Income Tax Officer, Ward 4(1), Nagpur, Seminary Hills V. Shri Nitin Murlidhar Agrawal, East Wardhaman Nagar

ITA 152/NAG/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5763 (ITAT-NAGPUR)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 15-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADIDA H. CHIMTHANAWALA
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Principle of natural justice; Difference of opinion; Competent authority; Assessment record; Change of opinion; Borrowed satisfaction; Set aside
• Section: 147; 68; 148; 28; 271(1)(c); 143(3); 142(1); 133(6); 250; 292BB; 143(2); 139(1); 48; 13; 158BD; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA No.152/Nag./2024 (Assessment Year : 2012-13) Income Tax Officer, Ward 4(1) Nagpur ................ Appellant v/s Nitin Murlidhar Agrawal, Wardhaman Nagar, Nagpur PAN – ADKPA7857K ................ Respondent Assessee by : Smt Adida H. Chimthanawala, CA Revenue by : Shri Kailash C. Kanojiya, CIT DR Date of Hearing – 20/06/2024 Date of Order – 18/07/2024 O R D E R PER K.M.ROY, A.M. The present appeal has been preferred by the Department challenging the impugned order dated 17/01/2024, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned NFAC-CIT(A), [“learned CIT(A)-NFAC”], for the assessment year 2012-13. 2. The department has raised following grounds of appeal:– ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 2 “(a) The Ld. CIT(A) erred in allowing the additional ground no.1 ignoring the fact that in the present case the notice u/s. 148 was rightly issued by the Asstt. Commissioner of Income Tax, Cir.4, Nagpur who is having jurisdiction over the case while in the case of Ashok Devi Chand Jain Vs. Union of India and Ors in WP no. 3489 of 2019 relied upon the notice u/s. 148 issued by the Income Tax Officer who was not having jurisdiction. (b) The Ld. CIT(A) ignored the fact that the bank statement shows that the assessee has been receiving funds from Priority Exports Pvt. Ltd., a tainted / shell company as discussed in detail in assessment order. (c) The ld. CIT(A) erred in upholding genuineness of the loan transactions ignoring the fact that though the company Priority Exports Pvt. Ltd., has legal existence, but having no creditworthiness having meagre income of Rs.265/- and existing as a pass through entity and is therefore, a shell entity as expounded by the Hon'ble Mumbai Tribunal in the case of DCIT Vs. Leena Power Tech Engineers Pvt. Ltd., [2021] 130 Taxmann.com 341 [Mumbai. Tri.] :- (i) A shell entity, by itself, is not an illegal entity, but it is their act of abetment of, and being part of, financial maneuvering to legitimize illicit monies and evade taxes, that takes it actions beyond what is legally permissible. (ii) These entities have every semblance of a genuine business- its legal ownership by persons in existence, statutory documentation as necessary for a legitimate business and a documentation trail as a legitimate transaction would normally follow. (iii) The only thing which sets it apart from a genuine business entity is lack of genuineness in its actual operations. (iv) The operations carried out by these entities, are only to facilitate financial maneuvering for the benefit of its clients, or, with that predominant underlying objective, to give the colour of genuineness to these entities. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 3 (v) These shell entities, which are routinely used to launder unaccounted monies, are a fact of life, and as much a part of the underbelly of the financial world, as many other evils. (d) Any other ground that may be raised during the course of appellate proceedings. 3. The facts of the case are as below, culled out from written submissions; a) The Assessee had filed his original Income Tax Return for the Assessment Year 2012-13 on 30/09/2012 declaring an income of Rs. 26,43,280/-. b) That the Computation of Income, Original Income Tax Return Acknowledgment and audited financial statements of the Assessee alongwith Form 3CD is enclosed herewith for your ready reference. c) The case of the Assessee was selected for scrutiny and various notices U/s. 142(1) of the Income Tax Act, 1961 (Act) were issued to the respondent Assessee seeking various details and documentary evidences including unsecured loans obtained by the Assessee. The photocopy of the various notices U/s. 142(1) of the Act alongwith the replies of the Assessee is enclosed herewith for your ready reference. d) After thorough Scrutiny of the Assessee's case the learned A.O. was pleased to pass an Order U/s. 143(3) of the Act on 31/12/2014. The photocopy of the Assessment Order U/s. 143(3) of the Act is enclosed herewith for your ready reference. e) That the Assessee received notices U/s. 148 of the Act as the learned A.O. had certain information from the DDIT, Unit IV, Kolkata that the Assessee is the beneficiary of the amount obtained from certain shell concerns. Pursuant to the Notice U/s. 148 the respondent Assessee filed the return and requested for Reasons for Re-opening. The extracts of the Reasons for Re-opening is enclosed herewith. f) The Assessee filed his objection to the Reasons for Re-opening vide his objection dated 04/10/2019. The copy of the said objection of the ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 4 Assessee to the Reasons for Re-opening is enclosed herewith for your ready reference. g) That the objections of the Assessee to re-opening was disposed off by the learned A.O. vide his Order dated 07/11/2019. The copy of the approval / sanction U/s. 151 of the Act from the Principal Commissioner of Income Tax-3, was also annexed alongwith the disposal of the objection of the Assesse. The Rejection order alongwith Sanction U/s. 151 of the Act is enclosed herewith for your ready reference. h) That various Notices U/s. 142(1) of the Act to the Assessee and Notices U/s. 133(6) to Priority Exports Private Limited, the lender was issued, In response to the notice u/s. 142(1), to the Assessee and notice to Priority Exports Private Limited U/s. 133(6) various documentary evidences were filed with the learned A.O. like Income Tax Return Acknowledgment, confirmation of unsecured loans, audited financial statement, copy of bank statement. i) That the learned A.O. disregarded the documentary evidence under the pretext that the entities from which the lender i.e. Priority Exports Private Limited have received funds have not responded to the notices of the learned A.O. u/s. 133(6) and also because the nomenclature used in the books of accounts while recording the transaction with Priority Exports Private Limited wherein the Assessee has treated the same as unsecured loans and the lender Priority Exports Private Limited have reflected the same as receivables coupled with the fact that no interest was paid, added the amount of Rs. 3,98,05,000/- as unexplained credits U/s. 68 of the Act. j) That it is humbly submitted that the loan was repaid in subsequent year through banking channels. The copy of account alongwith bank statement is enclosed herewith for your ready reference. k) That being aggrieved by the Order of the learned A.O. the Assessee raised various grounds. Also during the faceless hearing of the appeal the Assessee also raised certain additional grounds. The copy of the grounds of appeal alongwith the copy of the Additional Grounds of Appeal is enclosed herewith for your ready reference. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 5 1) The Hon'ble Commissioner of Income Tax (Appeals), National Faceless Appellate Centre, New Delhi, was pleased to allow the appeal of the Assessee vide his Order dated 17/01/2024. The photocopy of the Appellate Order is enclosed herewith. m) That the Revenue however challenged the order of the learned Commissioner of Income Tax (Appeals) before this Hon'ble Bench by raising grounds of appeal which are enclosed herewith. 4. Additionally, in a written synopsis, the undernoted averments were made: 4.1 That the learned A.O. lacked the jurisdiction as the condition precedent for re-opening of the assessment of the Assessee was absent, as the reasons recorded are factually incorrect: 4.1.1 The extracts of the relevant portion of the Assessee’s objection regarding list of entities whose names are appearing the Reasons for Re-opening are mentioned below: The following is the list of all the entities which has found place in the recording for reasons for re-opening: Sr.No. Name of the Party 1 M/s. Jagdamba Complex Pvt Ltd. 2 Saptrishi Suppliers 3 Praneta Industries 4 Advance Technologies 5 Safford Mercantile Pvt Ltd. 6 M/s. Nihal Mercantile Pvt. Ltd. 7 M/s. Pashupati Enclave Pvt. Ltd. 4.1.2 The aforesaid extracts will reveal that the Assessee has not taken any amount from any of the entities listed above which were appearing in the Reason for Re-opening. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 6 4.1.3 That for the first time the name of Priority Exports Private Limited cropped up during the re-assessment proceedings after issue of notice U/s. 148 and the disposal of objection of the Assessee. For the first time the name of Priority Exports Private Limited was mentioned in the Notice u/s. 142(1) dated 29.10.2019. Hence, the very reason or re-opening are based on factually incorrect fact which is impermissible in eyes of law, as it does not confer jurisdiction to the learned A.O. to re-open the completed assessment. 4.1.4 The Assess places its reliance on the following citations of the jurisdictional Hon’ble Bombay High Court for the said proposition:- i] Ankita A. Choksey vs. ITO & Ors 2019 TaxPub (DT) 0723 (Bom-HC) : (2019) 411 ITR 0207 ii] Arvind Sahdeo Gupta vs. ITO 2023 TaxPub(DT) 4810 (Bom-HC) iii] Tata Sons Ltd vs. Dy. CIT & ors. 2022 TaxPUB (DT) 1486 (Bom-HC) : (2022) 286 TAXMAN 0587 4.5 The Reasons for Re-opening are vague and based on guesswork as no nexus or live link with the Assessee is established alongwith the nature of transaction with the Assessee: 4.5.1 That the reasons are also completely silent regarding earlier regular assessment U/s. 143(3) of the Act and there is no corroboration of the said information with that of the ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 7 Assessment record of the Assessee in the Original Assessment so as to attribute to the Assessee of not having disclosed all the material facts fully and truly. 4.5.2 That the Reasons for Re-opening will reveal that the same is reason to suspect and to make fishing and roving enquiries against the Assessee and the whole exercise is done in a mechanical manner and is not in consonance with the CBDT SOP for recording satisfaction u/s 147 vide its internal directive No. 247/140/2017-A&PC-1, dated 10/01/2018. 4.5.3 In this regard, the Assessee places its reliance on the following citations; a] Pr.CIT Vs. Shodiman Investment (P) Ltd. 2018 TaxPub (DT) 2370 (Bom-HC) : (2020) 422 ITR 0337 b] Income-Tax Officer, I Ward, Distt. VI, Calcutta And Others vrs. Lakhmani Mewal Das 2976 TaxPub (DT) 0742 (SC) : (1976) 103 ITR 0437 4.6 The Reasons for Re-opening is based on borrowed satisfaction: 4.6.1 That the Reasons for Re-opening only narrates the information received from the DDIT Unit (IV), Kolkata and does not even remotely correlates the same with the assessment records of the Assessee. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 8 4.6.2 The reasons also does not indicate about the nature of transaction entered into by the entities with the Assessee, it speaks about investment in shares, whereas the Assessee is an individual hence, there is no question of receiving any amount against allotment of shares. 4.6.3 Even prima facie there is no satisfaction of the learned A.O. that any income of the Assessee has escaped assessment. This is the case of borrowed satisfaction which is impermissible in law. 4.6.4. The Assessee places its reliance on the following citations: a) Pr. CIT v. Meenakshi Overseas (P.) Ltd. 2017 TaxPub (DT) 1791 (Del-HC): (2017) 395 ITR 0677 b) Gandhibag Sahakari Bank Ltd. v. Dy. Commissioner of Income Tax 2023 TaxPub(DT) 6100 (Bom-HC): (2023) 458 ITR 0157 4.7 It is humbly submitted that it is the mandate of law that the reasons cannot be substituted, improved or supplemented at the later stage. 4.7.1 The Assessee wishes to place its reliance on the following judgments: ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 9 a) Nirupa Udhav Pawar v. Asstt. Commissioner of Income Tax 2021 TaxPub (DT) 6185 (Bom-HC): (2021) 439 ITR 0541 b) Hindustan Lever Ltd. v. R.B. Wadkar(No. 1) 2004 TaxPub(DT) 1424 (Bom-HC): (2004) 268 ITR 0332 4.8 Change of Opinion: 4.8.1 The earlier assessment was done U/s. 143(3) of the Act. Since 4 years had elapsed the learned A.O had to mention as to which fact was not disclosed truly and fully by the Assessee. There is no such mention as to which facts have not been disclosed truly and fully by the Assessee in the Reasons of Re-opening. 4.8.2 During the original assessment queries were raised regarding unsecured loans and after receiving the document evidence of the Assessee the learned A.O. was satisfied regarding the nature, genuineness, creditworthiness and identity. Hence, no addition was made. 4.8.3 In this regards, the Assessee wishes to place its reliance on the following citations; a) Hindustan Lever Ltd. v. R.B. Wadkar (No. 1) 2004 TaxPub(DT) 1424 (Bom-HC): (2004) 268 ITR 0332. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 10 b) Punia Capital (P) Ltd. v. Asstt. CIT 2023 TaxPub(DT) 1203 (Bom-HC): (2023) 292 ΤΑΧΜΑΝ 0380 c) Firstsource Solutions Ltd. v. Dy. CIT & Ors. 2018 TaxPub (DT) 8132 (Bom-HC) d) Peninsula Land Ltd. v. Asstt. CIT & Ors. 2021 TaxPub(DT) 6345 (Bom-HC): (2021) 439 ITR 0582 e) Ananta Landmark (P) Ltd. v. Dy. CIT Pr. CIT UOI & Ors. 2021 TaxPub(DT) 5644 (Bom-HC): (2021) 439 ITR 0168 f) Sesa Sterlite Ltd. v. Asstt. Commissioner of Income Tax. (2019) 417 ITR 0334 4.9 Mechanical sanction: 4.9.1 The sanction U/s 151, it seeks, have been given mechanically. The concerned authority on viewing the Reasons for Re-opening have also not questioned that how the said information can be correlated with the assessment records of the Assessee when the earlier order was passed U//s. 143(3) of the Act. 4.9.2 That the approval granted is by affixing the rubber stamp which clearly reveals that the same has been granted mechanically. 4.9.3 The Assessee relies on the following citations; a) Central India Electric Supply Co. Ltd. v. ITO & Anr.2011 TaxPub (DT) 0874 (Del-HC) ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 11 b) Sanjay Kumar v. Asstt. CIT & Anr. 2023 TaxPub(DT) 2035 (Del-HC) c) Synfonia Tradelinks (P) Ltd. v. ITO 2021 TaxPub (DT) 1794 (Del-HC) d) Chanchal Kumar Chatterjee v. Income-Tax Officer, 'B' Ward, Central Salaries Circle, Calcutta, & Ors. 1974 TaxPub(DT) 0042 (Cal-HC): (1974) 093 ITR e) German Remedies Ltd. v. Dy. Commissioner of Income Tax; (2006) 287 ITR 0494. 4.9.4 It is also humbly submitted that the learned A.O. while disposing off the objection of the Assessee to the Reasons for Re-opening have also not rebutted or found incorrect any of objections of the Assessee which is against the mandate of the Hon'ble Apex Court as laid down in GKN Driveshafts (India) Ltd. v. Income Tax Officer reported in 2003 TaxPub (DT) 0734 (SC): (2003) 259 ITR 0019 4.9.5 The Assessee wishes to place its reliances on the following citations; i) Ankita A. Choksey v. ITO & Ors. 2019 TaxPub (DT) 0723 (Bom-HC) : (2019) 411 ITR 0207 ii) Arvind Sahdeo Gupta v. ITO 2023 TaxPub (DT) 4810 (Bom-HC) 4.10 No Addition made on loans from concerns as stated in the recorded reasons: ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 12 4.10.1 As per the celebrated decision of Hon'ble Bombay High Court in Jet Airways CIT v. Jet Airways (I) Ltd reported in (2011) 331 ITR 0236 it was observed that no other addition can be made under explanation 3 of Sec 147. 4.10.2 The Assessee relies on the following citations; i] CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 0236 ii] Ranbaxy Laboratories Ltd. V. Commissioner of Income Tax; (2011) 336 ITR 0136 iii) Juliet Industries Ltd. v. Income Tax Officer 2018 TaxPub(DT) 6846 (Mum-Trib): (2018) 067 ITR (Trib) 0371 iv) CIT v. Adhunik Niryat Ispat Ltd. 2012 TaxPub(DT) 0591 (Del-HC): (2011) 063 DTR 0212 4.11 Lack of Pecuniary Jurisdiction of the learned A.O. to assess the income of the Assessee: 4.11.1 It is humbly submitted that as per the CBDT INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1- 2011 the pecuniary jurisdiction to assess the income of the Assessee lied with the Asst. Commissioner of Income Tax / Dy. Commissioner of Income Tax and not with the learned A.O./ Income Tax Officer. Therefore the assessment order passed by the Income Tax Officer, Ward 4(1), Nagpur is void-ab-initio and is without pecuniary jurisdiction. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 13 4.11.2 The Department in their grounds of Appeal have contended that in the case of Ashok Devichand Jain vs. Union of India & Ors, reported in (2023) 452 ITR 0043, the authority issuing notice had no jurisdiction in terms of CBDT INSTRUCTION NO.1/2011 [F.NO.187/12/2010-IT(A-I)], DATED 31-1-2011. Whereas in the instant case, the notice u/s. 148 was issued by the ACIT, hence the said decision of the Hon'ble Bombay High Court has no application in the instant case. 4.11.3 It is humbly submitted that the ratio laid down in said decision is that the authority which is issuing notice as well the authority which is doing assessment should have jurisdiction to assess the Income of the Assessee. Since the Income Tax Officer, Ward 4(1), had no jurisdiction to assess the income of the Assessee hence, the assessment is nullity in the eyes of law. 4.12 Non-mention of DIN on Letter disposing Objection of Assessee alongwith Assessment order and Notice of Demand: 4.12.1 Objection disposal letter dated 07/11/2019 and assessment order dated 26/12/2019 alongwith Notice of demand as well as computation sheet does not have any separate computer generated DIN Number which is in violation of the CBDT Circular No. 19/2019 and Hon’ble Finance Minister’s statement which is also covered by the ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 14 Jurisdictional Hon’ble Bombay High Court in Ashok Commercial Enterprises vs. Asstt. Commissioner of Income Tax, reported in (2023) 459 ITR 0100 and also of this bench of Hon’ble ITAT. 4.12.2 In this regards the Assessee wishes to place its reliance on the following citations; i) M/s Gupta Domestic Fuels (Nagpur) Ltd & Ors Vs. ACIT, Cen. Cir.-2(3), Nagpur & Ors (ITAT, Nagpur Bench) (Ι.Τ.Α. Νο. 61/NAG/2022 dated 31/10/2023) ii) Ashok Commercial Enterprises Commissioner of Income Tax reported in 2023 TaxPub (DT) 5483 (Bom-HC): (2023) 459 ITR 0100 4.13 Ingredients of Section 68: 4.13.1 The Assessee had borrowed amount from Priority Exports Private Limited and discharged the burden casted upon him by filing the confirmation from the parties, Audited financial statement, bank statement, Income Tax Return. The initial burden was duly discharged by the Assessee to prove the genuineness of transaction, identity and creditworthiness of the lender. 4.13.2 It is humbly submitted that the Assessee is also one of the directors of the Priority Exports Private Limited with which the Assessee proposed to have enter into the business of import of coal. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 15 4.13.3 That the financial statements of Priority Exports Private Limited will reveal that it had enough capital and reserves of its own to lend money to the Assessee. 4.13.4 That the learned A.O. sent notice U/s. 133(6) of the Act asking the company Priority Exports Private Limited to furnish various details including the factum of lending money to the Assessee which was duly responded by the Company Priority Exports Private Limited. The fact is also duly mentioned in the assessment order. Hence, the Assessee has duly discharged the onus of proving identity, genuineness of transaction and creditworthiness of the lender. 4.13.5 That the learned A.O. only on the basis of sources of Priority Exports Private Limited resorted to the addition U/s.68. It is humbly submitted that as per the mandate of Jurisdictional High Court, the sources of a source cannot be questioned in the Assessment Year 2012-13. The amendment to Sec 68 of the Act is prospective in nature and is applicable from Assessment Year 2023-24. 4.13.6 The Assessee places its reliance on the following citations; i) CIT v. Lovely Exports (P) Ltd. 2009 TaxPub (DT) 0261 (SC): (2009) 319 ITR 0005; ii) CIT v. Gagandeep Infrastructure (P) Ltd. 2017 TaxPub(DT) 1238 (Bom-HC): (2017) 394 ITR 0680 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 16 iii) CIT v. Veedhata Tower (P) Ltd. 2018 TaxPub(DT) 2030 (Bom-HC): (2018) 403 ITR 0415 iv) Rohini Builders v. Dy. Commissioner of Income Tax 2002 TaxPub(DT) 0125 (Ahd-Trib) : (2002) 076 TTJ 0521 4.14 Repayment of loan: 4.14.1 That it is humbly submitted that as the project of import of coal could not materialize because of stabilization of rate of coal in Vidarbha market and low grade of coal available in Indonesia. Hence, the Assessee refunded the amount to Priority Exports Private Limited in the subsequent Financial Year. The confirmation from Priority Exports Private Limited and Bank Statement of subsequent Financial Year i.e. 2012-13 are already enclosed. 4.14.2 The factum of repayment also establishes the creditworthiness and genuineness of transaction. 4.14.3 In this regards the Assessee places its reliance on the following citations. i) Commissioner of Income Tax - Rajkot - I. Vs. Ayachi Chandrashekhar Narsangji APPEAL NO. 992 of 2013 dated 02/12/2013 ii) Samruddhi Overseas Trading Co. v. DCIT/ACIT 2021 TaxPub(DT) 2345 (Ahd-Trib) iii) Pr. CIT v. Skylark Build 2019 TaxPub(DT) 0565 (Bom-HC). ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 17 5. The initial challenge by the revenue is that the notice u/s 148 issued by the Assistant Commissioner Income Tax is sustainable on the ground of being clothed with jurisdiction and hence order cannot be quashed. In this connection, we find that the assessment order has not been passed by the person issuing the notice u/s 148. We refer to the following judgments to following the judicial line of thinking. IV. REASONS TO BE FORMED ONLY BY JURISDICTIONAL ASSESSING OFFICER AND NOT ANY OTHER ASSESSING OFFICER AND ISSUANCE OF NOTICE IS MANDATORY: 4.1 The basic requirement of section 147 is that the assessing officer must have a reason to believe that any income chargeable to tax has escaped assessment and such belief must be belief of jurisdictional assessing officer and not any other assessing officer or authority or department. Therefore the jurisdiction of Assessing Officer to reopen an assessment under section 147 depends upon issuance of a valid notice and in absence of the same entire proceedings taken by him would become void for want of jurisdiction. ACIT v. Resham Petrotech Ltd. (2012) 136 ITD 185 (Ahd.)(Trib.) 4.2 Assessment in Kolkata - Reassessment notice in Delhi, such reassessment is held to be without jurisdiction Assessment having been made by assessing officer in Kolkata, in the absence of any order under section 127 transferring the case, reassessment notice issued by Assessing Officer at Delhi and all subsequent proceedings based on said notice are without jurisdiction. Smriti Kedia (Smt.) v. UOI [2011] 339 ITR 37 (Cal.)(HC) 4.3 Similarly in the case of ITO v. Rajender Prasad Gupta (2010) 48 DTR 489/135 TTJ 9 (Jodhpur)(Trib.) ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 18 Assessee was assessed at Suratgarh, Notice issued by ITO at Delhi, matter later transferred to ITO Suratgraph, however Assessing officer did not issued fresh notice or recorded reasons. Tribunal held that the ITO did not have jurisdiction notice invalid. 4.4 The assessment framed by assessing officer who had not issued notice under section 148 of the Act is void-ab- initio - Notice was issued by the assessing officer who had no jurisdiction- Reassessment is held to be bad in law. The ITO-1 (5), Ludhiana reopened the assessment and issued notice dt. 30.03.2017 u/s 148 of the Act on the basis of reasons so recorded. In response to such notice, assessee filed return of income declaring income of 49,320/-. Thereafter, the assessment was framed by ITO-1(5), Jalandhar assessing the income at Rs.6,71,915. The Tribunal observed that ITO-1 (5) Ludhiana issued the notice under section 148 r.w.s. 147 and thereafter the jurisdiction was transferred to ITO-1(5), Jalandhar who never issued the notice under section 148 of the Act but framed the assessment under section 143 of the Act. The Tribunal further relying on the decision of the ITAT Agra Bench in case of Jawahar Lal Agarwal v. ITO where the issue was similar held that the Assessing Officer may assess or reassess any income escaping assessment, if he has reason to believe such escapement of income. The section starts with the words 'If the Assessing Officer has reason to believe'. As per section 2(7A) of the Act, Assessing Officer means an Officer, as named therein, who is vested with the relevant jurisdiction. Thus, it was only the Officer having jurisdiction of the matter who under section 147 of the Act, could have formed any reason to believe escaping assessment and none other. In view of the above, Tribunal held that since the reasons were recorded by the Assessing officer who did not exercise the relevant jurisdiction, such reasons were non-est, being in-flagrant violation of the express provision of section 147 r.w.s ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 19 2(7A) of the Act. Thus the reassessment order was quashed. Gaurav Joshi v. ITO (2019) 174 DTR 353 / 197 TTJ 946 (Asr.) (Trib.) 6. In this case, we find that as on the date of issue of notice u/s 148, the Assistant Commissioner of Income Tax did not have the pecuniary jurisdiction. Upon realizing the same, he transferred the jurisdiction to the Income Tax Officer on 28.08.2019, as reproduced below. GOVERNMENT OF INDIA MINISTRY OF FINANCE OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, NAGPUR Room No. 301, 3rd Floor, Saraf Chambers, Sadar, Nagpur-440 001. Phone No.0712-2544753 Mobile No. 8888121888 ------------------------------------------------------------------------------------------- F.No.ACIT/Cir.4/NGP/Transfer of Scrutiny Cases/2018-19, Dated: 28.08.2019 To, Income Tax Officer, Ward 4(1), 4(2),4(4) Nagpur. Sir, Sub.: Transfer of scrutiny case(s) records-reg. Please refer to the above. The following case(s) are being transferred to your good office as the monetary jurisdiction over the case(s) lies with your good office. The detail of the case(s) which is/are being transferred is as under. Sr, No. PAN Name AY Returned Income Jurisdictio n 1 AAACU8325R Uttamcand Wadhwani Cold Storage Pvt. Ltd 2012- 13 7,47,100/- ITO Wd 4(4) Ngp 2 AAACM8181B M/S Maharashtra Vehicles Pvt. Ltd 2012- 13 19,87,236/ ITO Wd 4(2) Ngp 3 ABPPA7557G Mohd. Zubair Asharafi 2012- 13 -- ITO Wd 4(1) Ngp ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 20 4 ADLPA7857K Nitin Murlidhar Agrawal 2017- 18 -- ITO Wd 4(1) Ngp It is hereby stated that the PAN transfer request for confirmation may kindly be initiated through ITBA portal. The cases Sl. No. 3 & 4 are already being scrutinized for the A. Y. 2017-18 in your office. Therefore these cases are also being transferred to your good office. Yours faithfully, Encl.: Case record(s) (Arvind R. Renge) Asstt. Commissioner of Income Tax, Circle-4, Nagpur Copy submitted to: 3. The Pr. Commissioner of Income Tax-4, Nagpur for favour of information 4. The Joint Commissioner of Income Tax, Range-4, Nagpur for kind information. Asstt. Commissioner of Income Tax, Circle-4, Nagpur 7. At this juncture, we referred to the communication dated 11 th March, 2019, seeking approval for reopening u/s 147; OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, NAGPUR. Room No.301, Saraf Chambers, Sadar, Nagpur ------------------------------------------------------------------------------------------------------------------- F.No. ACIT, Cir.4/ Approval 147/Mittal/2018-19 Dated: 11.03.2019 To The Pr. Commissioner of Income Tax-3, Nagpur [Through Proper Channel] Respected Sir, Sub:- Approval for reopening u/s 147 in the case of M/s Mittal Energies of India [PAN: ADLPA7857K] for AY 2012-13-reg. ************* ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 21 Kindly find enclosed herewith a proposal for approval to initiate the reopening proceedings u/s 147 of the I.T. Act in the case of M/s Mittal Energies of India [PAN: ADLPA7857K] for AY 2012- 13. Copy of reasons for reopening the case is also enclosed for ready reference. Yours faithfully, Encl: As above. (Arvind R. Renge) Asstt. Commissioner of Income Tax Circle-4, Nagpur 8. The CIT (DR) has submitted a paper-book consisting of the following documents; S.No. Particulars Page No. 1. Gist of submission 1-2 2. Copy of acknowledgement for AY 2012-13 3 3. Copy of Assessment order u/s 143(3) for AY 2012-13 passed on 31.12.2014 4-5 4. Copy of acknowledgement for AY 2017-18 6 5. Copy of Assessment order u/s 143(3) for AY 2017-18 passed on 16.12.2019 7-8 6. Copy of letter for approval of Pr.CIT-3, Nagpur for reopening u/s 147 dated 11.03.2019 9-13 7. Copy of approval granted for issuance of notice by Pr.CIT-3, Nagpur dated 25.03.2019 14 8. Copy of notice u/s 148 issued to the assessee dated 26.03.2019 15 9. Copy of letter dated 28.08.2016 regarding transfer of Scrutiny case(s) records 16 10 Copy of Assessment Order u/s 147 r.w.s. 143(3) for AY 2012- 13 passed on 26.12.2019 17-21 11. Copy of instructions regarding income limits for assigning cases to Dy./Asstt. CIT/ITOs 22-23 12. Copy of jurisdiction distribution order u/s 120 of the I.T. Act, 1961 24-29 9. The gist of submission is reproduced below; GIST OF SUBMISSION 1. In this case assessee has filed his return of income u/s 139(1) on 30.09.2012 wherein income declared Rs. 26,43,280/- and agriculture income Rs. 1,94,759/-. The case was selected for scrutiny under CASS. The ACIT, Circle 4, Nagpur has passed an order u/s 143(3) on 31.12.2014 as assessed income of Rs. 26,43,280/- determined. Therefore, on the basis of returned income and assessed income of the assessee jurisdiction was pertaining to the ACIT, Circle - 4, Nagpur. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 22 2. Further, it is also noticed that the assessee has filed his return of income for AY 2017-18 u/s 139(1) on 28.09.2017 wherein income declared of Rs. 4,44,070/- and agriculture income of Rs. 1,28,750/-. The case was selected for complete scrutiny under CASS. Further, the order u/s 143(3) was passed on 16.12.2019 wherein income was assessed at Rs. 4,44,070/-. On the basis of returned income, the jurisdiction on the case was pertaining to the ITO Ward 4(1), Nagpur. 3. The ACIT, Circle - 4, Nagpur has received an information from O/o Deputy Director of Income Tax (Inv.), Unit-4(1), Kolkata on 01.03.2019, on the basis of information received the ACIT, Circle - 4, Nagpur has recorded the reason and put up for approval for reopening u/s 147 of the Act in the case of M/s Mittal Energies of India Prop. Shri Nitin Murlidhar Agrawal (PAN : ADLPA7857K) for AY 2012-13 to the Pr. Commissioner of Income Tax 3, Nagpur on 11.03.2019. The Pr. Commissioner of Income Tax-3, Nagpur has given the approval for issuance of notice in this case vide letter dated 25.03.2019. Therefore, the case was reopened in the F.Y. 2018-19 and notice u/s 148 was issued by the ACIT, Circle - 4, Nagpur on 26.03.2019 4. Thereafter, the case was transferred from ACIT, Circle – 4, Nagpur to ITO, Ward - 4(1), Nagpur vide letter dated 28.08.2019 wherein ACIT, Circle – 4, Nagpur, since as mentioned in para 2 of the above that the last assessed income of the assessee for the A.Y. 2017-18 was Rs. 4,44,070/- i.e. below Rs. 15 lakhs. Therefore, the said case is transferred by the ACIT, Circle – 4, Nagpur to Ward - 4(1), Nagpur. The ITO, Ward – 4(1), Nagpur has issued notice u/s 143(2) and 142(1) to the assessee on 26.09.2019 and passed the order u/s 143(3) r.w.s. 147 on 26.12.2019 and income assessed of Rs. 4,24,48,280/- 5. The jurisdiction of the AO based on locality and the income criteria. That is the income below Rs. 15 lakhs was to be assessed by ITO and above Rs. 15 lakhs was to be assessed by the ACIT, Circle. The jurisdiction of the Assessing Officer on the basis of income is to be transferred as on 1st of the April of the subsequent year. It is to be submitted that there cannot be two assessing officers for a single assessee in a year. 6. It is pertinent to mentioned here that two assessments were pending for AY2017- 18 and AY 2012-13 (A.Y. under consideration) at the same time with two different Assessing Officers. Hence, both the assessments were completed by the ITO, Ward 4(1), Nagpur to whom the case for AY 2012-13 was transferred by the ACIT. The ITO, Ward 4(1), Nagpur was already having the case for A.Y. 2017-18 as pending as on date the income was Rs. 4,40,070/- which is below Rs. 15 lakhs as per the jurisdictional order issued by the department. This was done for the reason that there cannot be two Assessing Officers for the same assessee at the same time. 7. The Ld. CIT(A) quashed the assessment order on the basis of decision of jurisdictional High Court in the case of Ashok Devichand Jain in W.P. No. 3486 of 2019 dated 8th March, 2022. The decision of CIT(A) is not acceptable because the case is clearly distinguishable. In the case relied upon the notice u/s 148 was issued by the ITO. In the present case the ACIT, Circle - 4, Nagpur has issued the notice and properly transferred the case on the basis of income criteria to the ITO, Ward 4(1), Nagpur. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 23 10. It is very clear that the jurisdiction as on the date of seeking approval was not with the ACIT because returns of non-corporate assessee upto Rs.20,00,000/- was with Income Tax Officer. The total income for assessment year 2017-18 as per the income tax return acknowledgement was Rs.4,40,070/-. Therefore, the proper jurisdiction was with the ITO Ward 4(1), Nagpur. Thus, it is clear that the notice was issued by a non- jurisdictional officer and the assessment being conducted pursuant thereto cannot be held to be valid. Subsequent transfer of assessment records by ACIT Circle, Nagpur to ITO Ward 4(1) Nagpur is also illegal, since transfer of case can only be done u/s 127 of the IT Act, 1961. The defect is incurable and is not amenable to be corrected under Section 292BB also. Accordingly, we find no merit to interfere with the cogent order passed by the CIT(A). In fact, upon perusal of the judgment of Ashok Devichand Jain v. Union of India & Ors, (2023) 452 ITR 43, we find that it is in favour of the assessee. In this case the primary grounds that has been raised are; “1. That the Income Tax Officer who had issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to the petitioner as per Instruction No. 1 of 2011, dated 31-1-2011 issued by the Central Board of Direct Taxes, where income declared/returned by any non-corporate assessee was up to Rs.20 lakhs, then jurisdiction would be of Income Tax Officer and where income declared/returned by a non-corporate assessee was above Rs.20 lakhs, jurisdiction would be of Deputy Commissioner/Assistant Commissioner. 2. The petitioner has filed return of income of about Rs.64,34,663 and therefore, the jurisdiction will be that of Deputy Commissioner/Assistant Commissioner and not Income Tax Officer. Mr. Jain submitted that since notice under section 148 of the Act has been issued by the Income Tax Officer, and not by the Deputy Commissioner/Assistant Commissioner that is by a person who did not have any jurisdiction over the petitioner, such notice was bad on the count of having been issueds by an officer who had no authority in law to issue such notice. The Hon’ble Court finally decided that, “ the Notice under section 148 was a jurisdictional notice and any inherent defect therein was not curable. In ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 24 the facts of the case notice having been issued by an officer who had no jurisdiction over petitioner, such notice in our view has not been issued validly and is issued without authority in law.” 11. The ITAT, Raipur, in Sarita Jain vrs. ITO Ward-4(1), Raipur, ITA No. 260/RPR/2023, has held in paras 16 to 21 as under; “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 in the case of Kusum Goyal Vs. ITO and Ors. (2010) 329 ITR 283 (Cal). For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "The question which falls for consideration is whether under section 127 of the Act an Assessing Officer on his own can transfer an income tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the relevant provisions in section 127 of the Act which is as under : "127.(1) The Director General or Chief 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 Director General or Chief Commissioner or Commissioner - (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 25 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 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 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 26 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 is required to be passed for getting the assessment records transferred from ITO Ward- 54(2), Kolkata to DCIT Circle-54, Kolkata by virtue of the provisions of sub-section 3 of section 127 of the Income Tax Act, 1961. For your ready reference the provisions of the said section is appended below. Section 127 sub-section (3) of the Income Tax Act, 1961 states/reads as: .......... From the foregoing provisions it is clear that the Commissioner of Income Tax is not required to pass any order transferring the case from/to any Assessing Officer(s) if "the offices of all such officers are situated in the same city, locality or place." (Emphasis supplied). It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-2008, 2008-2009 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 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 27 transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.Α.Ε.Κ.Κ. 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 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 aforesaid order u/s.127 of the Act. For the sake of clarity, the observations of the Tribunal are culled out as under: "11. Apropos the claim raised by the A.O, i.e. ITO-2(1), Bhilai in her letter dated 14.03.2024 (supra) that as the jurisdiction over the assessee's case remained within the same range, therefore, there was no requirement for the Pr. CIT to pass any order of transfer u/s. 127 of the Act, the same is found to be both factually and principally wrong. The case of the assessee had been transferred from ITO-1(4), Bhilai to ITO-2(1), Bhilai, i.e from Range 1 to Range 2. Be that as it may, as per the ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 28 mandate 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 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-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 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 29 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 thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee." (emphasis supplied by me) 13. Also, 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 absence of the aforesaid order is squarely covered by the judgment of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO and Ors, (2010) 329 ITR 283 (Cal.). For the sake of clarity, the relevant observations of the Hon'ble High Court are culled out as under: "The question which falls for consideration is whether under section 127 of the Act an Assessing Officer on his own can transfer an income tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the relevant provisions in section 127 of the Act which is as under: "127.(1) The Director General or Chief 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 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 30 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 Director General or Chief Commissioner 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 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 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 31 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 is required to be passed for getting the assessment records transferred from ITO Ward- 54(2), Kolkata to DCIT Circle-54, Kolkata by virtue of the provisions of sub- section 3 of section 127 of the Income Tax Act, 1961. For your ready reference the provisions of the said section is appended below. Section 127 sub-section (3) of the Income Tax Act, 1961 states/reads as: ............ From the foregoing provisions it is clear that the Commissioner of Income Tax is not required to pass any order transferring the case from/to any Assessing Officer(s) if "the offices of all such officers are situated in the same city, locality or place." (Emphasis supplied). It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that in case of transfer within the same city, locality or place although the ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 32 opportunity of hearing as postulated in section 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-2008, 2008-2009 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 Μ.Α.Ε.Κ.Κ. 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 the basis of a letter dated 11.04.2018 addressed by ITO- 1(4), Bhilai to ITO-2(1), Bhilai; therefore, it is a clear case ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 33 of invalid assumption of jurisdiction on the part of the ITO- 2(1), Bhilai who in absence of any valid assumption of jurisdiction had framed the assessment vide his order u/s.147 r.w.s. 144 of the Act, dated 30.11.2018. I, thus, in terms of my aforesaid observations quash the assessment framed by the ITO-2(1), Bhilai u/s.147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction on his part. 15. As I have quashed the assessment framed by the A.O u/s. 147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and dealing with the grounds of appeal raised by the assessee, based on which, the additions made by the A.O has been assailed before me, which, thus, are left open." 18. Also, I find that ITAT, Kolkata in the case of D. Craft Entertainment P. Ltd. Vs. ITO, ITA No.1461/Kol/2017 dated 12.10.2018 after relying on the judgment of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO & Ors (supra) had adjudicated the aforesaid issue in favor of the assessee. For the sake of clarity, the observations of the Tribunal are culled out as under: "6. We find that no notice u/s. 143(2) was issued by ITO, Wd-6(1), Kolkata before completing the assessment. We note that ITO, Wd-34(2), Kolkata did not enjoy the jurisdiction over the assessee company by virtue of both the earlier Notification No.228/2001 dated 31.07.2001 (CBDT) as well as the latest Notification No.50/2014 dated 22.10.2014 of CBDT as discussed above. Therefore, the assessment completed by ITO, Wd-6(1), Kolkata on the strength of the notice issued u/s. 143(2) of the Act by ITO, Wd-34(2), Kolkata (who did not enjoy jurisdiction) is non- 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, ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 34 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 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), Kolkata. The additional grounds raised by the assessee are allowed." 19. As in the case before me no order of transfer u/s. 127(1) of the Act had been shown to have been passed, therefore, it is a clear case of invalid assumption of jurisdiction by the ITO-4(2), Raipur who in absence of any valid assumption of jurisdiction had framed the assessment vide his order u/s.143(3) of the Act, dated 27.12.2017. As the facts and issues involved in the present appeal remain the same as were involved in the aforesaid cases, therefore, following the same parity of reasoning, I quash the assessment framed by the ITO-4(2), Raipur u/s.143(3) of the Act dated 27.12.2017 for want of valid assumption of jurisdiction on his part. ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 35 20. As I have quashed the assessment framed by the A.O. i.e. ITO-4(2), Raipur u/s. 143(3) of the Act dated 27.12.2017 for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and dealing with the grounds of appeal raised by the assessee, based on which, the additions made by the A.O. have been assailed before me, which, thus, are left open. 21. In the result, appeal of the assessee is allowed in terms of the aforesaid observations.” 12. We find no reason to deviate from the above judgment rendered by the jurisdictional High Court, which is binding upon us. Hence notice issued u/s 148 is clearly without jurisdiction and consequent assessment order has no legal legs to stand upon. Since we have dismissed the Revenue appeal on the very first issue of jurisdiction, we do not feel it appropriate to consider the other grounds which are merely an academic in nature. Hence, we decline to deal with the same. We refrain to comment upon the various other facts of averments placed before us. We acknowledge the illuminating submissions by both the counsels. Accordingly, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 18/07/2024. Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER NAGPUR, DATED: 18 /07 /2024 ITA NO. 152/NAG/2024 ITA, WARD-4(1) Vs. Nitin Murlidhar Agrawal Page | 36 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Rajesh V. Jalit PS (on contract) Sr.Private Secretary ITAT, Nagpur