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TMI Blog2025 (5) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... o void in as much as no notice u/s 143(2) was issued by jurisdictional AO. Assessment order is illegal and liable to be quashed. 3. Assessment order passed by AO is illegal in as much as no order u/s 127 was passed for transfer of case from DCIT-2(1), Raipur to DCIT-1(1), Raipur. Consequently DCIT-1(1) did not acquire jurisdiction to frame assessment. Assessment proceedings is illegal and consequent assessment order is liable to be quashed. 4. The appellant reserves the right to amend, modify or add any of the ground/s of appeal. 3. Brief facts are that the assessee is a private limited company, had filed its Return of Income for AY 2015-16 on 30.09.2015 declaring income at "NIL", consisting of Business Loss of Rs. (5,55,406/-) and Long-Term Capital Loss of Rs. (46,40,342/-). During the assessment proceedings, it was noticed by Ld. AO that the working of Capital Loss by the assessee is not justifiable, as the assessee had claimed transfer charges of Rs. 2,68,00,000/- and claimed expenses towards sale of the subject land. Assessee's submission that the transfer charges consist of payments towards cancellation of agreements with (i) Vandana Rolling Mills for Rs. 78,00,000/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remise. Further, it is noticed from the website of Registrar of companies, MCA that the directors of buyer and seller companies i.e. Shri Subhash Chand Agrawal and Shri Ashok Kumar Agrawal respectively are son of Shri N.L. Agrawal and they have been director/whole time directors of various group companies at different times invariably. The details of directorship of Shri Subhash Chand Agrawal and Shri Ashok Kumar Agrawal in the buyer and seller companies as per the website of Registrar of companies, Ministry of Corporate affairs are as under: Buyer/ seller company Name of directors/ whole time director Shri Subhash chand Agrawal Shri Ashok Kumar Agrawal Singhal Marketing Private Limited (Seller) 28.03.1995 to till date ------ Vandana Rolling Mills Limited (Buyer) 01.12.2007 to 01.01.2023 23.11.1994 to 01.04.2009 Vandana Ispat Limited (Buyer) 03.01.1995 to 01.04.2009 03.01.1995 to till date As per the details available on website of Registrar of companies, Ministry of Corporate affairs Shri Subhash Chand Agrawal and Shri Ashok Kumar Agrawal are/were directors/whole time directors in 46 and 26 group companies including the companies Involved in this case at dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Agreement for sale cancelled. Cancellation agreements dt.19.09.2014 & 20.11.2014 at PN 46 to 48 and 130 to 132 of PN. (iv) Impugned lands sold for Rs. 4,17,36,970/-. Sale deed at PN 50 to 124 and 134 to 219 of PB. Cancellation compensation of Rs. 2,68,00,000/- claimed as deduction from computation of capital gain. Computation at PN 36 to 39 of PB. Old agreements were cancelled on account of business prudence as eventually, assessee could sell the lands at a much higher price. (v) Amount of cancellation compensation included by the two companies in their income. Extract of profit & loss a/c at 49 to 133 of PB. (vi) Rs. 2,68,00,000/- being cost of transfer is allowable as deduction. 7. Baked by aforesaid submission, Ld. AR argued that the transactions of cancellation charges are duly recorded and are genuine being through banking channel, therefore, these are allowable as deduction while calculating the claim of assessee under Capital Gains. Disallowance of the same by revenue authorities without properly appreciating the facts of the case was arbitrary, baseless and unjustified, therefor the orders of both the authorities below are liable to be quashes and the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. ACIT 1(1). Raipur did not acquire jurisdiction validly in absence of any transfer order u/s 127. 4. Reliance on: i) Kusum Goyal vs. ITO (2010) 329 ITR 283 (Cal.), PN 240 to 244 of PB, relevant finding at PN 244, para no. 10. * Assessee challenged transfer of case from ITO Ward 54(2), Kolkata to DCIT. Circle 54, Kolkata. Both under same PCIT (Para No. 2, PN 242 of PB). * DCIT specifically informed the assessee that no order u/s 127 was needed for transfer of case from ITO, Ward 54(2), Kolkata to DCIT, Circle 54, Kolkata (para no.9, PN 243-244 of PB). * Vide para 10. PN 244 of PB, Hon'ble High Court held that for transfer within the same city, locality or place although opportunity of hearing is dispensed with other statutory formalities which includes issuing an order are required to be complied with. Argument of Revenue that in case of any intra city transfer no order is required, cannot be accepted in view of the law laid down in cash in Kashiran Aggarwalla (1965) 56 ITR 14 (SC) and S. L. Singhania (1992) 193 ITR 275 (Del.). ii) Sarita Jain vs ITO in ITA No. 260/RPR/2023 dt. 24.06.2024. PN 260 to 281 of PB. Relevant finding at PN 280, para no.19 iii) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, - (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order; (b) where the Principal Directors General or Directors General or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth Tax Act, 1957 in respect of respective cases or classes of persons in the territorial areas specified in the notification. Nothing has been brought on record by the Ld. DR which would reveal that any notification vesting jurisdiction over the case of the assessee with the ITO-2(1), Bhilai was issued after the notice u/s 148, dated 26.03.2018 of the ITO-1(4), Bhilai. 11. Apropos the claim raised by the A.O, i.e. ITO-2(1), Bhilai in her letter dated 14.03.2024 (supra) that as the jurisdiction over the assessee's case remained within the same range, therefore, there was no requirement for the Pr. CIT to pass any order of transfer u/s. 127 of the Act, the same is found to be both factually and principally wrong. The case of the assessee had been transferred from ITO-1(4), Bhilai to ITO-2(1), Bhilai, i.e from Range 1 to Range 2. Be that as it may, as per the mandate of Section 127 of the Act transfer of any case from one A.O to any other A.O would mandatorily require recording of reasons for doing so on the part of the concerned authority, viz. Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clarity, the relevant observations of the Hon'ble Apex Court are culled out as under: "We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and noncommunication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee." (emphasis supplied by me) 13. Also, my aforesaid view that as per the mandate of law, a transfer order is statutorily required to be passed by the prescribed authority u/s. 127 of the Act, and an A.O cannot on his own transfer an income tax file to another officer in absence of the aforesaid order is squarely covered by the judgment of the Hon'ble High Court of Calcutta in the case of Kusum Goyal Vs. ITO and Ors, (2010) 329 ITR 283 (Cal.). For the sake of clarity, the relevant observations of the Hon'ble High Court are culled out as under: "The question which falls for consideration is whether under section 127 of the Act an Assessing Officer on his own can transfer an income tax file to another officer and whether an order is required to be passed. In order to appreciate the issue it is necessary to refer to the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer, 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. 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 transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of transfer u/s. 127(1) of the Act had been shown to have been passed, and in fact, the case of the assessee had been transferred simplicitor on the basis of a letter dated 11.04.2018 addressed by ITO- 1(4), Bhilai to ITO-2(1), Bhilai; therefore, it is a clear case of invalid assumption of jurisdiction on the part of the ITO-2(1), Bhilai who in absence of any valid assumption of jurisdiction had framed the assessment vide his order u/s. 147 r.w.s. 144 of the Act, dated 30.11.2018. I, thus, in terms of my aforesaid observations quash the assessment framed by the ITO-2(1), Bhilai u/s. 147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction on his part. 15. As I have quashed the assessment framed by the A.O u/s. 147 r.w.s. 144 of the Act dated 30.11.2018 for want of valid assumption of jurisdiction, therefore, I refrain from adverting to and dealing with the grounds of appeal raised by the assessee, based on which, the additions made by the A.O has been assailed before me, which, thus, are left open. 16. In the result, the appeal of the assessee in ITA No.310/RPR/2023 for A.Y.2011-12 is allowed in terms of the aforesaid observations. 12. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO dated 14.01.2025, Ld. AR submitted that as there was no trace about the order of transfer u/s 127 in the present case, admittedly, there is no order u/s 127 was issued, which is mandatory under the relevant provisions of the Act, which is a settled position of law as laid down by Hon'ble Apex Court, Hon'ble Calcutta High Court which in the cases referred to supra, is further followed by the jurisdictional tribunal, in absence of which the order passed by the Assessing Officer, who does not conferred with the valid assumption of jurisdiction to frame the assessment in the present case, the assessment order so passed u/s 143(3) dated 11.12.2017 by such an Assessing Officer is unsustainable in the eyes of law, illegal and liable to be quashed. Ld. AR further pointed out that both the dates i.e., 13.12.2017 and 08.06.2020, mentioned by the present AO in his report dated 14.01.2025 are post the date of completion of assessment in the present case on 11.12.2017, even the date of transfer in the assessment order dated 21.07.2017, does not have any coincide with the aforesaid dates. After pointing out such facts from the report of present AO, Ld. AR argued that in absence of mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, the judgment favouring the assessee must be adopted. With such assertion, it was the request that the decision of Hon'ble Calcutta High Court in the case of Kusum Goyal (supra), may be applied in the present case which is followed by ITAT, Raipur SMC bench in the case of Roop Das vs ITO (supra), consequently, the impugned order passed u/s 143(3) dated 11.12.2017 is liable to be quashed. 16. We have considered the rival submissions, perused the material available on record and case laws relied upon by the Ld. AR in support of the aforesaid contention. Admittedly, on facts it can be safely gathered that in present case while the proceedings of assessment u/s 143(3) are transferred from DCIT-2(1) to DCIT-1(1), Raipur, the mandatory order u/s 127 was not passed and, therefore, the same was stated to be not traceable on records by the revenue. Regarding transfer of PAN, it was brought to our notice by the department that an order was passed vide no. 200000417990 dated 13.12.2017, the same is also issued after 11.12.2017 the date of passing of the impugned order u/s 143(3), thus, the same remains irrelevant in the present context. Regarding reliance of revenue on the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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