TaxTMI 
TaxTMI 
2025 (5) TMI 674
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....peal during the proceedings of the appeal." Also, the assessee has raised additional grounds of appeal which reads as under: "Additional Gr. No.1: "On the facts and circumstances of the case and in law, notice issued u/s. 143(2) dt. 22-9-18 by ITO-4(3); assessment made u/s. 143(3) dt. 30-12-19 by ITO-3(3); there is violation of sec. 127(1) & 127(3); there is no mention of order u/s. 127 by PCIT for transferring the case from ITO-4(3) to ITO-3(3) for assuming valid jurisdiction by ITO-3(3); in absence of order made u/s. 127 by PCIT for transferring the case to ITO-3(3); assessment made u/s. 143(3) by ITO-3(3) would be invalid as without having valid jurisdiction for making assessment u/s. 143(3), is liable to be quashed." Additional Gr. No.2: "On the facts and circumstances of the case and in law, notice issued u/s 143(2) by ITO-4(3) dt. 22-9-18 who was not having territorial jurisdiction as per sec 124(1) rws.120(2) & 120(3) to make assessment for AY17-18 as per Notification No.1/14-15 dt. 15-11-14; in absence of a valid notice issued u/s 143(2) by the 'correct jurisdictional AO' i.e., ITO-3(3) as per sec 124(1), 120(2), 120(3); assess....
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....the demonetization period. However, the A.O vide his order passed u/s. 143(3) of the Act, dated 30.12.2019 without rejecting the books of account of the assessee made an addition of Rs. 3 lacs (out of cash deposits of Rs. 25 lacs), and determined the income of the assessee at Rs. 8,33,700/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. The CIT(Appeals) holding a firm conviction that as the cash deposit of Rs. 25 lacs on a single day was abnormal as against her total turnover for the year under consideration of Rs. 53.65 lacs (approx.), upheld the addition made by the A.O observing as under: "5.1 On perusal of submissions of the appellant, the appellant had an annual turnover or Rs. 53,65,581/-. The appellant stated that she made cash deposits of Rs. 35,49,000/- during the year under consideration. The AO further noticed that an amount of Rs, 25,00,000/- was deposited on a single day when the assessee was in practice of depositing the cash every month. 5.2 The single day cash deposit of Rs. 25,00,000/- is abnormal when compared to the total turnover of the appellant i.e. Rs. 53,65,581/-. In this context the....
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....e on record, therefore, I have no hesitation in admitting the 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). 8. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold submitted that though the notice u/s. 143(2) of the Act was issued by the ITO-4(3), Raipur on four occasions, i.e. on 22.09.2018, Page 1 to 4 of APB, 26.09.2018, Page 5 to 8 of APB, 26.09.2018, Page 9-12 of APB and 30.09.2018, Page 13 to 16 of APB, but the assessment had thereafter been framed by the A.O i.e. ITO- 3(3), Raipur vide his order u/s. 143(3) of the Act, dated 30.12.2019. Elaborating further, the Ld. AR submitted that as no order of transfer u/s. 127 of the Act had been passed based on which, the case of the assessee was transferred by the ITO-4(3), Raipur to ITO-3(3), Raipur, therefore, the impugne....
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....ponse to additional ground no.1 (Mochán Meher) Income tax Officer-3(1), Raipur The Ld. AR, on being confronted rebutted the claim of the A.O that a notice u/s. 143(2) was issued by the ITO-3(3), Raipur on 25.09.2018. The Ld. AR in order to dislodge the claim of the A.O had placed on record a copy of the screen shot of the e-proceeding sheet in the case of the assessee for the subject year. 11. Be that as it may, the Ld. AR submitted that as no order of transfer u/s. 127 of the Act wherein the case of the assessee was transferred from ITO-4(3), Raipur to ITO-3(3), Raipur was passed, therefore, in absence of valid assumption of jurisdiction, the assessment framed by the ITO-3(3), Raipur vide his order u/s. 143(3) of the Act, dated 30.12.2019 being devoid and bereft of any force of law was liable to be quashed. 12. I have given a thoughtful consideration to the facts involved in the present case before me. As stated by the Ld. AR, and rightly so, I find that the till date despite specific direction the department has failed to place on record any order of transfer u/s. 127 of the Act, based on which, the case records of the assessee were transferred from ITO-4(3)....
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.... (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-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....
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.... 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 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. 16. 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 the absence of the aforesaid order is squarely covered by the judgment of the Hon'ble High Court of Calcutta....
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....rrent 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 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 ....
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....n 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 Tribunal after relying on the judgments of the Hon'ble Supreme Court in the case of Ajanta Industries Vs. Central Board of Direct Tax supra) and that of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO & Ors. (supra) had decided the issue in favor of the assessee, observing that 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 aforesa....
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....ily 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 interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. For the sake of clarity, the relevant observations of the Hon'ble Apex Court are culled out as under: "We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non-communication ....
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....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 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....
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....e 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) 14. As in the case before me no order of transfer u/s. 127(1) of the Act had been shown to have been passed, and in fact, the case of the assessee had been transferred simplicitor on....
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....s 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, Wd-6(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. Therefore, looking from any angle as discussed above and especially taking note that the impugned assessment order passed by the ITO, Wd-6(1), Kolkata without issuing notice u/s. 143(2) of the Act is corum non-judice and therefore null in the eyes of law and, therefore, need to be quashed and we quash the impugned assessment order dated 13.03.2015 passed by ITO, Wd-6(1),....