AI Insights
The case involves Rina Kumari Kodwani, who appealed against the order of the Income Tax Officer (ITO), Ward-3(3), Raipur, concerning an assessment for the year 2017-18. The primary contention was the validity of the jurisdiction under which the assessment was made, as the transfer of jurisdiction from ITO-4(3) to ITO-3(3) lacked a formal order under section 127 of the Income-tax Act. Additionally, the assessee contested the addition of Rs.3,00,000 as unexplained cash deposits under section 68 of the Act. The Tribunal also addressed the merits of the addition, finding it unjustified.
Appeal Details
Counselvise Citation
[2024] 140 COUNSELVISE.COM (IT) 469753 (ITAT-RAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
6 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-10-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
19-09-2024
Assessment Year
2017-2018
Appeal Filed On
28-03-2024
Judgement Text
"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No.111/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Rina Kumari Kodwani C-66, Sector 5, Opp. Shree Narayan Hospital, Devendra Nagar, Raipur (C.G.)-492 001 PAN: AJRPK2572K .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-3(3), Raipur ……Ĥ×यथȸ / Respondent Assessee by : Shri Sunil Kumar Agrawal, CA Revenue by : Dr. Priyanka Patel, Sr. DR a/w. Shri Manoj Kumar Pandey सुनवाई कȧ तारȣख / Date of Hearing : 19.09.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the ADDL/JCIT(A)-1, Visakhapatnam, dated 31.01.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: “1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in sustaining addition of Rs.3,00,000/- on count of unexplained cash deposits credit u/s.68 of the IT Act, 1961 is unjustified and is liable to be deleted. 2. The appellant craves to be allowed to add, amend, withdraw or otherwise modify the aforesaid grounds of appeal during the proceedings of the appeal.” Also, the assessee has raised additional grounds of appeal which reads as under: “Additional Gr.No.1: \"On the facts and circumstances of the case and in law, notice issued u/s.143(2) dt.22-9-18 by ITO-4(3); assessment made u/s,143(3) dt.30-12-19 by ITO-3(3); there is violation of sec.127(1) & 127(3); there is no mention of order u/s.127 by PCIT for transferring the case from ITO-4(3) to ITO-3(3) for assuming valid jurisdiction by ITO-3(3); in absence of order made u/s.127 by PCIT for transferring the case to ITO-3(3); assessment made u/s.143(3) by 1TO-3(3) would be invalid as without having valid jurisdiction for making assessment u/s.143(3), is liable to be quashed.\" Additional Gr.No.2: 3 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 \"On the facts and circumstances of the case and in law, notice issued u/s143(2) by ITO-4(3) dt.22-9-18 who was not having territorial jurisdiction as per sec124(1) rws.120(2) & 120(3) to make assessment for AY17-18 as per Notification No.1/14- 15 dt.15-11- 14; in absence of a valid notice issued u/s143(2) by the 'correct jurisdictional AO' i.e., ITO-3(3) as per sec124(1), 120(2), 120(3); assessment made u/s143(3) would be invalid and is liable to be quashed; relied on Hotel Blue Moon (2010) (SC). Additional Gr.No.3: \"On the facts and circumstances of the case and in law, there is violation of sec143(2) as notice u/s.143(2) can only be issued by 'the Assessing Officer' as mentioned in the sec.143(2) itself as \"the Assessing Officer shall serve on the assessee a notice\"; in absence of a valid notice issued by 'the Assessing Officer' u/s.143(2) as mandated by law u/s.143(2) itself, sec124(3)(a) does not come into play; assessment made u/s143(3) by ITO-3(3) without complying sec143(2), would be invalid as without having valid jurisdiction for making assessment u/s.143(3), is liable to be quashed; relied on Hotel Blue Moon (2010) (SC). Additional Gr.No.4: \"On the facts and circumstances of the case and in law, notice issued u/s.143(2) by ITO-4(3) dt.22-9-18 is invalid 41TO-4(3) was not having a valid authority of law as per sec.124(1), 120(2) & 120(3); without complying sec124(1), there is no need to apply sec.124(3)(a) for making objection within one month period from the notice issued u/s.143(2) dt.22-9-18 which itself is in violation of sec.124(1); assessment made u/s143(3) would be invalid and is liable to be quashed.” 2. Succinctly stated, the assessee who is engaged in retail trading, had e-filed her return of income for A.Y.2017-18 on 07.12.2017, declaring an income of Rs.5,33,700/- Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had made cash deposits of Rs.25 lacs in her 4 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 bank account with Kotal Mahindra Bank, Branch: Pandri, Raipur. The assessee on being queried about the cash deposits in her bank account, submitted that the same were sourced from the sale proceeds of her business. The A.O, observed that the cash deposit of Rs.25 lacs made by the assessee on a single day in her bank account was not in parity with the type of cash deposits made in her bank account in the immediately preceding year. The assessee, on being queried furnished necessary details and explanation and produced the “cash book” in order to substantiate the source of the cash deposits of Rs.25 lacs made in SBNs made in her bank account during the demonetization period. However, the A.O vide his order passed u/s.143(3) of the Act, dated 30.12.2019 without rejecting the books of account of the assessee made an addition of Rs.3 lacs (out of cash deposits of Rs.25 lacs), and determined the income of the assessee at Rs.8,33,700/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. The CIT(Appeals) holding a firm conviction that as the cash deposit of Rs.25 lacs on a single day was abnormal as against her total turnover for the year under consideration of Rs.53.65 lacs (approx.), upheld the addition made by the A.O observing as under: “5.1 On perusal of submissions of the appellant, the appellant had an annual turnover or Rs. 53,65,581/-. The appellant stated that she made cash deposits of Rs.35,49,000/- during the 5 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 year under consideration. The AO further noticed that an amount of Rs, 25,00,000/- was deposited on a single day when the assessee was in practice of depositing the cash every month. 5.2 The single day cash deposit of Rs.25,00,000/- is abnormal when compared to the total turnover of the appellant i.e. Rs. 53,65,581/-. In this context the reply of the appellant reply during the assessment proceedings is reproduced for sake of ready reference: The assessee replied that she was shifted her business to new place i.e. Station Road, Raipur to Devendra Nagar, Raipur and opened a new bank account on 01.11.2019 with Kotak Mahindra Bank situated at Pandri, Raipur. The assessee further replied that due to distance issue she has not convenient to deposit the cash regularly to Syndicate Bank. Therefore, she has deposited the cash in new bank account during demonetization in single day' 5.3 Even after considering the appellant's reply that she had shifted her business to a new place and opened new bank account on 01.11.2019, the single day cash deposit of Rs.25,00,000/- is abnormal. The total turnover of the appellant is Rs.53,65,581/-. The proportionate turnover upto December 2019 would be Rs.40,24,186/- (53,65,581*12/9). Out of proportionate turnover upto December 2019 of Rs. 40,24,186/- the appellant had deposited Rs.25,00,000/- on a single day which is 62.12% of such turnover(40,24,186*62.12%). Therefore, the addition made by the AO of Rs. 3,00,000/- out of total cash deposits made by the appellant is based on merits. Therefore, the grounds raised by the appellant are Dismissed. 6. subject to above discussion and observations, the grounds of appeal raised by the appellant M/s. RINA KUMARI KODWANI against the order u/s 143(3) for the AY 2017-18 are Dismissed.” 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on 6 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 7. Before proceeding any further I shall first deal with the maintainability of the additional ground of appeal that has been raised before me. Ostensibly, the assessee by raising the additional ground of appeal has sought my indulgence for adjudicating the sustainability of the assessment order passed by the ITO-3(3), Raipur u/s.143(3), dated 30.12.2019. As the adjudication of the aforesaid issue involves purely a question of law which would not require looking any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. My aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal, which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 8. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee at the threshold submitted that though the notice u/s. 143(2) of the Act was issued by the ITO-4(3), Raipur on four occasions, i.e. on 22.09.2018, Page 1 to 4 of APB, 26.09.2018, Page 5 to 8 of APB, 26.09.2018, Page 9-12 of APB and 30.09.2018, Page 13 to 16 of 7 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 APB, but the assessment had thereafter been framed by the A.O i.e. ITO- 3(3), Raipur vide his order u/s. 143(3) of the Act, dated 30.12.2019. Elaborating further, the Ld. AR submitted that as no order of transfer u/s. 127 of the Act had been passed based on which, the case of the assessee was transferred by the ITO-4(3), Raipur to ITO-3(3), Raipur, therefore, the impugned assessment order passed u/s.143(3) of the Act, dated 30.12.2019 by the ITO-3(3), Raipur being devoid and bereft of any valid assumption of jurisdiction was liable to be quashed. The Ld. AR in support of his aforesaid contention had relied on the judgment of the Hon’ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO (2010) 329 ITR 283 (Cal. HC) and orders of the ITAT, Raipur in the cases of viz. (i) Sarita Jain Vs. ITO, Ward-4(1), Raipur, ITA No.260/RPR/2023, dated 24.06.2024; and (ii) Roop Das Vs. ITO, ITA Nos. 310 & 311/RPR/2023, dated 09.04.2024. 9. As the assessee has assailed the validity of the jurisdiction assumed by the A.O for framing of the assessment in absence of an order of transfer u/s.127 of the Act, therefore, the Ld. Sr. Departmental Representative (for short ‘DR’) was directed to produce the assessment record so that the factual position can be verified. 10. On the next date of hearing, i.e. on 04.06.2024, the Ld. DR had placed on record a letter dated 17.05.2024 of the ITO-3(1), Raipur, wherein 8 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 he had commented as regards the additional ground of appeal raised by the assessee, as under: The Ld. AR, on being confronted rebutted the claim of the A.O that a notice u/s. 143(2) was issued by the ITO-3(3), Raipur on 25.09.2018. The Ld. AR in order to dislodge the claim of the A.O had placed on record a 9 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 copy of the screen shot of the e-proceeding sheet in the case of the assessee for the subject year. 11. Be that as it may, the Ld. AR submitted that as no order of transfer u/s. 127 of the Act wherein the case of the assessee was transferred from ITO-4(3), Raipur to ITO-3(3), Raipur was passed, therefore, in absence of valid assumption of jurisdiction, the assessment framed by the ITO-3(3), Raipur vide his order u/s. 143(3) of the Act, dated 30.12.2019 being devoid and bereft of any force of law was liable to be quashed. 12. I have given a thoughtful consideration to the facts involved in the present case before me. As stated by the Ld. AR, and rightly so, I find that the till date despite specific direction the department has failed to place on record any order of transfer u/s. 127 of the Act, based on which, the case records of the assessee were transferred from ITO-4(3), Raipur to ITO-3(3), Raipur. In my view, the framing of assessment by the ITO-3(3), Raipur in absence of any valid order of transfer u/s. 127 of the Act in absence of any valid assumption of jurisdiction by the latter cannot be sustained and is liable to be quashed. My aforesaid view is fortified by the order of the ITAT, Raipur in the case of Sarita Jain Vs. ITO, Ward-4(1), Raipur, ITA No.260/RPR/2023, dated 24.06.2024, wherein the Tribunal after placing reliance on the host of judicial pronouncements held as under: 10 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 “13. I have thoughtfully considered the contentions of the Ld. Authorized Representatives of both the parties in the backdrop of the material available on record. Before proceeding any further, I deem it fit to cull out the provisions of Section 127 of the Act, which reads as under: \"127. (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal 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 Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,— (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing 11 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.\" (emphasis supplied by me) 14. Admittedly, it is a matter of fact borne from the record that though the Notice u/s 143(2), dated 29.07.2016, Page 1 of APB was issued by the ITO- 2(1), Raipur but thereafter the assessment had been framed vide order passed u/s.143(3) of the Act dated 27.12.2017 by the ITO-$(2), Raipur. The Ld. AR had placed on record a Notification No.1/2014-15 dated 15.11.2014, as per which, the JCIT, Range-2, Bhilai in exercise of the powers conferred upon him under sub-section (1), (2) and (3) of Section 120 of the Act by Pr. Commissioner/Commissioner of Income Tax-2, Raipur, had directed the A.O’s to exercise and perform functions under the Income Tax Act, 1961/Wealth Tax Act, 1957 in respect of respective cases or classes of persons in the territorial areas specified in the notification. Nothing has been brought on record by the Ld. DR which would reveal that any notification vesting jurisdiction over the case of the assessee with the ITO-4(2), Raipur was issued after the notice u/s.143(2), dated 29.07.2016 was issued by the ITO-2(1), Raipur. 15. Apropos the claim raised by the A.O, i.e. ITO-4(1), Raipur in his letter dated 10.05.2024 (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-2(1), Raipur to ITO-4(2), Raipur, i.e. from Range 2 to Range 4. Be that as it may, as per the 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 the case is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place, but it does not 12 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 dispenses with the statutory requirement of recording of the reasons for doing so by the concerned authority. As such, in the case before me, where jurisdiction over the case of the assessee had been transferred to ITO-4(2), Raipur from ITO-2(1), Raipur, i.e. within the same city, though no requirement of affording a reasonable opportunity of being heard to the assessee was required, but the pre-condition contemplated under sub- section (1) of Section 127 of the Act, i.e., recording of reasons for doing so by the appropriate authority could not have been done away with. 16. My aforesaid view that as per the mandate of law, a transfer order is statutorily required to be passed by the prescribed authority u/s.127 of the Act, and an A.O cannot on his own transfer an income tax file to another officer in the absence of the aforesaid order is squarely covered by the judgment of the Hon'ble High Court of Calcutta 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 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; 13 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 (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 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). 14 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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 transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G.A.No. 81 of 2010 is also allowed. No order as to costs\" (emphasis supplied by me) 17. Also, a similar issue had 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 15 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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 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 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 16 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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 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 17 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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 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: …… 18 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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 transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G.A.No. 81 of 2010 is also allowed. No order as to costs\" (emphasis supplied by me) 14. As in the case before me no order of transfer u/s. 127(1) of the Act had been shown to have been passed, and in fact, the case of the assessee had been transferred simplicitor on 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 of invalid assumption of jurisdiction on the part of the ITO-2(1), Bhilai 19 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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, 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 20 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 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.” 13. Although, I have quashed the assessment framed by the A.O for want of valid assumption of jurisdiction in absence of any order of transfer u/s. 127 of the Act, I am even otherwise unable to concur with the addition made by the A.O as regards the merits of the case. Ostensibly, the assessee had in the course of the assessment proceedings produced his books of account, and had come forth with an explanation that the subject cash deposits in SBNs of Rs.25 lacs was sourced out of her business sale receipts. I find that the A.O without rejecting the “books of account” of the assessee u/s.145(3) of the Act, much the less pointing out any infirmity in the same, had whimsically held the subject cash deposits of Rs.3 lacs (out of Rs.25 lacs) as an unexplained cash credit u/s. 68 of the Act. I am unable to comprehend that as to how the aforesaid arbitrary action on the part of the A.O, which thereafter, had been upheld by the CIT(Appeals) can be sustained. Accordingly, the addition of Rs.3 lacs made/sustained by the lower authorities u/s. 68 of the Act cannot even otherwise be approved. 21 Rina Kumari Kodwani Vs. ITO, Ward-3(3), Raipur ITA No. 111/RPR/2024 14. In the result, appeal of the assessee is allowed in terms of the aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024. ****SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "
Other Referred Cases
Hotel Blue Moon (2010) (SC), Kusum Goyal Vs. ITO (2010) 329 ITR 283 (Cal. HC), Sarita Jain Vs. ITO, Ward-4(1), Raipur, ITA No.260/RPR/2023, dated 24.06.2024, Roop Das Vs. ITO, ITA Nos. 310 & 311/RPR/2023, dated 09.04.2024, National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC), Ajanta Industries Vs. Central Board of Direct Tax (1976) 102 ITR 281 (SC)
Laws Referred To
Income-tax Act, 1961
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