M/S. N T MARKETING PRIVATE LTD.,,KOLKATA vs. PR. CIT RANCHI, RANCHI

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ITA 23/RAN/2021Status: DisposedITAT Ranchi09 October 2026AY 2012-1312 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the PCIT, Ranchi, had jurisdiction to pass the order under section 263. The Tribunal reasoned that despite the section 127 order transferring jurisdiction to Kolkata, the PAN was never migrated, and the case records and statutory proceedings continued to remain with the Ranchi authorities. The Tribunal emphasized that jurisdiction should be viewed in practical terms of control over assessment records, citing CIT Vs. Sahara Indian Financial Corporation Ltd. The Tribunal found that the assessee's jurisdictional objection was technical and lacked substance, as the de facto and de jure jurisdiction continued with Ranchi. Furthermore, the Tribunal agreed with the revenue that the AO's order dated 15.05.2017 was erroneous and prejudicial to the interest of revenue because it disregarded the directions given by the PCIT, Ranchi, under section 264 to examine the genuineness of share capital/premium. The Tribunal concluded that the revision order was not only within jurisdiction but also mandated by law. Consequently, the appeal was dismissed.

What were the facts?

The assessee, NT Marketing Private Limited, filed its return of income for Assessment Year 2012-13 declaring a total income of Rs. 60,186/-. The Assessing Officer (AO) initially made additions of Rs. 12,51,00,000/- as unexplained cash credit and Rs. 3,45,895/- under section 14A, completing the assessment at Rs. 12,55,06,080/-. Subsequently, the jurisdiction was transferred from Kolkata to Ranchi. The assessee filed a revision application under section 264 before the Principal Commissioner of Income Tax (PCIT), Ranchi, who set aside the assessment order and remanded it for de novo assessment with directions to inquire into the genuineness of share capital/premium. The AO in Ranchi completed the assessment at Rs. 4,06,080/-, making only an addition of Rs. 3,45,895/- under section 14A. Later, jurisdiction was transferred back to Kolkata. The PCIT, Ranchi, issued a show cause notice under section 263, asserting jurisdiction despite the transfer, and passed a revision order on 05.02.2021, setting aside the AO's order and directing fresh assessment.

What were the issues?

1. Whether the Principal Commissioner of Income Tax (PCIT), Ranchi, had jurisdiction to pass an order under section 263 of the Income Tax Act, 1961, on 05.02.2021, given that the jurisdiction over the assessee's case had been transferred to Kolkata vide an order under section 127 dated 19.03.2019. Assessee's Contention: The assessee argued that the PCIT, Ranchi, lacked jurisdiction as the case records and PAN had been transferred to Kolkata. They relied on the judgment of the Hon'ble Apex Court regarding non-communication of reasons for transfer. The assessee also contended that the order was barred by limitation as the issue of unexplained cash credit originated from the first assessment order. Revenue's Contention: The revenue contended that jurisdiction is a practical matter of control over assessment records. Despite the section 127 order, the PAN was not migrated to Kolkata, and case records remained in Ranchi. They cited CIT Vs. Sahara Indian Financial Corporation Ltd. to argue that jurisdictional defects must be substantial, not technical, and that the assessee's objection was hyper-technical. The revenue further argued that the AO's order dated 15.05.2017 disregarded directions under section 264, making it erroneous and prejudicial to revenue, thus warranting revision under section 263.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 264,Section 14A,Section 68,Section 127,Section 124(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI RATNESH NANDAN SAHAY & SMT. RAJANI GUDURI

For Respondent: Shri Sanjay Kumar, CIT DR
Hearing: 03/09/2026Pronounced: 09/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER AND SMT. RAJANI GUDURI, JUDICIAL MEMBER I.T.A. No. 23/RAN/2021 (Assessment Year: 2012-13) (Physical Hearing) NT Marketing Private Limited, Principal Commissioner of 167/4 Lenin Sarani, Bow Bazar, Income Tax, Ranchi Vs. Kolkata 700072, West Bengal (Jharkhand) PAN No. AAACN8419M Appellant/ Assessee Respondent/ Revenue

Assessee represented by None Department represented by Shri Sanjay Kumar, CIT DR Date of hearing 03/09/2026 Date of pronouncement 09/10/2026

O R D E R PER: BENCH

1.

This is an appeal filed by the assessee against the order of the ld. PCIT, Ranchi dated 05.02.2021 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred as “the Act”) passed in Revision No. PCIT Ranchi/Revision-263/10000012448/2020 for the assessment year 2012-13. 2. The brief facts of the case, are that, the appellant is a Non-Banking Financial Company duly registered with RBI and involved in the P a g e 1 | 12 business of granting loans and trading and investment in shares and securities, since last more than 10 years. On 28.09.2012, the appellant filed its return of income declaring the total income as Rs. 60,186/- for the year under consideration, at Kolkata. During the said year, the appellant has enhanced its share capital by Rs. 5,00,400/- and also received Rs. 12,45,99,600/- towards share premium account, total being Rs. 12,51,00,000/-. He also produced the books of accounts, audited account and other relevant documents of share applicants for scrutiny and assessment in support of the identity, credit worthiness, genuineness of shareholders. They were test checked on 24.03.2015 and assessment order was passed under section 143(3) of the Act, by the learned AO Ward-1(4), Kolkata on total income of Rs. 12,55,06,080/- making addition, inter-alia, of Rs. 12,51,00,000/- as an unexplained cash credit and Rs. 3,45,895/- under section 14A of the Act. 3. Thereafter, the jurisdiction of the case was transferred from Kolkata to Ranchi by an order under section 127 dated 30.03.2016 by PCIT-1, Kolkata, since the office of the appellant was situated at Ranchi as against which the appellant filed revision application under section 264 of the Act, before the Pr. CIT, Ranchi against the said assessment order dated 24.03.2015. On 16.03.2017 the Pr. CIT, Ranchi has set aside the same under section 264 of the Act and remanded the

P a g e 2 | 12 original assessment order passed by Ld. AO, Kolkata with a direction to the AO to frame the assessment de-novo after making fresh enquiries regarding the genuineness of the source of the share/capital/premium. 4. Accordingly, the ld. AO, ITO Ward-2(1), Ranchi took up the reassessment proceedings. He relied upon the aforesaid documents which were filed earlier during the course of original assessment order dated 24.03.2015 filed by the appellant including producing the books of accounts. The ld. AO again called for identity of the investor companies which were produced by the appellant. The AO again called for all the details and after detailed inquiry and verification of the documents, being satisfied with the same, the Ld. AO has accepted the same, passed assessment order under section 143(3)/264 completing the assessment at total income of Rs. 4,06,080/- and thereby making addition of Rs. 3,45,895/- only to returned income under section 14A of the Act. 5. Thereafter, the jurisdiction of the case was transferred back to ITO Ward-1(4), Kolkata by order under section 127 of the Act, vide Memo No. Pr.CIT/RNC/Tech/u/s 127/2018-19/6352-85, dated 19.03.2019. 6. After the order under section 127 of the Act, the jurisdiction of the case stood with ITO, Ward-1(4), Kolkata, according to the assessee.

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7.

While the case was being bounced between ITO Office, Ranchi and Kolkata, the learned Pr.CIT, Ranchi has issued an office order on 16.10.2019 stating therein that:- “The Jurisdiction over the cases of Kolkata based companies were earlier transferred u/s 127 from Ranchi to Kolkata through order, dated 19/03/2019 and 29/03/2019 and the PANs were accordingly migrated to concerned assessing officers of Kolkata. That The AOs, however refused to accept the assessment records and remigrated the PANS back to the AO at Ranchi on the ground that the impugned orders were passed u/s 127 of the I.T. Act without getting "No Objection" from the concerned Pr.CITs of Kolkata. To resolve this issue a reference has already been made to CBDT. However, till the matter is resolved, it is imperative on the part of the AOs at Ranchi to attend and dispose of all pending proceedings to protect the interest of revenue. Accordingly the AOs of Ranchi are directed to complete all time barring proceedings in these cases to avoid any loss of revenue."

8.

According to the assessee, the case has been scrutinized two times under section 143(3) and one time under section 147, total three times in past and the assessee has disclosed all the material facts as required by the Ld. AO and it is not a case of failure on the part of the assessee to disclose all the information. Reassessment has been made time and again just changing the opinions of the department. Further,

P a g e 4 | 12 to the utter surprise of the appellant, a show cause notice under section 263 dated 19.03.2020 was issued by Pr. CIT, Ranchi which was complied by the appellant by filing his submission and explanation on 23.03.2020 and also objecting for assumption of jurisdiction by the Pr. CIT, Ranchi as the same has been transferred to Kolkata, vide order under section 127 of the Act, dated 19.03.2019 and at the time of hearing on 23.03.2020, it was also clarified that no such order under section 127 transferring the jurisdiction back to Ranchi was passed and as such, same was not available on record and after the first date of hearing, 3 more dates of hearing were fixed and on each date of hearing the issue of wrong assumption of jurisdiction was raised by the appellant along with other issues on merits of the case but, however, the Ld. CIT, Ranchi on 05.02.2021 has passed an order under section 263, without commenting upon wrong assumption of his jurisdiction, brushing aside all the objections raised by the assessee, directed that “the assessment order passed u/s 143(3) read with section 264 of the Income Tax Act, 1961 dated 15.05.2017 is set-aside with a direction to the AO to make fresh assessment after making enquiries, verifications and investigations regarding genuineness of source of share capital and share premium introduced in its books of account".

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9.

Being dissatisfied with the order under section 263 of the Act, the appellant has filed this appeal on the following grounds:- “1. For that the order u/s 263 dated 05.02.2021 passed by Ld. PCIT, Ranchi is without jurisdiction, arbitrary, illegal and unjustified on facts and in law. 2. For that Ld. PCIT, Ranchi erred in not appreciating that the jurisdiction over the case of the appellant was already transferred by his predecessor, from Ranchi to Kolkata vide order u/s 127 dated 19.03.2019. As such the impugned order passed u/s 263 on 05.02.2021 is without jurisdiction, illegal and void ab-initio. 2.1 For that Ld. PCIT, Ranchi erred in assumption of jurisdiction without further order u/s 127 from the CIT, Kolkata transferring back the jurisdiction from Kolkata to Ranchi, in utter violation of the judgment and order of Hon'ble jurisdictional High court. 2.2 For that without prejudice to aforesaid grounds it is submitted that in any view of the case the order passed by Ld. PCIT by assuming jurisdiction is illegal and ultra- virus in view of decision of Hon'ble Apex Court wherein Hon'ble court has held that non-communication of reasons for transfer of case is not saved by showing that reasons exist in file although not communicated. 3. For that the impugned order u/s 263 passed on 05.02.2021 is barred by limitation since the issue of unexplained cash credit u/s 68 originated from the 1st assessment order u/s 143(3) 24.03.2015, in view of the decision of Hon'ble Apex court. 3.

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4.

For that Ld. PCIT, Ranchi erred in law and in facts that the assessment order passed cannot be set aside and remanded back to the AO for making fresh enquiries for the same issue again and again by the same jurisdictional CIT, due to his change of opinion and on false allegation that the order was passed without making enquiries. The order was passed after due enquiry as per wisdom of the assessing officer and one of the possible view was taken. 5. For that Ld. PCIT was not justified in passing the impugned order u/s 263 since the appellant had duly discharged the burden of proof lied upon it by producing the books of accounts, audited accounts and other relevant details and documents, in support of the identity, genuineness and credit worthiness share capital and share premium, amounting to total Rs. 12,51,00,000/-. 6. For that Ld. PCIT erred in not appreciating that the assessment order passed on 15.05.2017 could not have been set-aside for re-appreciation of issue of share capital, to be made afresh, since the same merged in fresh assessment order u/s 144/147 passed on 14.12.2019 on the same issue of addition in share capital itself and the appeal filed against the order dated 10.01.2020 was pending before CIT(A). As such the order u/s 263 is unjustified, arbitrary and be cancelled.” 10. There was no representation for appellant.

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11.

We heard Ld. CIT DR appearing for the department. The Ld. CIT DR has submitted his oral as well as written arguments contending that the issue for adjudication in this case is whether the revision order dated 05.02.2021 passed by ld. Pr.CIT, Ranchi is valid in law despite the existence of order under section 127 dated 19.03.2019, transferring the jurisdiction to Kolkata, when PAN Migration and the file transfer had not been effectuated and administrative control was continued with Ranchi authorities.

12.

The contention of the Ld. CIT DR is that the jurisdiction under Income Tax law is both legal and factual. Section 127 of the Act empowers transfer of jurisdiction by an administrative order. Also as per the well settled principles and CBDT instruction’s the order under section 127 has to be effectuated by PAN Migration and actual transfer of records and unless the PAN migration takes place, the jurisdiction continues to remain with the existing Assessing Officer and supervisory authorities. In this case, despite the order under section 127 of the Act, dated 19.03.2019, PAN of the assessee was never migrated to Kolkata and the case records continue to remain at Ranchi and also statutory proceedings and custody of record remained with Ranchi Charge and as such, the plea of loss of jurisdiction as contended by the assessee is misconceived. It is further contended by the Ld. CIT DR that the actual control over the case was exercised by the ld. Pr. CIT, Ranchi

P a g e 8 | 12 throughout, both physical and electronic record was available with Ranchi and statutory proceedings continued to be carried out from Ranchi even after 19.03.2019. It is held by the Hon’ble Courts that the jurisdiction is not a mere, theoretical construct but has to be looked into in practical terms of control over the assessment records as held in CIT Vs. Sahara Indian Financial Corporation Ltd. (2007) 289 ITR 41(SC), the principle of jurisdictional defect must be substantial but not technical. Unless the Jurisdiction has been lawfully assumed by another authority by actual migration and file transfer, the existing jurisdictional authority cannot be said to be functus officio. It is also contended by the Ld. CIT DR that merely because the formal order under section 127, not given practical effect, it cannot be held that no authority could be competent to act. Section 124(3) of the Act, specifically bars the assessee from raising jurisdictional objections after expiry of limitation i.e. 1 month from the date of notice under section 143(2) etc., unless there is an inherent lack of jurisdiction. There is no inherent lack of jurisdiction in this case but it is only a procedural incompleteness of PAN migration. As per settled principle, the jurisdictional challenge should not be entertained where they are hyper technical and do not cause prejudice to the assessee.

13.

It is further contended that the power under section 263 of the Act, is supervisory in nature meant to correct erroneous orders which are

P a g e 9 | 12 prejudicial to the interest of the revenue. In the present case, the order of Ld. AO dated 15.05.2017 has completely disregarded the direction under Section 264 to examine the genuineness of share capital/share premium of Rs. 12.15 Crore, such abdication of duty rendered the assessment order erroneous which is prejudicial to the interest of revenue. It is trite in law that where an AO fails to make requisite enquiry the order is amenable to revision under section 263 (Malabar Industrial Co. Ltd. Vs. CIT). Therefore, the revision order dated 05.02.2021 was not only within jurisdiction but also mandated in law.

14.

It is the further contention of Ld. CIT DR that the order under section 127 dated 19.03.2019 does not by itself divest the Ld. Pr.CIT, Ranchi of jurisdiction, in the absence of PAN migration and record transfer. The plea of the assessee is mere technical objection without substance, while the de facto and de jure jurisdiction continued with Ranchi authorities and the Ld. Pr. CIT, Ranchi, was fully competent to invoke section 263 and pass the revisionary order dated 05.02.2021. Therefore, the order deserves to be upheld and Ld. CIT DR prayed to dismiss the jurisdictional objection raised by assessee.

15.

We have considered the grounds of the appeal raised by the Ld. AR for the appellant and also the submissions made by Ld. CIT DR. Admittedly, the appeal is filed on the ground of wrong assumption of P a g e 10 | 12 jurisdiction by Ld. AO at Ranchi, when the case was already transferred to ITO Ward-1(4), Kolkata and it appears that the case was transferred as many as six times and shuttled between ITO Kolkata ward and Ranchi, on administrative grounds as well as the fact that the Ld. AO Ranchi was directed to conduct denovo enquiry regarding genuineness of share capital and share premium by setting aside the assessment, in revisionary proceedings. The Assessment dated 24.03.2015 is a revisionary proceeding under section 264 of the then Pr. CIT vide order dated 16.03.2017 since the Pr. CIT Ranchi in the revision under section 263 held that the Ld. AO’s order dated 15.05.2017 was both erroneous and prejudicial to the interest of revenue since it was passed without the enquiry mandated by the earlier revisional order under section 264 of the Act, Section 127 of the Act, gives vast powers to transfer jurisdiction by an administrative order to the Pr.CIT on administrative grounds.

16.

We have considered the above facts on record and since the power under section 263 is revisionary in nature meant to correct the erroneous orders prejudicial to the interest of revenue and since the order of the Ld. AO dated 15.05.2017 completely disregarded the direction given by the Pr. CIT Ranchi, under section 264 to examine the genuineness of share capital/share premium of Rs. 12.15 crores and as the Ld. AO failed to make requisite enquiry, therefore, we hold

P a g e 11 | 12 that the revision order dated 05.02.2021 is not only within jurisdiction but also mandated by law. Therefore, we hold that there is no force in the contention raised in the grounds of appeal that the ITO Ranchi has no jurisdiction to hold an enquiry in this case and accordingly, we are of the opinion that the appeal is liable to be dismissed.

17.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 09/10/2026.

Sd/- Sd/- (RATNESH NANDAN SAHAY) (RAJANI GUDURI) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated: 09.10.2026 *Ranjan

Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File

Sr. Private Secretary, ITAT, Ranchi

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