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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER:
4. The captioned appeals instituted by the assessee are directed against the separate orders of the Commissioner of Income Tax (Appeals), NFAC, Delhi [in short “Ld. CIT(A)”], Delhi dated 13.01.2025 and 14.01.2025 for the assessment year 2011- 12, which in turn arises from the order u/s 143(3) / 147 dated 21.12.2018 passed by Income Tax Officer, Kawardha and order u/s 271(1)(c) passed by assessment unit NFAC dated 10.05.2024, respectively.
5. The grounds of appeal
assailed by the assessee against the impugned order are as under:
1. 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in not deciding the legal ground challenging initiation of reassessment proceeding as illegal, being passed by Assessing Officer other than the jurisdictional 34 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 Assessing Officer and transfer of the case to ITO Kawardha without requisite order u/s. 127 of the Income-tax Act, 1961.
2. In the facts and circumstances of the case and in law, the learned CIT (Appeals) has erred in not deciding the legal ground challenging initiation of reassessment proceeding as illegal, being made without fulfilling all the conditions stipulated in section 147 to 151 of the Income-tax Act, 1961.
3. In the facts and circumstances of the case and in law, the Id. CIT (Appeals) has erred in confirming addition of Rs.13,99,300/- as unexplained income.
The impugned order is bad in law and on facts.
5. The appellant reserves the right to add, amend, alter and omit all or any of the grounds of appeal with permission of the Hon'ble appellate authority.
6. Both the parties herein conceded that smce the facts and issues involved in both these appeals are absolutely similar and identical, therefore, the cases may be taken up together and dispose of vide this consolidated order.
7. The appeal filed by the assessee in for A.Y.2011-12 is with regard to the substantive addition and the appeal filed by the assessee in A.Y.2011-12 is with regard to penalty in respect of the substantive addition.
35 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 8. In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only.
The legal issue that has been raised by the Ld. Counsel for the assessee is that though the case of the assessee was transferred from ITO- 1(1), Bhilai to ITO, Ward-Kawardha, however, there is no order of transfer u/ s. 127 of the Act which is mandatory. In this regard, the Ld. Sr. DR was directed to file a report from the concerned A.0 and she has placed on record the same. The report is absolutely silent and does not state anything whether there is any mandatory order of transfer u/ s. 127 of the Act in the case of the assessee. Rather, the said report spells out that the concerned A.O i.e. the ITO-1(1), Bhilai had himself transferred the case to ITO, Ward-Kawardha. The said report of the A.O dated 14.07.2025 is extracted as follows:
36 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025
37 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025
Therefore, as evident from the aforesaid report filed by the department, there is no order of transfer u/s. 127of the Act in the case of the assessee and the facts remains that the jurisdiction was transferred from ITO-1(1), Bhilai to ITO, Ward-Kawardha. The Ld. Sr. DR could not refute these fact. The issue is no more res-integra. That as mandated by the statute the order of transfer u/s. 127 of the Act is essential for transferring jurisdiction from one A.O to another. In this case, it was transferred from ITO-1(1), Bhilai to ITO, Ward-Kawardha suo-motto by the A.0 which is beyond the scope and provision of 38 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 Section 127 of the Act. The power to transfer cases are vested with the Pr. Director General, Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner. In the case of the assessee there is no such mandatory order of transfer u/s. 127 of the Act from the competent authority.
Having given a thoughtful consideration to the facts and circumstances of the present case, after hearing both the parties and on perusal of case laws relied upon. Admittedly, in present case, the assessment has been framed by ITO, Kawardha vide the assessment order u/s 143(3)/ 147 dated passed on 21.12.2018 by transfer of jurisdiction from ITO, Ward-1(1), Bhilai to ITO, Ward- Kawardha. It was the allegation by assessee that there was no transfer of order u/s 127 of the Act, which is mandatory, therefore, in absence of any such order of transfer, the assessment order is void- ab-initio and liable to be quashed. On enquiry of this aspect from the revenue, it is submitted vide report by the Ld. AO i.e., Income Tax Officer, Ward-1(3), Bhilai dated 14.07.2025 that in the present matter the Ld. AO had transferred the case to ITO-Kawardha as per notification dated 15.11.2014, however, no order u/s 127 could be placed before us, which impliedly proves that no order of transfer u/s 39 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 127 was issued in the present case for transferring the case from ITO Ward 1(1), Bhilai to ITO, Ward- Kawardha.
The aforesaid issue raised by the assessee is no more res-integra, as the same have been decided by the division bench of this tribunal in the case of The Income Tax Officer-4(1) vs. M/s. Bhagyaarna Gems & Jewellery Pvt. Ltd in dated 31.01.2025, after considering and contemplating at length on the judgment of Hon’ble Apex Court in the case of “KIIT” (supra), while deliberating on the issue under similar facts and circumstances, the relevant observations of Division Bench of ITAT, Raipur in the aforesaid case reads, as under:
17. We, thus, based on the aforesaid facts shall proceed with and adjudicate the solitary issue for which our indulgence has been sought i.e. as to whether or not the assessment order passed by the ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 can be sustained in absence of any order of transfer u/s. 127 of the Act passed by the Pr. CIT, Kolkata?
Before proceeding any further for adjudicating the aforesaid issue, i.e. sustainability of the order passed by the ITO-4(1), Raipur u/s.143(3) of the Act, dated 31.03.2015 in absence of any order of transfer 40 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 u/s.127 of the Act of the Pr. CIT, Kolkata, we deem it fit to briefly cull out the facts involved in the present case. xxxxxx Xxxxxx xxxxxx 30. Also, support is drawn from the Judgment of the Hon’ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissioner of Income Tax, (2016) 388 ITR 489 (SC), wherein the Hon’ble Apex Court emphasizing on the passing of an order u/s.127(2)(a) of the Act where the assessee’s case was transferred from one A.O to another, and the said AO’s were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the Director General, Chief Commissioner or Commissioner as the case may be, of the two jurisdictions is necessary. The Hon’ble Apex Court, had observed, that though it was the claim of the department in its counter affidavit that there was no disagreement between the two CITs but absence of disagreement cannot tantamount to agreement as visualized u/s. 127(2)(a) of the Act, which contemplates a positive state of mind of the two jurisdictional CITs which was conspicuously absent in the case before them. Accordingly, the Hon’ble Apex Court had set-aside the judgment of the Hon’ble High Court of Madras in the case of CIT Vs. Noorul Islam Educational Trust (2015) 375 ITR 226 (Mad.), wherein the High Court had, observed, that as Section 127(2)(a) of the Act was nothing but a machinery provision, therefore, the CIT had the power of transfer even without assigning any reason and, thus, had approved the transfer of the case. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “4. As the income-tax/assessment file of the appellant assessee has been transferred from one AO in Tamil Nadu to another AO in Kerala and the two AOs are not subordinate to the same Director General or Chief CIT 41 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 or CIT, under s.127(2)(a) of the Act an agreement between the Director General, Chief CIT or CIT, as the case may be, of the two jurisdictions is necessary.
The counter-affidavit filed on behalf of the Revenue does not disclose that there was any such agreement. In fact, it has been consistently and repeatedly stated in the said counter- affidavit that there is no disagreement between the two CITs. Absence of disagreement cannot tantamount to agreement as visualized under s. 127(2)(a) of the Act which contemplates a positive state of mind of the two jurisdictional CITs which is conspicuously absent.
In the above circumstances, we will hold that the transfer of the income-tax/assessment file of the' appellant assessee from AO, Tamil Nadu to AO, Kerala is not justified and/or authorized under s. 127(2)(a) of the Act. The order of the High Court is, therefore, interfered with and the transfer is accordingly set aside.
The appeal is allowed in the above terms.” xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 44. Apropos the judgment of the Hon’ble Apex Court relied upon by the A.O in the case of Kalinga Institute of Industrial Technology Vs. DY. CIT (2023) 151 taxmann.com 433 (SC), it would be relevant to cull out the facts as were involved in the aforesaid case.
(i) the assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without jurisdiction; 42 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 (ii) the jurisdiction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar was after filing of the return of income changed and got vested with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar; (iii) it was the assessee’s case that as the jurisdiction to issue notice u/s.143(2) of the Act in its case was with Jt.CIT(OSD)(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar was without jurisdiction and, thus, was liable to be quashed; (iv) the Hon’ble High Court of Orissa considering the fact that the jurisdiction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar, therefore, held the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar as having been issued without jurisdiction and thus, quashed the same.
On Special Leave Petition (SLP) filed by the revenue, the Hon’ble Apex Court, inter alia, observed that as the records revealed that the assessee had participated in the assessment proceedings pursuant to notice issued u/s. 142(1) of the Act, and thus, had not questioned the jurisdiction of the A.O, therefore, there was no justification for the High Court to have set-aside the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar. Elaborating on the scope of Section 124(3)(a) of the Act, the Hon’ble Apex Court observed that the same precluded the assessee from questioning the jurisdiction of the A.O if he does not do so within 30 days of receipt of notice u/s. 142(1) of the Act.
43 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025
Before proceeding any further, it would be relevant to point out that a plain reading of sub-section (3) of Section 120 of the Act reveals that the “jurisdiction” vested with the A.O is classified into four categories, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. As in the present case before us, the assessee company has not assailed the vesting of jurisdiction with the ITO-4(1), Raipur on either of the aforesaid four categories, but has rather assailed the failure of the authorities to strictly comply with the mandate of law for transferring of its case i.e. from ITO- 4(1), Kolkata to ITO-1(1), Raipur, therefore, the same in our view cannot be brought within the meaning of questioning of the jurisdiction assumed by the A.O on the aforesaid basis, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. As the CIT-2, Kolkata had failed to pass an order transferring the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur as was statutorily required per the mandate of Section 127 of the Act, therefore, it is the validity of the impugned assessment order passed by the A.O i.e. ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 in absence of an order of transfer passed u/s. 127 of the Act which has been challenged by the assessee company.
At this stage, we may herein reiterate that the Hon’ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissioner of Income Tax, (supra), emphasizing on the statutory requirement of passing of an order u/s.127(2)(a) of the Act where the assessee’s case was transferred from one A.O to another, and the said AO’s were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the Director 44 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 General, Chief Commissioner or Commissioner as the case may be, of the two jurisdictions is necessary.
We, thus, in terms of our aforesaid observations are of a firm conviction that as the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but had rather assailed the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer that was statutorily required to have been passed by the CIT-2, Kolkata u/s. 127 of the Act, therefore, it would not be circumscribed by the restriction contemplated under sub-section (3) of Section 124 of the Act. Accordingly, we are of a firm conviction that the judgment of the Hon’ble Supreme Court in the case of Kalinga Institute of Industrial Technology Vs. DY. CIT (supra) is distinguishable qua the issue involved in the present case of the assessee company before us.
We, thus, in terms of our aforesaid observations read in the backdrop of the facts involved in the present case before us and the judicial pronouncements, are of a firm conviction that in absence of any order of transfer passed by the CIT, Kolkata-2, Kolkata u/s.127(2) of the Act, which was the very foundation for transferring the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur and finally to ITO-4(1), Raipur, the latter had invalidly assumed jurisdiction and framed the assessment vide his order u/s.143(3) of the Act, dated 31.03.2015. Accordingly, the assessment framed by the ITO-4(1), Raipur vide his order passed u/s.143(3) of the Act, dated 31.03.2015 in absence of an order of transfer u/s.127 of the Act having been passed by the CIT, Kolkata is quashed for want of valid assumption of jurisdiction.
45 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025 13. In backdrop of aforesaid observations and decision in the case of The Income Tax Officer-4(1) vs. M/s. Bhagyaarna Gems & Jewellery Pvt. Ltd (supra), I am of the firm conviction that in absence of any order of transfer passed by the Pr. CIT, Raipur u/s.127(2) of the Act, which was the very foundation for transferring the case of the assessee from ITO-1(1), Bhilai to ITO- Kawardha, who finally had framed the assessment vide his order u/s.143(3) / 147 of the Act, dated 21.12.2018, consequently, the impugned assessment framed, dehors an order of transfer u/s.127 of the Act is liable to be quashed and I do so.
As the impugned assessment passed u/s 143(3) / 147 dated 21.12.2018 is quashed, dehors of mandatory order of transfer u/s. 127 of the Act, therefore, I refrain from adverting to the merits of the case as had been raised by the assessee before us, which, thus, are rendered as academic only.
Resultantly ITA 142/RPR/2025 stands allowed in terms of our aforesaid observations.
46 Bhuwaneshwar Shukla Vs. ITO, Ward-1(3), Bhilai & 142/RPR/2025
Since the assessment framed u/s 143(3) / 147 dated 21.12.2018 is quashed and therefore, substantive additions are vacated as per my decision in for AY 2011- 12, the imposition of penalty u/s 271(1)(c) therefore, becomes infructuous. Accordingly, the appeal of assessee in ITA 142/RPR/2025 stands allowed.