SOMNATH SAHA,KOLKATA vs. ITO WARD-38(4), PASCHIM MEDINIPUR

This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)- 11, Kolkata [hereinafter referred to as ‘Ld. CIT(A)’] dated 30.09.2019 for the assessment year 2012-13.

The assessee has raised a legal issue before us that the order passed by the AO is without jurisdiction as no valid notice u/s 148 was issued by the AO who was having the jurisdiction. The assessment framed was also assailed to be invalid as the order u/s 127(1) of the Act passed by the ld. PCIT transferring the case to ITO, Ward- 38(4), Midnapur is itself bad in law.

Facts in brief are that the ITO , Ward-2(3), Cuttack re-opened the assessment u/s 147 of the Act on 30.03.2018 by issuing notice u/s 148 of the Act which was served on the assessee on 31.03.2018. A copy of the notice is available at page 8 of the paper book. Pertinent to state that the assessee has shifted from Cuttack address to Village-Nischindapur, Post-Ghatal, P.S-Ghatal, Paschim Medinipur-721212 w.e.f AY 2015-16 and copiers of income tax return filed for A.Y. 2015-16 & A.Y. 2016-17 are Assessment Year:2012-13 Somnath Saha placed at page 16-17 of PB. The ld Counsel for the assessee referred to Board Circular being No. 50/2014 dated 22.10.2014 w.e.f 15.11.2014 copy of which available is filed at page 9 and submitted that the said circular provides that the jurisdiction of AO would be decided by the address in the case of individual assessee. The Ld. A.R submitted that thereafter the PCIT, Cuttack vide order dated 14.09.2018 passed u/s 127(1) of the Act transferred the case from ITO, Ward-2(3), Cuttack to ITO, Ward- 38(4), Midnapur, a copy of which is placed at page 23 of the PB. The Ld. Counsel for the assessee also stated that the said order is null and void as the PCIT has no jurisdiction to pass the order for the reason that the provision of Section 127(1) of the Act deal with only for transferring the cases within his jurisdiction and not outside.

The Ld. A.R pointed out that the said order should pass u/s 127(2) of the Act which provides for transferring the case outside other than his jurisdiction. The Ld. A.R therefore submitted that order passed by ITO, Ward-38(4), Midnapur on the basis of said transfer order passed u/s 127(1) of the Act dated 14.09.2018 is invalid and void ab-initio as ITO, Ward-38(4), Midnapur has not been transferred / conferred jurisdiction through invalid order which is ab-initio as it was not passed u/s 127(2) of the Act. The Ld. A.R drew our attention to the fact that the change in PAN qua the address of the assessee have already been taken place on the date of issuing of notice u/s 148 by drawing our attention to the fact that the assessee has already been started filing in return with ITO, Ward-38(4), Midnapur under PAN address. The Ld. A.R also placed before us a copy of print out taken from E-filing portal of Income Tax which is available in the file.

After hearing the rival contentions and perusing the material on record. We find that during the year the assessee has sold immovable property on 16.11.2011 for a consideration of Rs. 1,37,00,000/- which was brought on 30.04.2008 for Rs.29,30,000/-. The indexed cost of acquisition of the said property worked out at Rs.39,51,976/- resulting into a long term capital gain of Rs. 97,48,025/- however the assessee has not filed any return of income during the instant assessment year thereby not offering the long term capital gain for taxation. The ITO,Ward-2(3), Cuttack

Thus we find merit in the contentions of the assessee that the order passed u/s 127(1) of the Act is invalid ad void ab initio on the ground of lack of jurisdiction u/s 127(1) of the Act from AO from his jurisdiction to another AO in a different jurisdiction. The ITO, Ward-38(4), Midnapore (WBGW-178-4) falls under the Assessment Year:2012-13 Somnath Saha jurisdiction of ld PCIT, Kolkata-13. For the sake of ready reference the provisions of section 127(1) of the Act are extracted below:-

Thus it is abundantly clear from the perusal of the provisions of section 127(1) of the Act that it authorizes the ld. PCIT to transfer cases from AO to another AO within his jurisdiction. We have also perused the provisions of Section 127(2) of the Act which deals with the transferring of cases from AO falling under jurisdiction by the PCIT to the AO falling under the different jurisdiction of another PCIT. The ld DR submitted that the transferring of cases from one jurisdiction to another is internal matter and assessee has no locus standie to question the same. The Ld. DR has also filed written submissions, which has been duly taken into consideration. We are of the considered view that the Act expressly provides the manner of exercising jurisdictions by ld PCIT.

We have also perused the notification no.50/2014 dated 22.10.2014 which provides that w.e.f. 15.11.2014, the jurisdiction of the individual assessee would be on the basis of address of the assessee. Therefore the jurisdiction of the assessee was with ITO, Ward-38(4), Midnapore (WBGW-178-4) however the said ITO has not issued any notice u/s 148 of the Act. The ITO, Ward-2(3), Cuttack has issued notice u/s 148 of the Act on 30.03.2018 mentioning the address of the assessee as”Somnath Saha, Village Noschindipur P.O. Ghatal, P.S Ghatal, Paschim Medinipur-721212 West Bench which in our opinion is without jurisdiction as the assessee has been filing the returns of income w.e.f. A.Y. 2015-16 in Midnapure address the proof where has been filed on page no 16 and 17 of the PB. Accordingly we hold that the notice u/s 148 of the Act was not validly issued and on this count even the assessment needs to be annulled.

Since we have allowed the appeal of the assessee on legal and jurisdictional issue , the grounds raised on merit are not being adjudicated at this stage and left open to be decided at later date if need arises for the same.

In the result, appeal of the assessee is allowed on legal issue.