AMOLAKSHAYA TRADE AND CREDIT PRIVATE LIMITED,GUWAHATI vs. INCOME TAX OFFICER, WARD-4(1), GUWAHATI

The ld. Addl. CIT appearing for the revenue vehemently opposed the contention of the assessee and contended that as per section 124(2) of the Act, when a question arises in respect of jurisdiction as to whether the AO has jurisdiction to assess any person, then the question shall be determined by the jurisdictional Commissioner; and, since in this case both the ITOs were under the same Commissioner, question of dispute in respect of jurisdiction does not arise; and he also drew our attention to sec. 127(4) of the Act and contended that the AO to whom the assessment has been transferred need not reissue any notice already issued by the earlier AO and, therefore, he does not want us to interfere with the re- assessment order passed by the AO.

We have heard rival submissions and have gone through the facts and circumstances of the case. We note that it is an ex parte order passed by the Ld. CIT(A) without adjudicating the legal issue as well as merits of the case. However, we note that the legal issue which has been raised before us is whether the AO ie ITO Ward (4) (1) had jurisdiction to frame the re-assessment order without satisfying the condition precedent as stipulated in section 147 of the Act [i.e,without recording reason for re-opening the assessment and not issuing notice u/s. 148 of the Act] . For adjudicating this legal challenge we note that relevant material/documents are filed before us, therefore, we are inclined to adjudicate this issue. We note that the impugned order of the AO is a reassessment order passed u/s. 147 read with section 143(3) of the Act. Quietess to assessment proceedings subject to limitation is the rule. Exception to this rule is only if the law permits AO to do so. Once an assessment order u/s. 143(3) of the Act or even an intimation u/s. 143(1) has been passed, then also after the limitation period is over, the same cannot be disturbed or reopened without satisfying the condition precedent as laid in the statute. For reopening an assessment of an assessee, the condition precedent prescribed u/s. 147 of the Act is that the AO should have “reason to believe escapement of income” which means there should be foundation based on information and belief based on reason. Therefore, the jurisdictional AO of the assessee has to record reasons as to how he forms the belief that income chargeable to tax has escaped assessment. This is the condition precedent which he should satisfy before he ventures to reopen the assessment within four years. Here in this case of the assessee, ITO, Ward-1(1), Guwahati on 24.03.2016 has recorded the reasons for reopening and thereafter has issued section 148 notice on 29.03.2016. Thereafter he transferred the case to the ITO, Ward-4(1) by letter dated 01.06.2016. And the ITO, Ward- 4(1) neither issued any notice u/s. 148 of the Act nor recorded the reasons for reopening the assessment has straight away issued notice under section 143(2) of the Act and has framed the re-assessment on 27.12.2016, which action according to us, is without jurisdiction. For coming to such a conclusion, we rely on the order of the ITAT “D” Bench in Dr. Mrs. K. V. Kumar Vs. ITO (2011) 12 taxmann.com 318 (Del.), ACIT Vs. Resham Petrotech Ltd. (2012 21 taxmann.com 161 (Ahd) and Coronation Agro Industries ltd. Vs. DCIT (2017) 82 taxmann.com 75 (Bom.). We also note that Hon’ble Calcutta High court in the case of Kusum Goel Vs. ITO 319 ITR 283 has held that- “one AO cannot transfer the case to another AO without order u/s. 127 of the Act.”

Coming to the contention of ld. DR, we note that section 124(2) or section 127(4) of the Act does not come to the rescue of the department. Coming to section 124(2) of the Act, we note is in respect of transfer of cases within the jurisdictional CIT as well as if there is a dispute between two AOs falling under the jurisdiction of different Commissioner, the procedure that has to be followed is spelt out. In the present case admittedly there is no order passed by the jurisdictional Commissioner transferring this case from ITO, Ward-1(1) to the ITO, Ward-4(1); and moreover the ITO, Ward-1 while transferring the re-assessment to ITO, Ward-4(1) admits that he does not have territorial jurisdiction over the assessee. And the Ld. DR’s contention justifying the action of ITO-4(1) in not again issuing notice u/s. 148 nor recording reasons by pointing out section 127(4) of the Act, we clarify that sec. 127(4) of the Act comes into operation only when the transfer of assessment is ordered by the Commissioner u/s. (1) and (2) of the section 127 of the Act and not otherwise. It is not the case of the revenue that there has been an order passed by the Commissioner u/s. 127 of the Act transferring the assessment of assessee from ITO ward (1) (1) to ITO-ward 4(1); and it is not the case of the revenue that ITO, Ward-4(1) who passed the impugned reassessment order had issued notice u/s. 148 and has recorded the reasons for reopening as required under section 147 of the Act. In the light of the undisputed facts stated above, we hold that ITO, Ward 4(1) has usurped the jurisdiction without satisfying the condition precedent as prescribed u/s. 147 of the Act resulting in the impugned order being null in the eyes of law and, therefore, we quash the impugned reassessment order passed by the ITO, Ward-4(1) in this case. Since both the appeals are on the same facts and the ld.DR was not able to point out any change in facts or law, the assessee succeeds on the legal issue in both the appeals.

In the result, both the appeals of assessee are allowed.