NISHA BAHETI,KOLKATA V. ACIT, CIR-11(2), KOLKATA. , KOLKATA

ITA 1199/KOL/2023

AI Insights

The case involves an appeal by Nisha Baheti against the order of the National Faceless Appeal Centre, Delhi, which upheld the assessment order passed by the ACIT, Circle-11(2), Kolkata. The primary legal issue was the validity of the assessment order, which was challenged on the grounds that the mandatory notice under section 143(2) of the Income Tax Act was not issued after the transfer of the case to a new Assessing Officer (AO). The tribunal found that the assessment was invalid due to the lack of this notice and the improper transfer of the case file between AOs without the necessary administrative order from the PCIT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312605 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Other Referred Cases: Kusum Goyal Vs. ITO, Deputy Commissioner of Income (Exemption) Vs Kalinga Institute of Industrial Technology Vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROMA CHAUDHARY
• Assessee Lawyers: SOMNATH GHOSH
• Keywords: Set aside; Onus to prove; Gift; Assessment record
• Section: 143(3); 142(1); 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI SONJOY SARMA, JM ITA No.1199/KOL/2023 (Assessment Year:2015-16) Nisha Baheti C/o S.N. Ghosh & Associates, Advocates 2, Garstin Place, 2nd Floor, Suite No.203, Off Hare Street, Kolkata-700001, West Bengal Vs. ACIT, Cir-11(2), Aaykar Bhavan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AHMPB0320M Assessee by : Shri Somnath Ghosh, AR Revenue by : Ms. Roma Chaudhary, DR Date of hearing: 21.04.2025 Date of pronouncement : 02.05.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 13.09.2023 for the AY 2015-16. 02. The only legal issue pressed at the time of hearing by the ld. Counsel for the assessee is against the order of ld. CIT (A) upholding the assessment order passed by the ld. AO i.e. ACIT, Circle 11(2), Kolkata without issuing any notice u/s 143(2) of the Act and therefore, the assessment framed is bad and ab-initio and ex-facie nullity in law. 03. The facts in brief are that the assessee filed return of income on 29.08.2015, declaring total income at ₹83,28,070/- after claiming Page | 2 ITA No.1199/KOL/2023 Nisha Baheti; A.Y. 2015-16 deduction of Rs.1,75,000/- under Chapter VIA. The case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) and notice u/s 143(2) of the Act dated 28.08.2016, was issued by ACIT Circle-31, Kolkata, which was duly served upon the assessee. Notice u/s 142(1) of the Act was issued on 08.02.2017. Subsequently, the case of the assessee has been transferred to the jurisdiction of ACIT, Circle 11(2), Kolkata and he framed the assessment u/s 143(3) of the Act dated 29.12.2017, without issuing notice u/s 143(2) of the Act. While framing the assessment an addition of ₹58,96,582/- was made to the income of the assessee on account of Long-Term Capital Gain on sale of script of Surabhi Chemical & Investments Ltd. Which was claimed u/s 10(38) of the Act as exempt. 04. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by holding that the burden of proof was not discharged by the assessee by proving the purchase and sales of the shares of the said script. 05. The ld. AR vehemently submitted before us that the order passed by the ld. ACIT Circle-11(2), Kolkata, is invalid and nullity in the eyes of the law as the ld. ACIT has not issued the mandatory notice u/s 143(2) of the Act, after the case of the assessee was transferred to him. In this case, the ld. AR submitted that the notice u/s 143(2) of the Act was issued by ACIT Circle-31, Kolkata, who is a non- jurisdictional AO of the assessee and that correct jurisdictional AO was ACIT, Circle 11(2), Kolkata. The ld. AR assailed the order passed by the ld. AO on two counts; firstly, that notice u/s 143(2) of the Act, which is mandatory/ statutory requirement under the Act, was not issued; secondly, that the file was transferred from one AO to another Page | 3 ITA No.1199/KOL/2023 Nisha Baheti; A.Y. 2015-16 AO without any order passed by the PCIT. The ld. AR argued that the file cannot be transferred without there being an administrative order of the PCIT, who is authorized to transfer the cases intra AOs falling under his administrative charge and therefore, the assessment framed is ex-facie, nullity and void ab-initio. He further contended that no assessment can be framed by the ld. AO without issuing notice u/s 143(2) of the Act. So far as second contention is concerned that the file cannot be transferred by one AO to another AO in the same jurisdiction without an order of PCIT u/s 127(3) of the Act the ld counsel relied on the decision of the Hon'ble High Court in case of Kusum Goyal Vs. ITO reported in (2010) 329 ITR 283 (Calcutta). 06. The ld. DR vehemently supported the order of the lower authorities. The ld. DR argued that if the assessee has any objection to the jurisdiction of the AO who framed the assessment, then the assessee should have objected to it within 30 days of the issue of notice. In defense of the argument of the ld. Counsel for the assessee relied on the decision of Hon'ble Apex Court in case of Deputy Commissioner of Income (Exemption) Vs Kalinga Institute of Industrial Technology Vs. DCIT (2023) 151 taxmann.com 434 (SC).The ld. DR submitted that since the assessee has not filed any objections to issuance of notice by non-jurisdictional AO, therefore he should not be allowed to rake up this issue at this stage and the ground raised may be dismissed. 07. The ld AR in the rebuttal submitted the decision of the Hon’ble Apex Court is not applicable to the present facts as in the present case the notice was issued by non-jurisdictional AO who was not having any jurisdiction and thereafter transferred to another AO who was having the jurisdiction over the assessee but the notice u/s 143(2) was not Page | 4 ITA No.1199/KOL/2023 Nisha Baheti; A.Y. 2015-16 issued by the jurisdictional AO and assessment was framed sans issuing notice u/s 143(2) of the Act. The counsel further argued that the said transfer was also invalid as there was no order passed by the jurisdictional principal commissioner transferring the file from one AO to another. Whereas in the case before the Hon’ble Apex Court, the notice was issued by the non-jurisdictional AO and thereafter the case records were transferred to AO having jurisdictional who framed the assessment sans issuing any notice u/s 143(2). 08. We have heard the rival contentions and perused the materials available on record. We note that the assessment order was passed by the ld. ACIT Circle-11(2), Kolkata, without issuing the mandatory notice u/s 143(2) of the Act after the case records of the assessee was transferred to him by ACIT Circle-31, Kolkata, who issued the notice u/s 143(2) of the Act because he was not having any jurisdiction over the assessee. We note that the case file was transferred from one ACIT circle-31 to another AO i.e. ACIT Circle - 11(2) without any administrative order passed by the PCIT having the administrative control over both the AOs. Therefore, on this count also the assessment framed cannot be sustained. After considering the facts of the assessee case in the light of the above decisions , we are inclined to hold that the assessment framed by the ACIT, Circle- 11(2), Kolkata is bad in law and nullity in the eyes of the law on the ground that the case has been transferred from ACIT, Circle-31 to ACIT 11(2) of the Act without order u/s 127(3) of the Act. We have also called for the assessment records from the SR DR who produced the assessments records and examined thoroughly however he could not produce any order of the jurisdictional PCIT u/s 127 of the Act transferring the assessment file from one to another as stated above. The case of the assessee is squarely covered by the decision of the Page | 5 ITA No.1199/KOL/2023 Nisha Baheti; A.Y. 2015-16 Hon’ble Calcutta High Court in case of Kusum Goyal Vs. ITO reported in (supra) wherein the jurisdictional High Court held as under:- “10. It is evident that 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 October 21, 2009 is patently illegal since it has been held in this judgment 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 2007-08, 2008-09 and the earlier years as intimated in the letter/notice dated July 30, 2009 issued by 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 [1965] 56 ITR 14 (SC) and in S.L. Singhania [1992] 193 ITR 275 (Delhi) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgment in Subhas Chandra Bhaniramka [2010] 320 ITR 349 (Cal) 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 judgment in M. A. E. K. K. Varma [1981] 129 ITR 31 (AP) 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 the Wealth-tax Act, 1957 and the Gift-tax Act, 1958. Therefore, since it has been held in this judgment 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.” 09. Therefore, considering the facts of the instant case in the light of the ratio laid down in the above decision , we hereby quash the assessment framed by the AO. 010. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 02.05.2024. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 02.05.2024 Sudip Sarkar, Sr.PS Page | 6 ITA No.1199/KOL/2023 Nisha Baheti; A.Y. 2015-16 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "