TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1580
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder is bad in law, illegal and without jurisdiction for the assessment order was passed by ACIT-1(1), Bhilai on the basis of jurisdictional notice issued u/s. 148 of the Income-tax Act, 1961 by Income-tax Officer-1(1), Bhilai who transferred the case without passing of order u/s. 127 of the Income-tax Act, 1961. 3) In the facts and circumstances of the case and in law, the Ld. Assessing Officer has erred initiating reassessment proceeding u/s. 147 of the Income-tax Act, 1961 without fulfilling all necessary conditions. Accordingly, the said proceedings as well as the assessment order are illegal, bad in law and without jurisdiction. 4) The ld. Assessing officer has erred in making addition of Rs. 12,10,200/-representing sale proceeds of immovable property sold by her spouse as unexplained investment u/s. 69A of the Income-tax Act, 1961. 5) The impugned order is bad in law and on facts. 6) The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice." 2. Succinctly stated, the A.O based on information that the assessee had during the year under consideration had made cash deposits of Rs. 21,10,200/- in her savin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds qualified in the case of the assessee- * Assessee was found to be the owner of the money; * Such money was not recorded in the books of accounts; and * The nature and source is not identifiable. 4.3 When the assessee has failed to prove that in his normal business or otherwise, he was possessed of so much cash, it is to be held that the money by virtue of cash deposits represents the earning of the assessee during the year from undisclosed sources within the meaning of Section 69A of the Act. Section 69A of the Act deals with money, etc. owned by the assessee and found in possession including in the bank accounts of the assessee which remained unexplained. The relevant portion of the same is reproduced herein under: "Section 69A - Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7, dt 27/3/1963 held that the source of money has not been satisfactorily proved, the dept was justified in holding it to be assessable income of the assessee from some undisclosed source. * "the fact of the case was that assessee had encashed 51 high denomination notes of Rs 1000 each in January. Assessee's explanation in his application for encashment of notes was that he was a colliery proprietor and contractor, that for conducting the business and for payment to labour which came to about Rs 30000 every week to Rs 40000 every week he had to keep large sums of money to meet emergency and that sum of Rs 50000 realised by encashment of the notes was neither profit nor part of profit but was floating capital for the purpose of conducting business. the ITO did not accept this explanation and treated this amount as profit from some undisclosed source and assessed it as assessable income. In Manindra Nath Das vs CIT, BIHAR and Orissa the taxpayer had encashed Notes of the value of Rs 28600, which he contended were his accumulated savings. His explanation was accepted in respect of Rs 15000, because 15 notes could be traced to a bank, but was rejected in respect of balance. The P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustained and is liable to be struck down. The Ld. AR in support of his aforesaid contention had pressed into service the order of the ITAT, Raipur, "SMC" Bench in the case of Sarita Jain Vs. ITO, Ward-4(1), Raipur, ITA No. 260/RPR/2023, dated 24.06.2024. 7. Per contra, Dr. Priyanka Patel, Ld. Departmental Representative (for short 'DR') relied on the orders of the lower authorities. The Ld. DR submitted that as the assessment in the present case had been framed by the ACIT-1(1), Bhilai, i.e. an officer who was vested with a concurrent jurisdiction, therefore, no infirmity emerges from the order that was passed by her based on the notice issued u/s. 148 of the Act, dated 31.01.2018 by the ITO-1(1), Bhilai. 8. As the Ld.AR has assailed the validity of the jurisdiction that was assumed by the A.O for framing of the assessment on the ground that there was no order of transfer u/s. 127 of the Act transferring the case of the assessee from ITO-1(1), Bhilai i.e. the officer who had issued notice u/s. 148 of the Act dated 31.01.2018 to ACIT-1(1), Bhilai i.e. the officer who had framed the assessment, therefore, the Ld. Sr. DR was directed to produce the assessment records and obtain....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 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 Princi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....andate 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 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 j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lidity 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng 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-2(1), Bhilai 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or Commissioner - (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2009 and the earlier years as intimated in the letter/notice dated 30th July, 2009 issued by the respondent no.1 is also bad in law. The argument 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....est in law and, therefore, is bad in law and consequently null in the eyes of law. Moreover, we also take note that Pr. CIT/CIT-12, Kolkata under whom 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, 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 ....