l. Karmakar PR. CIT& ANR. (2018) 304 CTR 0436 (Bom) wherein it has been held: Transfer of jurisdiction--Power of competent officers-Centralization of case--Dissenting note--Assessee was issued notice enshrining proposal for transfer of his case from Kolhapur to Mumbai, so as to centralise cases relating to D.Y. Patil Group--Assessee objected that such notice did not referred to any agreement being reached by officers of equal rank at Mumbai and Kolhapur--These objections were however overruled and assessee's case was transferred--High Court quashed purported transfer u/s 127--Held, "Centralisation Committee" which took decision for transfer of jurisdiction, is not authority envisaged u/s 127(2)--Counter-affidavit filed on behalf of Revenue does not disclose that there was any agreement 36 ITA 688/JP/2019_ M/s Wholesale Cloth Merchant Association Vs Pr.CIT between authorities of equal rank, as a pre-condition for invoking powers u/s 127--"....
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.... Commissioners was condition precedent for passing order of transfer--Clause (b) of sub-section (2) of section 127 provides for consequences when there was no such agreement--When jurisdiction to pass order of transfer under clause (a) of sub-section (2) of Section 127 could be exercised only when there was such agreement, fact that such agreement exists ought to had been stated in show cause notice as same was jurisdictional fact--It was on basis of written document that finding was recorded that there was agreement between Jurisdictional Commissioners of Ranchi and Delhi--Even going by case made out by revenue, no such agreement was spelt out. 8. The Apex Court has categorically held that the absence of disagreement will not be tantamount to an agreement as visualized under section 127(2)(a) which contemplates positive state of mind of the two jurisdictional Principal Commissioners of Income Tax. The agreement contemplated by clause (a) of subsection (2) of section 12 7 may not be a drawn up agreement. What is necessary is that there has to be an agreement which will involve positive state of mind of the two jurisdictional Principal Commissioners. Both of them must conse....
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.... "The CBDT sent a notice to the appellants under s. 127 proposing to transfer their case files "for facility of investigation" from the respective at Nellore to the ITO, B Ward, Special Circle II, Hyderabad. By this notice they were also asked to submit in writing if they had any objection to the proposed transfer within 15 days of receipt of the notice. The appellants made their representation objecting to the transfer and on 26th July, 1973, the Central Board passed the impugned order transferring the cases from Nellore to Hyderabad. The short question that arises for consideration is whether failure to record the reasons in the order which was communicated to the appellants is violative of the principles of natural justice for which the order should be held to be invalid. Held: The requirement of recording reasons under s. 127(1) is a mandatory direction 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. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in Court, it ce....
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.... of law and accordingly stands quashed." 13. Ld. AR submitted that the both on the facts and in law, the case of assessee is squarely covered by this decision of Hon'ble Jaipur Bench of ITAT. 14. With these submissions, Ld. AR strongly contended that the Ld. PCIT(Circle) had no authority to cancel the registration u/s 12AA of the assessee. Hence the order dated 23.12.2019 passed by Ld. PCIT(Circle) is bad, illegal, without jurisdiction and must be quashed. 15. Ld. DR appearing on behalf of revenue could not controvert these submissions of the assessee. However, Ld. DR made some submissions which we would like to address. Ld. DR submitted that the Income-Tax Department is having different authorities and the cases are transferred from one authority to another authority because of necessity or in the special circumstances like search u/s 132. According to Ld. DR, the case of present assessee was also centralized in the office of Ld. PCIT(Central) due to search-proceeding. Therefore, the Ld. PCIT(Central) was holding charge over the assessee and the impugned order passed by him must be upheld. Ld. DR also submitted that the assessee could have raised this grievance much earli....