TMI Blog2020 (6) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... andated by the Hon ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] before the completion of assessment. No notice of reopening u/s 148 of the Act was given by the Assessing Officer having jurisdiction over the assessee. No reasons were recorded by the jurisdiction so that he believes that income subject to tax has escaped assessment. The notice issued u/s 148 of the Act was by an AO who had no jurisdiction. Hence it is null and void. It is not a legal notice in the eyes of law. Thus, on this count also, the assessment order passed u/s 143(3) of the Act on 13/12/2016, is bad in law. Addition u/s 68 - AO has not discharged the onus that lay on the revenue to prove that the assessee had earned the income in question. The letter from NSE states the facts which are not controverted by the Assessing Officer. When the NSE states that the assessee has not earned income from derivative transactions, the question of making addition on this ground does not arise. Thus, we delete the addition made. - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - HELD THAT:- Taking note of the extraordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information received by the Assessing Officer, which triggered the re-opening, was factually incorrect and the Assessing Officer should have conducted preliminary verification of the same before recording reasons on incorrect facts that he believes that income subject tax has escaped assessment. He relied on the following case-law for the propositions that under such circumstances, the reopening of assessment is bad in law :- PCIT vs. Meenakshi Overseas P. Ltd. (2017) 395 ITR 677 (Del.) PCIT vs. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del.) PCIT vs. G G Pharma India Ltd. (2016) 384 ITR 147 (Del.) 4.1. He further argued that, the letter of the DCIT, Hqs.-1, Kolkata, on behalf of the ld. Pr. CIT-1, Kolkata addressed to the Addl. CIT/Jt. CIT Range-1, Kolkata, dt. 30/31.03.2016, make it clear that this approval letter was issue by the ld. Pr. CIT on 30/31.03.2016 from the stamp of the receipt section, it is clear that the approval was received by the Assessing Officer on 01/04/2016 and whereas notice u/s 148 of the Act was issued on 30/03/2016. This shows that the notice was issued much prior to the receipt of the approval of the ld. Pr. CIT by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from April 01,2008 to March 31, 2009 in Capital Market and Currency Derivatives Segment . Thus, he submits that the additions which are made in contravention of this evidence is bad in law. He prayed for relief. 6. The ld. D/R, on the other hand, controverted the arguments of the ld. Counsel for the assessee and submitted that the information was received from ADIT, Inv. Unit-1(3), Ahmedabad, that the assessee company was a beneficiary by way of CCM and that the net benefit was ₹ 15,31,700/-. He submitted that based on this information, the Assessing Officer recorded reasons that he believes that income subject to tax has escaped assessment and thereafter issued notice u/s 148 of the Act, reopening the assessment. He relied on the order of the ld. CIT(A) and submitted that the original return was processed u/s 143(1) of the Act and it is not a case of change of opinion. He relied on the case-law cited by the ld. CIT(A) in his order and submitted that at the stage of recording of reasons, the Assessing Officer need not, with proof, come to a conclusion that income subject to tax has escaped assessment. On the issue of jurisdiction, he submitted that the assessee has not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(6) of the Act, the NSE issued a letter on 16/01/2017 and stated as follows:- Please find no the client code modification details during the period from April 01, 2008 to March 31, 2009 in Capital Market and Currency Derivatives Segment. Please find the client code modification details for Futures Options Segment as Annexure A. 8.2. A perusal of this communication reveals that the reasons recorded by the Assessing Officer that the assessee was beneficiary by way of CCM in derivative transactions was factually incorrect. This shows non application of mind by the I.T.O to the information received by the Assessing Officer from the ADIT (Inv.), Unit-1(3), Ahmedabad. The law requires that the Assessing Officer prima facie applies his mind to the information received, prior to forming a reasonable belief, that income subject to tax has escaped assessment and thereafter record reasons. When reasons are based on wrong facts, which were not verified, then it is a clear case of non-application of mind by the Assessing Officer to the material received. Thus, there is no direct nexus between the tangible material received and the formation of belief that income had escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is unhelpful in understanding whether the Assessing Officer applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the Assessing Officer, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the assessee, which must have been tendered along with the return, which was processed under section 143(3).Without forming a prima facie opinion, on the basis of such material, it was not possible for the Assessing Officer to have simply concluded that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries. Thus, the reassessment order was not valid. 9. Applying the propositions of law laid down in the above case-law to the facts of the case on hand, I have to hold that the reopening is bad in law. 10. I also find that the assessee has filed objections against the reopening by way of letters dt. 18/07/2016 and 28/10/2016. Admittedly, the Assessing Officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 148 on ground that assessee was only a work contractor and, thus, was not entitled to deduction under section 80-IB - Assessee raised objection to notice - Assessing Officer passed reassessment order without disposing of such objections - Whether Assessing Officer acted without jurisdiction in initiating proceedings for reassessment in spite of nonexistence of required conditions specified under Act and, therefore, reassessment proceedings and consequent reassessment order were to be quashed [Emphasis ours] 10.4. Similar view was taken by the Hon ble Gujarat High Court in the case of Arvind Mills Ltd. v. Assistant Commissioner of Wealth-tax [2004] 141 TAXMAN 210 (GUJ.) 11. As the Assessing Officer has not disposed off the objections raised by the assessee to the reopening of assessment till date. Hence the reassessment order is bad in law. 12. On the issue of jurisdiction, I find that it is admitted fact that the ITO, Ward-4(3), Kolkata, has jurisdiction over the assessee. While so, the reasons for reopening was recorded by ITO Ward-1(1), Kolkata. Notice of reopening of assessment was issued by this officer i.e., ITO Ward-1(1), Kolkata. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rform, concurrently, the powers and functions in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette,, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income- tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment, whichever is earlier.) (4) Subject to the provisions of sub- section (3), where an assessee calls in question the jurisdiction of an- Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub- section (2) before the assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub- section (1) or sub- section (2) of section 120.] 127. Power to transfer cases (1) The Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction in respect of any year. 129. Change of incumbent of an office Whenever in respect of any proceeding under this Act an income- tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income- tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor: Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard. 14. A bare reading of the foregoing provisions reveal that an Assessing Officer (AO) has been vested with the jurisdiction by virtue of the directions or orders issued by the Board under sub-section (1) or sub-section (2) of section 120 of the Act. The direction u/s. 120(1) is given by the Board, for the exercise of the powers and performance of the functions by all or any of the Income Tax Authorities, as specified u/s. 116 of the Act. As per sub-section (2) of Section 120 of the Act, the Board may delegate its powers to Income tax authorities as specified in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be entitled to call in question the jurisdiction of an AO within the period prescribed under clauses (a), (b) and (c) of section 124(3) of the Act. We also note that sec. 124(5) saves the action of the AO who has territorial jurisdiction over the assessee in respect of the income earned by the assessee from the territorial jurisdiction vested in him by virtue of any directions or orders issued u/s. 120(1) or (2) of the Act. So, this saving provision which saves the action of an AO is limited to the income accruing or arising or received within the limits of his territorial area as conferred to him (AO) by order under sub-sec. (1) or (2) of sec. 120 of the Act and not otherwise. So, this saving provision will come into play only in the first place the AO is vested with the jurisdiction by an order/direction issued under subsec. (1) or (2) of sec. 120 of the Act. Thus, as per the scheme of the Act, it can be seen that sections 120 and 124 vest jurisdiction on Income Tax Authorities and on AO respectively and, therefore, both sections i.e. sections 120 and 124 of the Act must be read in conjunction and harmoniously to decide the territorial jurisdiction which is prescribed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the transfer order passed u/s. 127 of the Act, means all proceedings under the Act in respect of any year which may be pending on the date of such order or direction or it may have been completed on or before such date, and includes also all proceedings under the Incometax Act which may be commenced after the date of such order or direction of any year. This definition of the expression case implies that, once a transfer is made by the authority specified in sub-section (1) or (2) of section 127 of the Act who had the jurisdiction over an AO who in turn had jurisdiction over the assessee/person/entity, by virtue of direction/order issued under section 120(1) or (2) of the Act, then the entire assessment of the person i.e. pre-transfer and post-transfer as on date of transfer will stand transferred and thereafter for all purposes of the Income Tax Act, the AO of the assessee to whom the case is transferred, will be the Assessing Officer in respect of the said the assessee for pre and post proceedings from the date of transfer. In other words, once transfer order of a case of an assessee is issued u/s. 127 of the Act the effect will be that (i) all the proceedings of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating this contention, let us first examine the relevant provisions of sub-section (5) of sec. 124 of the Act and sub-sec. (4) of sec. 127 of the Act, which read as follows: Sec. 124(5):- Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub- section (1) or sub- section (2) of section 120. Sec. 127(4):- The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation: In section 120 and this section, the word case , in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nconditionally transferring the jurisdiction over the appellant s case to the charge of ACIT, Central Circle 1, Ranchi; then by virtue of such an order, the jurisdiction enjoyed by ACIT at New Delhi in terms of Section 124 read with Section 120(1) (2) stood abrogated. Accordingly after 08.10.2008, the ACIT at New Delhi could not have exercised any powers conferred on the AO by the Act for the purposes of any proceedings against the appellant. 19. In this regard we find that by virtue of the transfer order passed by theld. CIT-V, Delhi u/s. 127 dated 08.10.2008, the case of the assessee was transferred with immediate effect. Pursuant to such an order, the DCIT, Central Circle Ranchi became the AO who alone had valid jurisdiction over the appellant s case till even he was divested of such jurisdiction by virtue of an order passed u/s. 127(2)by thePr.CIT, Central, Patna dated 03.11.2017 as per which the jurisdiction stood transferred to the ACIT, Central Circle 3(1) Kolkata. We are therefore of the firm opinion that in June 2016 when the notice u/s 143(2) was issued, it was the ACIT, Central Circle 1, Ranchi alone enjoyed sole jurisdiction over the appellant s case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seisin over the matter. He became functus officio . [Emphasis given by us]Thus, the contention of the Ld. CIT, DR that the jurisdiction is an administrative issue and not a subject matter stands negated in the light of the jurisdictional High Court's specific observations (supra). 21. Coming to the next contention of the Ld. CIT, DR that since the assessee did not question the territorial jurisdiction of the AO at Delhi after it received statutory notice from him and therefore the assessee is estopped/shut-out from doing so as stipulated by sub-section (3) of sec. 124 of the Act. We however note that sub-section (3) of section 124 of the Act will come into play only when a question arises as to whether an AO has jurisdiction to assess any person u/s. 124 of the Act and the AO derives his powers from the direction or order issued by CBDT and/or authorities under sub-section (1) or (2) of sec. 120 of the Act respectively. It is true that when a question of jurisdiction arises in the event an AO assumes jurisdiction u/s. 124 of the Act by virtue of the jurisdiction vested by direction or order issued by CBDT and/or other authorities under sub-section (1) or (2) of sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory notices upon the assessee unless he had been re-empowered or vested by a fresh transfer order u/s. 127 of the Act (i.e. from AO, Ranchi to AO, Delhi), which is not the case of the Revenue. In the circumstances therefore, the AO at Delhi (ACIT, Circle-21 (1), New Delhi) could not have usurped the jurisdiction when his predecessor i.e. DCIT, Circle15(1), New Delhi was divested of it, by order dated 08.10.2008 by CIT-V, New Delhi u/s. 127 of the Act. Subsequent to the order u/s. 127 of the Act i.e., w.e.f. from 08.10.2008, the DCIT, Central Circle-1, Ranchi succeeded to the jurisdiction of the assessee and the jurisdiction continued to vest in him (AO Ranchi) till it was legally taken away by order u/s. 127 dated 03.11.2017 by Pr. CIT, Central Patna and transferred to ACIT, Central Circle-3(l), Kolkata. Therefore, as per the discussions (supra) there was no necessity for the assessee to have questioned the jurisdiction of AO at Delhi, as envisaged under subsec. (3) of sec. 124 of the Act since in the first place AO at Delhi legally enjoyed jurisdiction u/s. 124 of the Act over the assessee s case. In our considered opinion Section 124(3) of the Act does not in any way help th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21st May, 2010 Assessment u/s. 147/143(3) by ITO, Wd-4(1), Kolkata (for AY 2008-09). 2. 3rd September, 2012 CIT, Kolkata-II transferred the jurisdiction over the assessee to ACIT/DCIT, Central Circle-XIX, Kolkata for better co-ordination, effective investigation and meaningful assessment, consequent to a search conducted on 17th November 2011 upon M/s. Atha Mines (AY 2012-13). 3. 18th March, 2013 ACIT/DCIT, Central Circle-XIX, Kolkata issued sec. 143(2) notice to assessee 4. 29th July, 2013 Actual transfer of files took place from ITO, Wd-4(1), Kolkata to ACIT/DCIT, Central Circle-XIX, Kolkata. 5. 18th March, 2013 Notice u/s. 263 issued by CIT, Kolkata-II proposing to interfere in the assessment order passed by ITO, Wd-4(1), Kolkata dated 21st May, 2010 (AY 2008-09). 6. 26th March, 2013 CIT-II, Kolkata passed the order u/s. 263 setting aside the order of ITO, Wad-4(1) dated 21st May, 2010 for AY 2008-09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kata-II, had jurisdiction over the appellant at the time of issue of the Show Cause notice on 18th March, 2013 and passing of the order on 26th March, 2013 under section 263 of the Income Tax Act, 1961 in spite of transfer of jurisdiction to the Commissioner of Income Tax, Central Circle, Kolkata vide an order dated 3rd September, 2012 under section 127 (2)(a) of the said Act and its purported findings in that behalf are arbitrary, unreasonable and perverse?. 25. In this case which is reported as M/s.Ramshila Enterprises Pvt. Ltd. Vs. Pr. CIT (2016) 383 ITR 546 (Cal), we note that the gist of department s contention was taken note by the Hon ble High Court, which is as under: Mr. Ghosal, learned senior advocate appearing for the Revenue submitted that the transfer order itself indicates that jurisdiction of the Income-tax Officer, Wd-4(1), Kolkata was transferred to ACIT/DCIT, Central Circle-XIX, Kolkata, which is at page 584. The jurisdiction of the Commissioner of Income-tax remained unchanged. In other words, it is the jurisdiction of the trial court, which was changed. The jurisdiction of the appellate authority remained unchanged. Therefore, the order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, a nullity. He drew our attention to a judgment of the Apex Court in the case of Pandurang and Others versus State of Maharashtra reported in (1986) 4 SCC436for the proposition that even a right order by a wrong forum is a nullity.In the aforesaid judgment their Lordship held as follows: 4.When a matter required to be decided by a Division Bench of the High Court is decided by a learned Single Judge, the judgment would be a nullity, the matter having been heard by a court which had no competence to hear the matter, it being a matter of total lack of jurisdiction. The accused was entitled to be heard by at least two learned Judges constituting a Division Bench and had a right to claim a verdict as regards his guilt or innocence at the hands of the two learned Judges. This right cannot be taken away except by amending the rules. So long as the rules are in operation it would be arbitrary and discriminatory to deny him this right regardless of whether it is done by reason of negligence or otherwise. Deliberately, it cannot be done. Negligence can neither be invoked as an alibi, nor can cure the infirmity or illegality, so as to rob the accused of his right under the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction over the subject-matter has to be conferred by law. The jurisdiction in this case had been transferred by the order dated 3rd September, 2012 by no other than the CIT Kolkata- II, Kolkata himself. Once that was done CIT Kolkata II, Kolkata lost the seisin over the matter. He became functus officio . Reference in this regard may be made to the Stroud s Judicial Dictionary of Words and Phrases, 7th Edition, Page 1085 wherein the following meaning has been expressed: FUNCTUS OFFICIO. An arbitrator or referee cannot be said to be functus officio when he has given a decision which is held to be no decision at all (Davies v Howe Spinning Co LTD.27 B.W.C.C.207). Where a judge has made an order for a stay of execution which has been passed and entered, he is functus officio, and neither he nor any other judge of equal jurisdiction has jurisdiction to vary the terms of such stay (Re V.G.M. Holding Ltd [1941].3 All E.R.417). An arbitrator or umpire who has made his award is functus officio, and could not by common law alter it in any way whatsoever; he could not even correct an obvious clerical mistake. See Mordue v Palmer, 6 Ch. App.22; Henfree v Bromley ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such power, as the provision gave him the power only to give his opinion as regards the duty with which in his judgment the instrument was chargeable and when that function was performed by the Collector he became functus officio. It was observed by the Supreme Court that the power to impound only exists when an instrument is produced before judicial officers or other officers performing judicial functions as evidence of any fact to be proved, or before other public officers who have to perform any function in regard to those instruments as, for example, registration. The Supreme Court also approved the decisions in Collector, Ahmednagar v. Rambhau, AIR 1930 Bom 392 (FB). Paiku v. Gaya, ILR (1948) Nag 950 : (AIR1949Nag 214) and Panakala Rao v. Kumaraswami, AIR 1937Mad 763 where the doctrine of functus officio was applied and it was held that the Court had no power to recall and impound a certificate of sale after executing it and delivering it to the purchaser, or to reopen a case and impound documents proved after signing the decree, or to impound an instrument admitted in evidence after delivery of judgment. Here, when the Sub- In the present case, the Sub-Registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onounced by dictation in an open court to a shorthand writer [if the Judge is specially empowered (sic by the High Court) in this behalf].The proviso thereto provides that where the judgment is pronounced by dictation in open court, the transcript of the judgment so pronounced shall, after making such corrections as may be necessary, be signed by the Judge, bear the date on which it was pronounced and form a part of the record. Rule 3 provides that the judgment shall be dated and signed by the Judge in open court at the time of pronouncing it and when once signed, shall not afterwards be altered or added to save as provided by Section 152 or on review. Thus, where a judgment is reserved, mere dictation does not amount to pronouncement, but where the judgment is dictated in open court, that itself amounts to pronouncement. But even after such pronouncement by open court dictation, the Judge can make corrections before signing and dating the judgment. Therefore, a Judge becomes functus officio when he pronounces, signs and dates the judgment (subject to Section 152 and power of review).The position is different with reference to quasi-judicial authorities. While some quasi-judicial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ITO, Ward-4(1), Kolkata dated 21.05.2010. 29. Coming back to the case in hand, and having taken note of the ratio laid down by the Hon ble jurisdictional High Court (supra), we note that in the present case, after the order of the CIT-V, New Delhi dated 08.10.2008 transferring the jurisdiction of the assessee s case to DCIT, Central Circle, Ranchi, the CIT, Delhi became functus officio and thereby his subordinate officers viz., ACIT, Circle 21(1), New Delhi, could not have issued notice u/s. 143(2) dated 28.07.2016 and in that view of the matter the notice issued by the ACIT, Circle-21(1), New Delhi u/s 143(2)was without jurisdiction and, therefore, non-est in the eyes of law. 30. Our above finding also finds support from the decision of this Tribunal in the case of Chankya Finvest Pvt Ltd Vs ITO (34 taxmann.com 206). In that case the CIT Delhi had passed an order u/s 127 dated 04.01.2010 transferring jurisdiction over the assessee s case from ITO, Delhi to ITO Kolkata. After the order u/s 127 was passed on 04.01.2010, the ITO at Delhi initiated reassessment proceedings after recording reasons and issued notice u/s 148 dated 25.03.2010 for AY 2003-04. Thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtified copies of all related records so that we can represent the matter properly. The CIT(A) sent this written submission to ITO, Ward-6(1), Kolkata vide letter No. CIT(A)VI/Kol/Remand/2011-12/368 dated 20-02-2010 and the AO sent its remand report vide letter No. Wd6(1)/Kol/ChanakyaFinvest/11-12/826 dated 23-04-2010, which is as under: Kindly refer to your letter No. CIT(A)-VI/Kol/Remand Report/2011-12/368 dated 20.02.2012. In this connection following information as available from the record are chronologically appended below: Date Happening 1. 04-01-10 Order u/s l27 passed by the Ld. CIT, Delhi-I, New Delhi. 2. 23-03-10 Proposal to re-open the case was sent to Ld. Addl. CIT, Range-3 Delhi. 3. 25-03-10 Delhi. Ld. Addl. CIT, Range-3, accorded the approval for re-open the case. 4. 25-03-10 Notice u/s 148 issued and served by ITO, Ward3(3), New Delhi. 5. 30-11-10 Record received by the under signed from ITO, Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f time from Assessing Officer on 20-12-2010 but did not file any objection regarding the jurisdiction of the Assessing Officer and did not attend the proceedings thereafter. The assessment has been completed on 29-12-2010. 9. The Income-tax Officer, Ward (1) has submitted that the case records were not transferred to him and was still lying with ITO Ward 3(3), New Delhi on the date of issuance of notice u/s 148. In the absence of the transfer of case records, the jurisdiction is not transferred automatically since the ITO Ward 6(1), Kolkata did not know about the order passed u/s 127 by the Commissioner of Income-tax-1, New Delhi. And further, he decided the issue by dismissing the assessee's issue of reopening u/s. 148 of the Act, vide ground Nos. 17 to 20 as under: 17. The assessee had never questioned the jurisdiction of the Assessing Officer in the course of assessment proceedings. Section 124(3) of the Income-tax Act makes it clear that the jurisdiction of the Assessing Officer cannot be challenged after the expiry of one month from the date of service of notice on the assessee under section 143(2)/148. The Hon'ble Allahabad High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y objection being raised before the Assessing Officer issuing the notice u/s 148 and/or completing the assessment. In the facts and circumstances of the case it is also held that appellant was given proper opportunity after serving the notice u/s 148 and during assessment by the Assessing Officer. Hence, these three grounds of appeal are dismissed. Aggrieved, assessee is in appeal before us. 5. We have heard rival submissions and gone through facts and circumstances of the case. First of all, it is to be seen that what is the chronology of events, as recorded by the AO in his remand report given, during course of appellate proceedings before CIT(A). The chronology of events is as under: Date Happening 1. 04-01-10 Order u/s l27 passed by the Ld. CIT, Delhi-I, New Delhi. 2. 23-03-10 Proposal to re-open the case was sent to Ld. Addl. CIT, Range-3, Delhi. 3. 25-03-10 Ld. Addl. CIT, Range-3, accorded the approval for re-open the case. 4. 25-03-10 Notice u/s 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. But, what will be the effect of the order of Commissioner of Income-tax transferring the jurisdiction u/s. 127 of the Act. We are of the view, that when any case of a particular assessee which is transferred from one AO to another AO, whether within the state or without it, all proceedings which are pending against the assessee under the Act in respect of the same year as also previous years are meant to be transferred simultaneously and all proceedings under the Act which may be commenced after the date of such transfer in respect of any year whatever are also included therein, so that the AO to whom such case is transferred would be in a position to continue the pending proceedings and also institute further proceedings against the assessee in respect of any year. The proceedings pending at the date of transfer can be thus continued but in the case of such proceedings the provisions in regard to issuance of notices contained in the main body of section 127(2) of the Act would apply and it would not be necessary to reissue any notice already issued by AO from whom the case is transferred. For this, assessee has relied on the decision of Hon'ble P H High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ward-3(3), New Delhi issuing notice u/s. 148 of the Act dated 25-03-2010 is invalid because the jurisdiction from ITO, Ward-3(3), New Delhi by CIT-1, Delhi to ITO, Ward-6(1), Kolkata. At the time of passing of order by CIT-1, Delhi transferring jurisdiction from ITO, Ward-3(3), New Delhi dated 04-01-2010 to ITO, Ward-6(1), Kolkata, there is no proceedings pending before the ITO, Delhi and the transfer order for jurisdiction was passed on that date. The CIT, Delhi-1 passed order u/s. 127 of the Act on 01-01-2010 transferring the jurisdiction of the assessee to ITO, Wd-6(1), Kolkata and the jurisdiction in respect to every action for all assessment years lies with the ITO, Wd-6(1), Kolkata and only he is competent to issue notice u/s. 148 of the Act. In such circumstances, the notice issued u/s. 148 of the Act by the ITO, Ward-3(3), New Delhi is bad and illegal in view of the clear provisions of the Act because an order for transfer of case was validly made by CIT and the purpose for transfer was simply that all future proceedings are to be taken by ITO, Ward-6(1), Kolkata w.e.f. 04-01-2010. Hence, the notice issued u/s. 148 of the Act dated 25.03.2010 is quashed. 9. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside. 7. In the affidavit-in-reply filed by the DCIT-10(1) Mumbai dated 8.10.2012 it is stated that by a corrigendum order dated 27.03.2012, the CIT-10 Mumbai has temporarily withdrawn/cancelled the earlier transfer order dated 22.11.2011 for the sake of administrative convenience and therefore, the notice dated 30.03.2012 would be valid. It is the case of the petitioner that neither any notice to pass a corrigendum order was issued to the petitioner nor the alleged corrigendum order dated 27.03.2012 has been served upon the petitioner till date. 8. Mr. Pinto, learned Counsel for the Revenue on instruction from CIT-10 Mumbai informs us that there is no proof of serving the corrigendum order dated 27.03.2012 upon the petitioner. It is neither the case of the revenue that before passing the corrigendum any notice was issued to the petitioner nor it is the case of the revenue that the corrigendum order was passed after hearing the petitioner. 9. Although in the affidavit in reply the revenue claims to have annexed a copy of the corrigendum order dated 27.03.2012 no such order was in fact annexed to the affidavit-in-reply. It is only during the course of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter instead of taking steps to circumvent the jurisdictional issue. It does not befit ACIT-10(1) Mumbai to indulge in circumventing the provisions of law and we strongly condemn the conduct of ACIT-10(1) Mumbai in that behalf. Instead of bringing to book the persons who circumvent the provisions of law, the ACIT-10(1) Mumbai has himself indulged in circumventing the provisions of law which is totally disgraceful. 15. In any event, the CIT-10 Mumbai ought not to have succumbed to the unjust demands of ACIT-10(1) and instead ought to have admonished the ACIT-10(1) for making such unjust request. The CIT-10 Mumbai ought to have known that there is no provision under the Act which empowers the CIT to temporarily withdraw the order passed by him under Section 127(2) of the Act for the sake of administrative convenience or otherwise. If the CIT-10 Mumbai was honestly of the opinion that the order passed under Section 127(2) of the Act was required to be recalled for any valid reasons, then, the CIT-10 Mumbai ought to have issued notice to that effect to the petitioner and after hearing the petitioner ought to have passed any order as he deemed fit and serve the same to the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Delhi. On these facts, the Hon'ble Delhi High Court held that it was mala fide on the part of the assessee not to intimate the AO at Noida prior to 31.03.2016 and that the assessee waited for the period of limitation to expire before raising this objection. In absence of any order u/s 127 and having noted that with reference to address made available by the assessee to ICICI Bank in which cash deposits were found, the Hon'ble High Court held that assessee was debarred from raising the objection to AO s jurisdiction in terms of section 124(3)(b). In the instant case, however, the appellant had mentioned its PAN in the return of income filed for AY 2015-16. By virtue of the order u/s 127 dated 08.10.2008,it was within the knowledge of the AO at Delhi that the jurisdiction over the case of the assessee solely vested with AO at Ranchi in the month of June 2016. On these facts we therefore find that the ratio laid down in the judgment of the Hon ble Delhi High Court (supra) is not applicable because the factual context in which it was rendered was vastly different. 33. Similarly, in the case of S.S. Ahluwalia (supra), the assessee was assessed at Delhi from 1980-81 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to transfer of case ordered by PCIT, Central Patna dated 03.11.2017 u/s. 127 of the Act, without there being valid issuance of notice u/s 143(2) of the Act. In our opinion such an order is bad in law as held by the Hon ble Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (S.C) wherein the Hon ble Supreme Court has held that issue of a legally valid notice u/s. 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s. 143(3) of the Act and absence of a valid notice u/s 143(2) is not a curable defect. This view was reiterated by the Hon ble Apex Court in the case of CIT Vs Laxman Das Khandelwal(108 taxmann.com 183). The relevant observations are as follows: 5. At the outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon's case2 the first question was whether notice under Section 143(2) would be mandatory for the purpose of making the assessment under Section 143(3) of the Act. It was observed:- 3. The Appellate Tribunal held, while affirming the decision of CIT (A) that non-issue of notice under Section 143(2) is only a procedural irregularity and the same is curable. In the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to the following effect:- 292BB. Notice deemed to be valid in certain circumstances.-Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was (a) Not served upon him; or (b) Not served upon him in time; or (c) Served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. 7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee accordingly succeeds on the preliminary legal issue raised before us. 13. In this case no notice of reopening u/s 148 of the Act was given by the Assessing Officer having jurisdiction over the assessee. No reasons were recorded by the jurisdiction so that he believes that income subject to tax has escaped assessment. The notice issued u/s 148 of the Act was by an Assessing Officer who had no jurisdiction. Hence it is null and void. It is not a legal notice in the eyes of law. Thus, on this count also, the assessment order passed u/s 143(3) of the Act on 13/12/2016, is bad in law. 14. Coming to the merits of the case, the Assessing Officer has not discharged the onus that lay on the revenue to prove that the assessee had earned the income in question. The letter from NSE states the facts which are not controverted by the Assessing Officer. When the NSE states that the assessee has not earned income from derivative transactions, the question of making addition on this ground does not arise. Thus, we delete the addition made. 15. Before parting, it is noted that the order is being pronounced after ninety (90) days of hearing. However, taking note of the extrao ..... X X X X Extracts X X X X X X X X Extracts X X X X
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