KOMMA TULASI RAM KUMAR,VIJAYAWADA vs. INCOME TAX OFFICER, WARD (INTERNATIONAL TAXATION), VIJAYAWADA
Facts
The assessee filed a return of income, and the case was selected for scrutiny concerning credit card payments totalling Rs.11,40,170/-, of which Rs.6,89,000/- was cash. The Assessing Officer added the entire amount as unexplained money under Section 69A and Section 115BBE due to lack of explanation. The assessee challenged this addition and the AO's jurisdiction before the CIT(A), arguing that the case was transferred without a formal Section 127 order.
Held
The Tribunal upheld the CIT(A)'s rejection of the jurisdictional challenge, stating that it was not a transfer under Section 127 for administrative convenience but a correction of incorrect filing by the assessee. Regarding the addition, the Tribunal directed the Assessing Officer to delete the addition of Rs.4,51,170/- paid through the bank, as the source was traceable to declared income. However, the Tribunal sustained the addition of Rs.6,89,000/- paid in cash, as the assessee failed to explain its source.
Key Issues
1. Whether the Assessing Officer had proper jurisdiction to pass the assessment order when the case was transferred without a formal order under Section 127 of the Income Tax Act, 1961. 2. Whether credit card payments, specifically those made in cash and through bank, constituted unexplained money under Section 69A of the Income Tax Act, 1961.
Sections Cited
69A, 115BBE, 143(2), 143(3), 127
AI-generated summary — verify with the full judgment below
Before: SHRI VIJAY PAL RAO, V.P. & SHRI MANJUNATHA G. A.M.
IN THE INCOME TAX APPEALTE TRIBUNAL : VISAKHAPTNAM BENCH : VISAKHAPATNAM AT HYDERABAD [THROUGH VIRTUAL HEARING] BEFORE SHRI VIJAY PAL RAO, V.P. AND SHRI MANJUNATHA G. A.M. ITA.No.203/Vizag/2024 Assessment Year 2017-2018 Komma Tulsi Ram Kumar, The Income Tax Officer, VIJAYAWADA – 520 010. vs. Ward (Intl. Taxation), PAN AFJPT6346J VIJAYAWADA. (Appellant) (Respondent) For Assessee : Sri GVN Hari, Advocate For Revenue : Dr. Aparna Villuri, Sr. AR Date of Hearing : 28.07.2025 Date of Pronouncement : 31.07.2025 ORDER PER MANJUNATHA G. :
This appeal has been filed by the assessee against the order dated 08.03.2024 of the learned CIT(A)-10, Hyderabad, relating to the assessment year 2017-2018.
Brief facts of the case are that, the assessee filed his return of income for the assessment year 2017-2018 on 30.03.2018, declaring income of Rs.9,47,800/-. The case was selected for scrutiny under CASS to examine the issue
2 ITA.No.203/Vizag/2024 of credit card payments. During the course of assessment proceedings, the Assessing Officer noticed that, the assessee holds credit card with IndusInd Bank and made payments in respect of expenditure incurred through the above credit card for Rs.11,40,170/-, out of which, cash payment of Rs.6,89,000/- was made. Therefore, the Assessing Officer vide show cause letter dated 11.11.2019 called-upon the assessee to explain the source for credit card payments. Since, there is no response from the assessee, the Assessing Officer made addition of Rs.11,40,170/- as unexplained money under section 69A of the Act and brought to tax under section 115BBE of the Income Tax Act, 1961.
Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee challenged the assessment order passed by the Assessing Officer on various grounds including non-service of notice issued u/sec.143(2) of the Act and also jurisdiction of the Assessing Officer who passed the assessment order in light a provisions of section 127 of the Income Tax Act, 1961 and argued that, initially the Income Tax Officer, Non-
3 ITA.No.203/Vizag/2024 Corporate Ward-18 (3), Chennai issued notice under section 143(2) of the Act, dated 24.09.2018 and subsequently, the case has been transferred to Income Tax Officer, [International Taxation], Vijayawada, without any formal order under section 127 of the Income Tax Act, 1961, which is evident from subsequent notice issued by the Income Tax Officer, [International Taxation], Vijayawada dated 27.09.2018 and subsequent assessment order passed under section 143(3) of the Income Tax Act, 1961 dated 11.02.2019. The assessee had also challenged the addition made by the Assessing Officer towards credit card payments and submitted that, the source for the credit card payment is, out of income declared by the assessee for the relevant assessment year. The learned CIT(A) after considering the relevant submissions of the assessee, rejected the legal ground taken by the assessee challenging the jurisdiction of the Assessing Officer i.e., Income Tax Officer, [International Taxation], Vijayawada on the ground that, the provisions of section 127 of the Income Tax Act, 1961 would apply only to those cases, where there is a transfer of case from one
4 ITA.No.203/Vizag/2024 jurisdiction to other and not transfer of jurisdiction of the assessee from one place to another. The learned CIT(A), however, held that, it is the assessee, who had filed his return of income with a wrong jurisdiction which is evident from ITR-1 filed by the assessee, where the assessee has filed return with Income Tax Officer, Non-Corporate Ward- 18(3), Chennai, even though, the jurisdiction of the assessee falls with Income Tax Officer, [International Taxation], Vijayawada. Since, the assessee himself has filed return with a wrong jurisdiction, the Assessing Officer has rightly transferred the case to the Assessing Officer having jurisdiction over the assessee and the Assessing Officer has issued notice under section 143(2) of the Act. Therefore the learned CIT(A) has held that, there is no merit in the ground taken by the assessee challenging the validity of jurisdiction of the Assessing Officer.
The learned CIT(A) had also rejected other legal ground taken by the assessee including non-service of notice under section 143(2) of the Income Tax Act, 1961 on the ground that, on perusal of the remand report of the
5 ITA.No.203/Vizag/2024 Assessing Officer, it is noticed that, notice under section 143(2) was generated electronically on 24.09.2018 by the Income Tax Officer, Non-Corporate Ward-18(3), Chennai as the PAN was with him. Subsequently, the Assessing Officer has noticed from the return of income that, the jurisdiction of the assessee lies with Income Tax Officer, [International Taxation], Vijayawada. Therefore, the jurisdiction of the case was transferred. Since, the case was received by the Assessing Officer, the Assessing Officer has signed the same notice with seal and stamp which was generated on 24.09.2018 and served on the assessee on 28.09.2018. Therefore, the arguments of the assessee that notice under section 143(2) of the Act, was not served is incorrect. Thus, the learned CIT(A) rejected the ground taken by the assessee.
Learned CIT(A) had also rejected the argument of the assessee with regard to source for credit card payment out of income declared in the return of income on the ground that, the assessee has failed to prove the nexus
6 ITA.No.203/Vizag/2024 between the income earned and amounts spent for credit card payments.
Aggrieved by the order of the learned CIT(A) the assessee is now, in appeal before The Tribunal.
Sri GVN Hari, Advocate-Learned Counsel for the Assessee submitted that, the learned CIT(A) was erred in rejecting the ground taken by the assessee regarding jurisdiction of the Assessing Officer in light of provisions of section 127 of the Income Tax Act, 1961, even though, the case has been transferred from Income Tax Officer, Non- Corporate Ward-18(3), Chennai to Income Tax Officer [International Taxation], Vijayawada, without there being any formal Order under section 127 of the Income Tax Act, 1961. Learned Counsel for the Assessee referring to notice issued under section 143(2) of the Act, dated 24.09.2018 by the Income Tax Officer, Non-Corporate Ward-18(3), Chennai and subsequent notice issued by the Income Tax Officer, [International Taxation], Vijayawada submitted that, there is a transfer of jurisdiction from one Assessing Officer to another Assessing Officer, for which, Order under section
7 ITA.No.203/Vizag/2024 127 of the Income Tax Act, 1961 from the Component Authority is required. Although, there is no Order from the Component Authority, the learned CIT(A) has simply rejected the ground taken by the assessee. Learned Counsel for the Assessee further submitted that, after transfer of jurisdiction, the Assessing Officer has not issued notice under section 143(2) of the Act. In absence of notice issued under section 143(2) of the Act, assumption of jurisdiction by the Assessing Officer is in correct and consequently, the assessment order passed by the Assessing Officer is null and void. Learned Counsel for the Assessee further referring to addition made by the Assessing Officer towards credit card payments submitted that, out of total payment of Rs.11,40,170/-, the assessee has made payment of Rs.4,51,170/- through Bank, out of his known source of income, which is evident from the total income declared by the assessee for the year under consideration and the remaining amount of Rs.6,89,000/- was although, made in cash, but, source is out of regular income and previous savings. Although, these facts has been explained to the
8 ITA.No.203/Vizag/2024 learned CIT(A), but, the learned CIT(A) has, simply sustained the addition made by the Assessing Officer. Therefore, he submitted that, the addition made by the Assessing Officer should be deleted.
Dr. Aparna Villuri, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, it is not a case of transfer of jurisdiction from one Assessing Officer to another Assessing Officer for administrative convenience, but, it is a case of transfer of jurisdiction for filing of return of income by the assessee with incorrect jurisdiction. Therefore, the learned CIT(A) has rightly rejected the legal ground taken by the assessee. In so far as addition made by the Assessing Officer towards credit card payments, the assessee could not establish the nexus between the income declared for the year under consideration and credit card payments. Therefore, in absence of details, the learned CIT(A) has rightly sustained the addition made by the Assessing Officer and thus, the order of the learned CIT(A) should be upheld.
9 ITA.No.203/Vizag/2024 9. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that, the assessee is a non-resident Indian and filed his return of income for the assessment year 2017-2018 with address D.No.6442, Ramalayam Street, Patamata Lanka, Vijayawada-520 010. But, the assessee has filed his return of income in Form ITR-1 with Income Tax Officer, Non-Corporate Ward-18(3), Chennai. The initial notice under section 143(2) of the Act, dated 24.09.2018 was issued by Income Tax Officer, Non- Corporate Ward-18(3), Chennai and said notice was generated electronically by the System on the basis of return of income filed by the assessee. Further, upon verification of relevant address given by the assessee and residential status, the Assessing Officer i.e., Income Tax Officer, Non-Corporate Ward-18(3), Chennai noticed that, the jurisdiction of the assessee falls with Income Tax Officer, [International Taxation], Vijayawada and therefore, the assessment record has been transferred to the Assessing Officer having jurisdiction over the assessee. The Income
10 ITA.No.203/Vizag/2024 Tax Officer, [International Taxation], Vijayawada issued notice under section 143(2) of the Act on 28.09.2018. Therefore, it is necessary for us to examine the legal ground taken by the assessee, in light of provisions of section 127 of the Income Tax Act, 1961 and in light of above facts.
The provision of Section 127 of the Income Tax Act, 1961 deals with power to transfer case from one Assessing Officer to another Assessing Officer. In case, the jurisdiction of the Assessing Officer has been transferred from one Assessing Officer to another Assessing Officer, a formal Order under section 127 of the Income Tax Act, 1961 from Component Authority is mandatory. It was the argument of the Counsel for the Assessee that, the case of the assessee has been transferred from Income Tax Officer, Non-Corporate Ward-18(3), Chennai to Income Tax Officer, [International Taxation], Vijayawada, without any Order under section 127 of the Act. Therefore, the subsequent proceedings becomes null and void. We do not find any merit in the arguments of the Counsel for the Assessee for the simple reason that, it is not a transfer of case from one
11 ITA.No.203/Vizag/2024 Assessing Officer to another Assessing Officer for administrative convenience or for better management of the case, but, it is a case of transfer of assessment records to the Assessing Officer having jurisdiction over the assessee, which is based on the return of income filed by the assessee with his residential status and address. Although, the assessee’s jurisdiction falls under Income Tax Officer, [International Taxation], Vijayawada, but, the assessee has filed return of income with Income Tax Officer, Non- Corporate Ward-18(3), Chennai. Since the assessee himself has made a mistake or error in filing the return of income with incorrect jurisdiction, in our considered view, the generation of initial notice under section 143(2) of the Act by the Assessing Officer i.e., Income Tax Officer, Non- Corporatel Ward-18(3), Chennai and subsequent issue of notice under section 143(2) of the Act, by the Income Tax Officer, [International Taxation], Vijayawada cannot be considered as transfer of jurisdiction of the assessee to one Assessing Officer to another Assessing Officer. Therefore, we are the considered view that, there is no merit in the legal
12 ITA.No.203/Vizag/2024 ground taken by the assessee in light of certain judicial precedents including the decision of Hon’ble Calcutta High Court in the case of PCIT vs., M/s. Ojasvi Motor Finance Pvt. Ltd., [2023] 337 CTR 964 (Cal.) and thus, the grounds of appeal taken by the assessee are rejected.
Coming back to the addition made by the Assessing Officer towards credit card payment under section 69A of the Income Tax Act, 1961 as unexplained money. Admittedly, the assessee has made credit card payment of Rs.11,40,170/-, out of which, Rs.6,89,000/- has been paid in cash. The Assessing Officer made addition on the ground that, the assessee could not file any evidence to explain the source. Before the learned CIT(A), the assessee submitted that, out of total payment of Rs.11,40,170/-, a sum of Rs.4,51,170/- has been paid through proper banking channel, out of is known source of income including the income declared for the year under consideration. The learned CIT(A) has rejected the arguments of the assessee on the ground that, there is no one-to-one co-relation or nexus between the income
13 ITA.No.203/Vizag/2024 declared for the year under consideration and credit card payment. In our considered view, the reasons given by the learned CIT(A) is devoid of merit because, once the assessee has made payment through bank account, it is clearly evident that, the said payment is out of income declared for the year under consideration. The assessee had declared income of Rs.9,47,800/- for the year and consideration, whereas credit card payments to the tune of Rs.4,51,170/- has been made through bank account. Since, the income declared by the assessee is in excess of credit card payment through bank account, in our considered view, the explanation of assessee with regard to source for credit card payments should have been accepted by the Assessing Officer and the learned CIT(A). Therefore, we direct the Assessing Officer to accept the source to the extent of credit card payment made through bank account and delete addition of Rs.4,51,170/-.
In so far as cash payment of Rs.6,89,000/- is concerned, there is no explanation from the assessee. Although, the assessee claims that, it is out of income
14 ITA.No.203/Vizag/2024 declared for the year under consideration and past savings, but, going by the amount of income declared by the assessee, in our considered view, if we exclude the amount of drawings for his personal purposes, the remaining amount considered for credit card payments through bank account is sufficient enough to cover the income declared by the assessee. Therefore, in our considered view, the assessee is unable to explain the source for cash payment of Rs.6,89,000/- towards credit card payments. Thus, we are inclined to uphold the reasons given by the learned CIT(A) to sustain the credit card payment to the extent of Rs.6,89,000/- and thus, we direct the Assessing Officer to sustain the addition to the extent of Rs.6,89,000/- paid in cash for credit card payments.
In the result appeal of assessee is partly allowed.
Order pronounced in the open Court on 31.07.2025.
Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 31st July, 2025 VBP
15 ITA.No.203/Vizag/2024
Copy to Komma Tulsi Ram Kumar, D.No.64-4-2, Ramalayam 1. Street, VIJAYAWADA (Urban), Patamata S.O. Krishna District. State of Andhra Pradesh. PIN – 520 010. 2. The Income Tax Officer, Ward-(International Taxation), Vijayawada. 3. The CIT(A)-10, 2nd Floor, Aayakar Bhawan, Basheerbagh, Hyderabad – 500 004. 3. The Pr. CIT, Hyderabad/Vijayawada/Visakhapatnam. 4. The DR ITAT Visakhapatnam Bench, Visakhapatnam. 5. Guard File. //By Order// //True Copy//
