Vijay Vikram Dande, Kurnool, Hyderabad V. ADIT, International Taxation-II, Hyd, Hyderabad

ITA 947/HYD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8052 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 23-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: AJAY GANDHI
• Keywords: Residential status; Opportunity of being heard; Set aside
• Section: 69C; 143(3); 142(1); 143(1); 27; 148

Judgement Text

ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.947/HYD/2016 (ASSESSMENT YEAR: 2011-12) SHRI VIJAY VIKRAM DANDE KURNOOL PAN:AIVPD8319C VS ASSTT. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI AJAY GANDHI FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12 AGAIN ST THE ORDER OF THE CIT (A)-10, HYDERABAD, DATED 24.03 .2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2011-12 ON 6.4.2012 ADMITTING TOTAL INCOME OF RS.71,18,403/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) AND SUBSEQUENTLY, T HE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THEREAFTER, THE A DDITIONAL CIT, KURNOOL, VIDE LETTER DATED 28.10.2013 TRANSFERRED T HE FILES TO ADDL. CIT (IT-II) HYDERABAD, STATING THAT THE JURISDICTIO N OF THE CASE VESTED WITH THE AO (IT) HYDERABAD SINCE THE ASSESSE E IS A NON- RESIDENT. DATE OF HEARING : 23.01.2019 DATE OF PRONOUNCEMENT : 18.04.2019 ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 2 OF 11 3. THEREAFTER, THE AO ISSUED A NOTICE U/S 143(2) AN D 142(1) ON 26.11.2013 WHICH WERE SERVED ON THE ASSES SEE. IN RESPONSE TO THE NOTICES, THE ASSESSEES AUTHORIZED REPRESENTATIVE ATTENDED FROM TIME TO TIME AND FILED THE RELEVANT D ETAILS CALLED FOR. AFTER VERIFICATION OF THE INFORMATION AND OTHER MAT ERIAL AVAILABLE ON RECORD AND AFTER CONSIDERING THE ASSESSEES SUBM ISSIONS AT LENGTH ON EACH OF THE ISSUES, THE ASSESSMENT WAS CO MPLETED BY MAKING VARIOUS ADDITIONS AND THE TOTAL TAXABLE INCO ME WAS ARRIVED AT RS.1,41,82,750/-. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) CHALLENGING THE JURISDICTION OF THE AO AT HYDERABAD ON MAKING THE ASSESSMENT AND ALSO THE ADDITIONS MADE BY THE AO. THE ASSESSEE ALSO MADE DE TAILED SUBMISSIONS ALONG WITH RELEVANT MATERIAL BEFORE THE CIT (A). THE CIT (A) CALLED FOR A REMAND REPORT FROM THE AO DATE D 28.10.2015 WHICH WAS SUBMITTED ON 21.1.2016. THE CIT (A), AFTE R CONSIDERING THE SAME AND ALSO OBTAINING THE REMAND REPORT ALSO FROM THE DY.CIT (I.T) VISAKHAPATNAM, HELD THAT THE ASSESSEE DID NOT QUESTION THE JURISDICTION WITHIN ONE MONTH AS PER T HE PROVISIONS OF SECTION 124(3), ON THE ISSUE OF NOTICE AND ALSO THE ISSUE OF JURISDICTION BEFORE THE AO BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS AND THEREFORE, THE ASSESSEE IS PREVENTE D FROM RAISING THE ISSUE AFTER COMPLETION OF THE ASSESSMENT PROCEE DINGS AS PER SECTION 292B OF THE I.T. ACT. AS REGARDS THE MERITS OF THE ADDITION MADE BY THE AO, HE CONFIRMED THE ADDITIONS MADE BY THE AO. THUS, THE CIT (A) CONFIRMED THE ASSESSMENT ORDER BO TH ON THE GROUNDS OF JURISDICTION AS WELL AS THE ADDITIONS MA DE BY THE AO. THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISI NG THE FOLLOWING GROUNDS OF APPEAL: ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 3 OF 11 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX IS IN GROSS VIOLATION OF THE PROVISIONS OF LAW AND HENCE IS BAD IN LAW. 2. THE COMMISSIONER OF INCOME TAX HAS ERRED IN UPHO LDING THE ASSESSMENT ORDER. 3. THE COMMISSIONER OF INCOME TAX HAS ERRED IN UPHO LDING THE JURISDICTION OF THE ASSESSING OFFICER. 4. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING THE ADDITION OF RS.L,46,435 UNDER THE HE AD SHORT TERM CAPITAL GAINS TOWARDS DISCREPANCIES AS P ER FORM 26AS AND THE RETURN OF INCOME. 5. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING THE DISALLOWED CLAIM PERTAINING TO SET O FF OF SHORT TERM CAPITAL LOSS OF RS.13,58,290. 6. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING THE ADDITION OF RS.24,673 UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. 7. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING THE ADDITION OF RS.54,00,000 AS UNEXPLAI NED MONEY ULS 69A OF THE INCOME TAX ACT. 8. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING THE ADDITION OF RS.L,74,400 AS UNEXPLAIN ED EXPENDITURE ULS 69C OF THE INCOME TAX ACT. 9. THE COMMISSIONER OF INCOME TAX HAS ERRED IN SUSTAINING DISALLOWANCE OF DEDUCTION CLAIMED U/S 80 C OF RS.20,296. 10. THE COMMISSIONER OF INCOME TAX HAS ERRED IN UPHOLDING THE ASSESSMENT OF TOTAL INCOME AT RS.1,41,82,750. 11. THE COMMISSIONER OF INCOME TAX HAS ERRED IN UPHOLDING THE DEMAND RAISED OF RS.27,91,360. 12. THE COMMISSIONER OF INCOME TAX HAS ERRED IN UPHOLDING THE PENALTY PROCEEDINGS INITIATED UL/ 271 (1)(C). 13. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 4 OF 11 4. AS REGARDS GROUNDS 1 TO 3, WE FIND THAT THEY ARE AGAINST THE JURISDICTION OF THE AO IN PASSING THE A SSESSMENT ORDER. IT IS THE CASE OF THE ASSESSEE THAT THE ASSE SSEE HAS FILED HIS RETURN OF INCOME AS A NON-RESIDENT ELECTRONICALLY FOR THE A.Y 2010-11 ON 28.10.2010 BEFORE HE FILED HIS RETURN OF INCOME FOR THE A.Y 2011-12 ALSO IN THE STATUS OF NON-RESIDENT AND THAT HE DID NOT FILE ANY OTHER RETURN OF INCOME BEFORE COMPLETI ON OF THE ASSESSMENT FOR THE A.Y 2011-12. HE SUBMITTED THAT S UBSEQUENTLY, HE FILED HIS RETURNS OF INCOME IN RESPONSE TO NOTIC ES U/S 148 ISSUED BY THE ASSTT. DIRECTOR (IT) FOR THE A.YS 200 7-08 TO 2009-10 ON 3.7.2014 AND THAT ALL THE ASSESSMENTS WERE COMPL ETED U/S 143(3) ON 31.3.2015 BY THE DY. CIT (IT) VISAKHAPATN AM. HE SUBMITTED THAT THE RETURN FILED ON 6.4.2012 FOR THE A.Y 2011-12 WAS PROCESSED U/S 143(1) ON 4.08.2012 AND THEREAFTE R THE NOTICE U/S 143(2) WAS ISSUED BY THE DY.CIT KURNOOL ON 6.8. 2013. HE SUBMITTED THAT THE LAST DATE FOR ISSUANCE OF A NOTI CE U/S 143(2) WAS ON 30 TH SEPT. 2013; WHEREAS THE NOTICE U/S 143(2) ISSUED B Y THE ASSTT. DIRECTOR (IT) HYDERABAD WAS DATED 6.11.2 013 AND THE ASSESSMENT WAS COMPLETED BY THE ADD. DIT (IT) AT HY DERABAD ON 28.03.2014. IT IS SUBMITTED THAT WHEN A RETURN IS F ILED ELECTRONICALLY, THE SYSTEM ALLOCATES THE RETURN TO A SPECIFIC OFFICER AND ACCORDINGLY THE DY. CIT, KURNOOL ISSUED NOTICE U/S 143(2) ON 6.8.2013 DEMONSTRATING THAT HE HAS JURISDICTION OVE R THE ASSESSEE. HE SUBMITTED THAT THEREAFTER, THE JURISDI CTION WAS TRANSFERRED TO THE OFFICER AT HYDERABAD WHO ISSUED NOTICE U/S 143(2) ON 6.11.2013 WHICH IS WAY BEYOND THE LAST DA TE PERMITTED U/S 143(2) I.E. 30.09.2013. HE SUBMITTED THAT U/S 1 27 OF THE I.T. ACT, A NOTICE AND AN OPPORTUNITY OF BEING HEARD WAS REQUIRED TO BE GIVEN TO AN ASSESSEE AND SINCE THE SAID PROCEDURE H AS NOT BEEN ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 5 OF 11 FOLLOWED BY THE DEPARTMENT IN ASSESSEES CASE, THE ASSESSMENT ORDER ITSELF IS NULL AND VOID. HE ACCORDINGLY PRAYE D FOR SETTING ASIDE OF THE ASSESSMENT ORDER. IN SUPPORT OF HIS CO NTENTION, HE PLACED BEFORE US, A PAPER BOOK CONTAINING NOTICES I SSUED BY THE DY. CIT, KURNOOL AND ADIT (IT) HYDERABAD AND THE AS SESSEES INCOME TAX RETURNS FOR THE A.YS 2010-11 AND 2011-12 . AS REGARDS THE MERITS OF THE ADDITIONS ALSO, THE ASSESSEE HAS ALSO FILED A PAPER BOOK SUPPORTING HIS CONTENTIONS. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE ASSTT. DIT (IT) HYDERABAD AND SUBMITT ED THAT HE HAS EXERCISED HIS JURISDICTION CORRECTLY. THE WRITTEN S UBMISSION OF THE DY.CIT-2 (IT) DATED 13.06.2018 ADDRESSED TO THE SR. AR, ITAT IS ALSO FILED BEFORE US. IN THE SAID LETTER, IT IS STA TED THAT THE FIRST NOTICE FOR SCRUTINY I.E. U/S 143(2) WAS ISSUED BY T HE DY. CIT, KURNOOL ON 6.8.2013 AND THEREAFTER, IT WAS FOUND FR OM THE RETURN OF INCOME THAT THE ASSESSEE IS AN NRI AND THAT THE JURISDICTION OF THE ASSESSEE VESTS AT ITO-I HYDERABAD AND HENCE THE DY.CIT, KURNOOL TRANSFERRED THE CASE TO ITO-I HYDERABAD ON 26.10.2013 I.E. EVEN BEFORE THE COMMENCEMENT OF THE CASE. IT I S SUBMITTED THEREIN THAT THE JURISDICTION OVER FOREIGN ENTITY I NCLUDING NRIS VESTED ONLY WITH THE AO ATTACHED TO INTERNATIONAL T AXATION WING OF THE I.T. DEPTT. AND AT THE RELEVANT POINT OF TIM E OF THE ASSESSMENT PROCEEDINGS SUCH I.T. OFFICERS WERE SITU ATED ONLY AT HYDERABAD, VIZAG, KURNOOL AND NELLORE AND PRIOR TO BIFURCATION OF THE STATES DURING 2014, THE JURISDICTION WITH REGAR D TO THE ITO KURNOOL WAS VESTED ONLY AT HYDERABAD. IT WAS SUBMIT TED THAT THE ASSESSEES CASE FALLS U/S 127(3) AS IT DID NOT ENTA IL TRANSFER OF CASE FROM ONE JURISDICTION TO THE OTHER, BUT IT WAS ONLY A TRANSFER FROM ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 6 OF 11 THE AO WHO HAD NO JURISDICTION TO THE AO WHO ACTUAL LY HAD THE JURISDICTION. IT WAS ALSO SUBMITTED THAT THE ASSESS EE HAS NEVER RAISED ANY OBJECTION REGARDING THE TRANSFER OF THE CASE TO HYDERABAD DURING THE SCRUTINY PROCEEDINGS AND THERE FORE, HE CANNOT RAISE A GROUND AT THIS STAGE. 6. DETAILED WRITTEN SUBMISSIONS TO THE ABOVE EFFECT HAVE ALSO BEEN FILED BY THE LEARNED DR. IT WAS SUBMITTED THAT AFTER THE RETURN WAS FILED ELECTRONICALLY, THE CASE WAS ALLOC ATED TO THE AO AT KURNOOL BECAUSE THE PAN OF THE ASSESSEE WAS MAPPED WITH THE AO CODE OF THE DY.CIT CIRCLE-1 KURNOOL AS DECLARED IN FORM NO.49A WHICH IS THE FORM FOR APPLICATION OF PAN BY THE ASSESSEE AND SINCE THE ASSESSEE HAS NOT MADE ANY SUBMISSION THEREAFTER, REQUESTING THE MIGRATION OF PAN, CONSEQUENT TO CHAN GE IN HIS RESIDENTIAL STATUS, THE SYSTEM CONTINUED TO HOLD TH E DY. CIT, KURNOOL AS THE JURISDICTIONAL AO AND HENCE THE RETU RN OF INCOME FILED BY THE ASSESSEE WAS ENTRUSTED TO THE AO AT KU RNOOL. IT WAS SUBMITTED THAT THE RETURN WAS PROCESSED BY THE DY.C IT, KURNOOL U/S 143(1) AND REFUND WAS ISSUED ACCORDINGLY AND TH AT THE ASSESSEE DID NOT REQUEST FOR PAN MIGRATION EVEN AT THIS STAGE. IT WAS SUBMITTED THAT THE PAN NO.IS TO BE APPLIED WITH THE JURISDICTIONAL AO AND ONCE PAN IS ALLOTTED, IT IS A UTOMATICALLY MAPPED WITH THE AO CODE OF THE JURISDICTIONAL AO DE CLARED BY THE ASSESSEE IN FORM NO.49A FOR APPLICATION OF PAN AND ACCORDINGLY INTIMATIONS, NOTICES, SUMMONS ETC., GENERATED ONLIN E IN RESPECT OF AN ASSESSEE, ARE GENERATED UNDER THE AO CODE DECLAR ED BY THE ASSESSEE AND IF THERE IS ANY CHANGE IN THE STATUS, NATURE OF INCOME, ADDRESS ETC., IT IS THE DUTY OF THE ASSESSE E TO REQUEST FOR CORRESPONDING PAN MIGRATION TO THE NEW JURISDICTION AL AO. IT WAS ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 7 OF 11 SUBMITTED THAT SINCE THE ASSESSEE DID NOT REQUEST T HE DY.CIT, CIRCLE-1, KURNOOL FOR MIGRATION OF PAN CONSEQUENT T O HIS RESIDENTIAL STATUS GETTING CHANGED FROM N.R.I, THE RETURN FILED BY THE ASSESSEE WAS PROCESSED BY THE CPC ON 16.04.2012 AND REFUND WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY WHEN THE R ETURN WAS PICKED UP FOR SCRUTINY UNDER CASS, NOTICE U/S 143(2 ) WAS GENERATED ONLINE, WHICH WAS SERVED BY THE DY. CIT, CIRCLE-1 KURNOOL AND THEREFORE, THE DY.CIT, CIRCLE-1 KURNOOL CANNOT BE HELD RESPONSIBLE FOR THE ASSESSEES FAILURES TO APP LY FOR PAN MIGRATION FOR CORRECT MAPPING OF PAN CONSEQUENT TO CHANGE OF HIS RESIDENCE WHICH WAS ALSO IN THE CASE OF THE ASSESSE E. HE RELIED UPON THE PROVISIONS OF SECTION 139A OF THE ACT WHIC H CASTS OBLIGATION ON EVERY PERSON WHO HAS NOT BEEN ALLOTTE D A PAN TO APPLY FOR A PAN TO THE AO FOR THE ALLOTMENT OF A PA N. HE SUBMITTED THAT SINCE THE AO AT KURNOOL NOTICED THAT THE ASSESSEE IS A NON-RESIDENT AND THAT HE SHOULD BE ASSESSED BY THE DY.CIT (IT) HYDERABAD, HE TRANSFERRED THE RECORDS OF THE A SSESSEE TO THE ITO (IT) AT HYDERABAD FOR CONTINUATION OF PROCEEDIN GS INITIATED BY ISSUANCE OF NOTICE U/S 143(2) DATED 6.8.2013. HE SU BMITTED THAT THE ACIT (IT) HYDERABAD, ISSUED ANOTHER NOTICE U/S 143(2) OUT OF ABUNDANT CAUTION AND IS ONLY TO BE UNDERSTOOD AS AN OPPORTUNITY TO THE ASSESSEE, TO EXPLAIN HIS RETURN OF INCOME BE FORE HIM, IN CONTINUATION OF PROCEEDINGS TRIGGERED BY ISSUANCE A ND SERVICE OF NOTICE DATED 6.8.2013. HE THEREFORE, VEHEMENTLY ARG UED THAT THIS IS NOT THE CASE WHERE THERE IS A CHANGE IN THE JURI SDICTION OF THE AO AND ACCORDING TO HIM, IT IS ONLY A TRANSFER OF R ECORD TO THE CORRECT JURISDICTIONAL AO. ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 8 OF 11 7. THE LEARNED COUNSEL FOR THE ASSESSEE REBUTTED TH E SAID CONTENTION OF THE LEARNED DR BY REFERRING TO THE PR OVISIONS OF SECTION 127 OF THE I.T. ACT. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT UNDISPUTED FACTS ARE THAT T HE ASSESSEE HAS FILED THE RETURNS ELECTRONICALLY AND THE AO AT KURN OOL PURSUANT TO THE SELECTION FOR SCRUTINY UNDER CASS, HAD ISSUED A NOTICE U/S 143(2) OF THE ACT DATED 6.8.2013 TO THE ASSESSEE. T HIS NOTICE IS WELL IN TIME. THEREAFTER, THE ACIT (IT) AT HYDERABA D HAS ISSUED ANOTHER NOTICE U/S 143(2) DATED 6.11.2013 WHICH IS BEYOND THE SPECIFIED TIME. IT IS TRUE THAT THE ASSESSEE HAS NO T RAISED ANY OBJECTION TO THE JURISDICTION OF THE DY.CIT (IT) HY DERABAD, DURING THE ASSESSMENT PROCEEDINGS. THE CIT(A) HAS RELIED O N THE PROVISIONS OF SECTION 292B TO HOLD THE ISSUE AGAINS T THE ASSESSEE. THEREFORE, LET US FIRST SEE IF THESE FACTS ATTRACT THE PROVISIONS OF SECTION 292B OF THE ACT. FOR THE SAKE OF CONVENIENC E AND READY REFERENCE, THE RELEVANT PROVISION IS REPRODUCED HER EUNDER: 292B. NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS O R OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN P URSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR S HALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. 9. ON A LITERAL READING OF SECTION 292B, WE FIND TH AT IT ONLY PROVIDES THAT A NOTICE OR SUMMONS OR OTHER PRO CEEDINGS CANNOT BE TREATED AS INVALID OR SHALL BE DEEMED TO BE INVOLVED, MERELY BY REASON OF ANY MISTAKE/DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 9 OF 11 PROCEEDINGS IF SUCH RETURN OF INCOME, ASSESSMENT, N OTICE, SUMMONS OR OTHER PROCEEDINGS IS IN SUBSTANCE AND EF FECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURP OSE OF THIS ACT. THEREFORE, IT IS CLEAR THAT NOTICE U/S 143(2) DT. W HICH IS CHALLENGED BY THE ASSESSEE SHOULD BE IN ACCORDANCE WITH THE AC T. THE JURISDICTIONAL DEFECT POINTED OUT BY THE ASSESSEE C ANNOT BE CONSIDERED TO BE IN CONFORMITY WITH THE INTENT AND PURPOSE OF THE ACT. ACCORDING TO THE ASSESSEE, THERE IS A CHANGE O F JURISDICTION FROM THE AO AT KURNOOL TO THE AO AT HYDERABAD AND A S PER THE PROVISIONS OF SECTION 127(1) OF THE ACT, IT IS ONLY THE PRINCIPAL DIRECTOR GENERAL OR THE PR. CIT OR CHIEF COMMISSION ER OF INCOME TAX OR THE PR. CIT, WHO MAY, AFTER GIVING THE ASSES SEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER FOR DOING SO, TRANSFER ANY CASE FROM ONE OR MORE THAN ONE AO SUBO RDINATE TO HIM TO OTHER AO OR AOS ALSO SUBORDINATE TO HIM. HE SUBMITTED THAT THE CONTENTIONS OF THE LEARNED DR THAT SUB-SEC TION 3 OF SECTION 127 IS APPLICABLE TO THE ASSESSEES CASE IS WITHOUT ANY SUBSTANCE. BEFORE APPLYING THE PROVISIONS OF SECTIO N 127 OF THE ACT, WE DEEM IT PROPER TO RE-PRODUCE THE SAME HEREU NDER: SECTION 127 OF THE I.T. ACT. (1) THE DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMM ISSIONER 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 ASSESS ING OFFICERS SUBORDINATE TO HIM (WHETHER WITH OR WITHOUT CONCURRENT JURISDIC TION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WI TH 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 ASSE SSING OFFICERS TO WHOM THE CASE IS TO BE TRANSFERRED ARE NOT SUBORDINATE T O 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 COMMI SSIONER OR COMMISSIONER FROM WHOSE JURISDICTION THE CASE IS TO BE TRANSFERRED MAY, ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 10 OF 11 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 TRANSFERR ING THE CASE MAY, SIMILARLY, BE PASSED BY THE BOARD OR ANY SUCH DIREC TOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER AS THE BOARD MAY, BY N OTIFICATION IN THE OFFICIAL GAZETTE, AUTHORISE IN THIS BEHALF. (3) NOTHING IN SUB- SECTION (1) OR SUB- SECTION (2) SH ALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITH OUT CONCURRENT JURISDICTION) TO ANY OTHER ASSESSING OFFICER OR ASS ESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) AND THE OF FICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SAME CITY, LOCALITY OR PLACE. (4) THE TRANSFER OF A CASE UNDER SUB- SECTION (1) OR S UB- SECTION (2) MAY BE MADE AT ANY STAGE OF THE PROCEEDINGS, AND SHALL NOT RENDER NECESSARY THE RE- ISSUE OF ANY NOTICE ALREADY ISSUED BY THE ASSESSING OFFICER OR ASSESSING OFFICERS FROM WHOM THE CASE IS TRANSFERRED. EXPLANA TION.- IN SECTION 120 AND THIS SECTION, THE WORD' CASE', IN RELATION TO ANY P ERSON WHOSE NAME IS SPECIFIED IN ANY ORDER OR DIRECTION ISSUED THEREUND ER, MEANS ALL PROCEEDINGS UNDER THIS ACT IN RESPECT OF ANY YEAR WHICH MAY BE PENDING ON THE DATE OF SUCH ORDER OR DIRECTION OR WHICH MAY HAVE BEEN COMP LETED ON OR BEFORE SUCH DATE, AND INCLUDES ALSO ALL PROCEEDINGS UNDER THIS ACT WHICH MAY BE COMMENCED AFTER THE DATE OF SUCH ORDER OR DIRECTION IN RESPECT OF ANY YEAR. 10. WE FIND THAT U/SUB-SECTION 3 OF SECTION 127, IT IS PROVIDED THAT PROVISIONS OF SUB-SECTION 1 & 2 ARE N OT APPLICABLE AND NO SUCH OPPORTUNITY IS TO BE GIVEN TO THE ASSES SEE, WHERE THE TRANSFER IS FROM ANY AO, TO ANY OTHER AO WHERE THE OFFICES OF SUCH OFFICERS ARE SITUATED IN THE SAME CITY, LOCALITY OR PLACE. WE FIND THAT THE AO AT KURNOOL HAD TRANSFERRED THE FILE TO THE AO AT HYDERABAD AND THEREFORE, EVEN IF THEY ARE BOTH UNDE R THE JURISDICTION OF THE SAME PR. CIT AT HYDERABAD, THE NOTICE U/S 127(1) HAS TO BE GIVEN TO THE ASSESSEE AND IT IS ON LY THE PR. DIRECTOR GENERAL OR THE PR. CIT OR PR. CIT WHO CAN TRANSFER THE CASE U/S 127 OF THE ACT. NO SUCH PROCEDURE HAS BEEN FOLLOWED BY THE DEPTT. THEREFORE, WE ARE OF THE OPINION THAT TH E ISSUANCE U/S 143(2) BY THE DY. CIT (IT)-1, HYDERABAD IS WITHOUT ANY AUTHORITY ITA NO 947 OF 2016 VIJAY VIKRAM DANDE KURNOOL. PAGE 11 OF 11 AND ALSO BEYOND THE PERIOD OF SIX MONTHS FROM THE D ATE OF FILING OF RETURNS AND THEREFORE, IS BARRED BY LIMITATION AND HENCE, NOT SUSTAINABLE AND THE CONSEQUENT ASSESSMENT ORDER PAS SED BY THE ASSTT. CIT (IT) HYDERABAD IS VOID AB INITIO. 11. SINCE THE ASSESSMENT ORDER ITSELF HAS BEEN HELD TO BE NULL AND VOID AND SET ASIDE, THE OTHER GROUNDS OF A PPEAL ON MERITS OF THE ADDITIONS ARE NOT DEALT WITH AT THIS STAGE A S IT WOULD ONLY RESULT IN AN ACADEMIC EXERCISE. THEREFORE, ASSESSEE S GROUNDS OF APPEAL 1 TO 3 ARE ALLOWED AND THE OTHER GROUNDS ARE REJECTED. 12. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 18 TH APRIL, 2019. VINODAN/SPS COPY TO: 1 GANDHI & GANDHI, C.AS, 1002, PAIGAH PLAZA, BASHEE RBAGH, HYDERABAD 500063 2 ASSTT. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXA TION)-II AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 3 CIT (A)-10 HYDERABAD 4 CIT (IT& TP), HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER