I.T.O, WARD-46(4),KOLKATA., KOLKATA vs. TRIPURARI SINGH, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA [Before Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]

I.T.A No.315/Kol/2013 Assessment Year: 2003-04 & I.T.A No.316/Kol/2013 Assessment Year: 2005-06 Tripurari Singh Vs. Income-tax Officer, Wd-46(4), Kolkata. (PAN:AIPPS4557H) (Appellant) (Respondent) & I.T.A No.434/Kol/2013 Assessment Year: 2003-04 & I.T.A. No.435/Kol/2013 Assessment Year: 2005-06 Income-tax Officer, Wd-46(4), Kolkata. Vs. Tripurari Singh (Appellant) (Respondent)

Date of hearing: 19.11.2015 Date of pronouncement: 04.12.2015

For the Assessee: Shri Miraj D. Shah, AR For the Revenue: Shri Rajendra Prasad, JCIT

ORDER Per Shri Mahavir Singh, JM: The cross appeals i.e. ITA Nos. 315 and 434/K/2013 by assessee and revenue are arising out of order of CIT(A)-XXX, Kolkata in Appeal No.404/CIT(A)-XXX/Wd- 46(4)/2008-09 dated 18.10.2012. Assessment was framed by ITO, Ward-46(4), Kolkata u/s. 144/147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2003-04 vide his order dated 31.12.2008. The cross appeals i.e. ITA Nos. 316 & 435/K/2013 by assessee and revenue are arising out of order of CIT(A)-XXX, Kolkata in Appeal No.388/CIT(A)-XXX/Cir-46/2007-08 dated 18.10.2012. Assessment was framed by ACIT, circle-46, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2005-06 vide his order dated 31.12.2007.

2 ITA Nos.315 & 316/K/2013 & ITA Nos. 434 & 435/K/2013 Tripurari Singh. AYs 2003-04 & 2005-06 2. At the outset, Ld. Counsel for the assessee stated that he has challenged the issue of assumption of jurisdiction by the AO i.e. issuing notice u/s. 148 read with section 147 of the Act without territorial jurisdiction. He drew our attention to the application for prayer for admission of additional ground and the addition ground raised in both the appeals of the assessee reads as under: “1. That in the facts and circumstances of the case, the reopening notice u/s. 148 of the I. T. Act, 1961 was without jurisdiction and bad in law. And thus the entire assessment order be quashed and/or cancelled. 2. That in the facts and circumstances of the case, the assessment order u/s. 144/147 of the I. T. Act, 1961 was without jurisdiction and bad in law. And thus the entire assessment order be quashed and/or cancelled.” 3. When this additional ground was confronted to Ld. Sr. DR he argued that this ground should not be admitted because the issue was not raised before the lower authorities and he objected to the admission of additional ground. 4. We find that the above additional ground raised by the assessee for assumption of jurisdiction i.e. the AO having no territorial jurisdiction over the assessee, is issuing notice u/s. 148 of the Act is purely a legal ground which goes to the root of the matter and no new facts are required to be investigated or placed on record for adjudicating the same. Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC), wherein Hon’ble Supreme Court has held as under: “We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier.” In view of the above facts, the additional grounds raised by assessee are purely a legal ground, which goes to the root of the matter and no new facts are required to be investigated, we admit the ground and adjudicate the same. 5. Briefly stated facts are that the assessee for these assessment years i.e. AY 2003-04 and 2004-05 filed her returns of income with ITO, Ward-46(4), Kolkata and notice u/s. 148 of the Act was issued by the ACIT, Circle-46, Kolkata vide dated 26.03.2008. Furthermore, assessment in response to notice u/s. 147/148 of the Act was framed u/s. 144 of the Act and passed assessment order on 31.12,2008 by ITO, Wd-46(4), Kolkata. Even the appeal filed by revenue for the AY 2003-04 was signed on 01.03.2013 by ITO, Wd-

3 ITA Nos.315 & 316/K/2013 & ITA Nos. 434 & 435/K/2013 Tripurari Singh. AYs 2003-04 & 2005-06 46(4), Kolkata. The grievance of the assessee is that the return of income was filed by her with ITO, Wd-46(4), Kolkata but notice u/s. 148 of the Act was issued by ACIT, Cir-46, Kolkata and thereafter assessment was framed by ITO, Wd-46(4), Kolkata for the reason that the assessee was never served with a notice u/s. 127 of the Act, wherein the file was transferred from ITO, Wd-46(4), Kolkata to ACIT, Circle-46, Kolkata and vice versa. It was claimed before us that when the return of income was filed before ITO, Wd-46(4), Kolkata, then how the ACIT, Circle-46, Kolkata could have recorded the reasons and reinitiated the reassessment proceedings without having territorial jurisdiction. Similarly, if the reopening was valid, then in the absence of any notice and order u/s. 127 of the Act, the case could not have been transferred from ACIT, Circle-46, Kolkata to ITO, Wd- 46(4), Kolkata. The assessee claimed that in such circumstances, in both the years the reopening notice u/s. 147 of the Act and thereafter reassessment order both are without having territorial jurisdiction over the assessee. Ld. Counsel for the assessee before us relied on jurisdictional High Court decision in the case of Kusum Goel Vs. ITO (2010) 329 ITR 283 (Kol) wherein it is observed that the DCIT had south to justify his action by stating that the jurisdiction automatically got vested with the jurisdictional officer and no order u/s. 127 of the Act was required to be passed. The letter/notice dated 21.10.2009 was patently illegal since although in case of transfer within the same city, locality or place the opportunity of hearing as postulated in section 127(1) and (2) of the Act is dispensed with, other statutory formalities which include issuing an order are required to be complied with. The transfer of files for the assessment years 2007-08 and 2008-09 and the earlier years as intimated in the letter/notice dated 30.07.2009 issued by the ITO was bad in law. Hon’ble High court has observed as under: “From a reading of the language of section 127(3) it is evident that when a file is transferred from one assessing officer to another whose offices are located in the same city, locality or place, though other statutory formalities are required to be complied with, the opportunity of hearing as postulated in section 127 (1) and (2) in case of inter city transfer, is not required. Now keeping the position of law in mind let the letter/notice dated 21st October, 2009 issued by the respondent no.2 be examined. In order to appreciate the issue it is necessary to refer to the relevant portion of the impugned intimation issued by the respondent no.2 which is as under : “Since your income has exceeded minimum threshold limit of Rs.10 lac for the assessment year 2007-2008, the jurisdiction to/of your case automatically gets vested with the Jurisdictional DCIT-Circle-54, Kolkata as per above Directives.

4 ITA Nos.315 & 316/K/2013 & ITA Nos. 434 & 435/K/2013 Tripurari Singh. AYs 2003-04 & 2005-06 You are kindly informed hereby that no order u/s 127 of the Income Tax Act 1961 by the Ld. Commissioner of Income Tax XIX, WB is required to be passed for getting the assessment records transferred from ITO Ward-54(2), Kolkata to DCIT Circle-54, Kolkata by virtue of the provisions of sub-section 3 of section 127 of the Income Tax Act, 1961. For your ready reference the provisions of the said section is appended below. Section 127 sub-section (3) of the Income Tax Act, 1961 states/reads as: .. From the foregoing provisions it is clear that the Commissioner of Income Tax is not required to pass any order transferring the case from/to any Assessing Officer(s) if “the offices of all such officers are situated in the same city, locality or place.”(Emphasis supplied ) It is evident that the respondent no.2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated 21st October, 2009 is patently illegal since it has been held in this judgement that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-2008, 2008-2009 and the earlier years as intimated in the letter/notice dated 30th July, 2009 issued by the respondent no.1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in Kashiram Aggarwalla (supra) and in S.L.Singhania (supra) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The judgement in Subhas Chandra Bhaniramka (supra) where it has been held that in case of transfer of file under section 158BD resort has to be made to section 127 also applies in the instant case. The judgement in M.A.E.K.K. Verma (supra) relied on by the Revenue is not applicable as it dealt with the question whether in case of intra city transfer notice is required to be served and whether separate orders of transfer are required under Wealth Tax Act, 1957 and Gift Tax Act, 1956. Therefore, since it has been held in this judgement that it is imperative on part of the respondents to issue order under section 127(3), the letters/notices under challenge are set aside and quashed. The writ petition is allowed. Consequential proceedings are also set aside and quashed. Accordingly, the notice dated 6th January, 2010 regarding the penalty proceedings under section 271(1)(c) for the assessment year 2006-07 is also set aside and quashed. The application being G.A.No. 81 of 2010 is also allowed.”

5 ITA Nos.315 & 316/K/2013 & ITA Nos. 434 & 435/K/2013 Tripurari Singh. AYs 2003-04 & 2005-06 wherein the file was transferred from ITO, Wd-46(4), Kolkata to ACIT, Circle-46, Kolkata and vice versa, the very issuance of notice u/s. 148 of the Act is out of jurisdiction and invalid. Accordingly, we quash the notices u/s. 148 of the Act issued in both the years as without jurisdiction and consequently, assessments are also quashed. The appeals of assessee are allowed. 7. Since we have quashed the notice u/s. 148 of the Act in both the years, the appeals of revenue have become infructuous and hence, dismissed. 8. In the result, the appeals of assessee are allowed and that of the revenue are dismissed. 9. Order is pronounced in the open court on 04.12.2015 Sd/- Sd/- (M. Balaganesh) (Mahavir Singh) Accountant Member Judicial Member

Dated : 04th December, 2015 Jd. Sr. P.S Copy of the order forwarded to:

Asstt. Registrar.