Mahavir Singh, Judicial Member - This appeal by assessee is arising out of order of CIT(A)-VI, Kolkata in Appeal No. 202/VI/Wd.6(1)/10-11/Kol dated 12-03-2012. Assessment was framed by ITO, Ward-6(1), Kolkata u/s. 147/144 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2003-04 vide his order dated 29-12-2010.
2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the reopening of assessment u/s. 148 of the Act as within jurisdiction in terms of section 124 r.w.s. 127 of the Act. For this, assessee has challenged the reopening u/s. 148 of the Act by way of following ground Nos. 2, 3 and 4:
"2. For that in the facts and circumstances of the case the CIT(A) erred in holding that the reopening u/s. 148 of the I T Act 1961 was valid in terms of section 292BB of the I. T. Act 1961. The CIT(A) failed to appreciate that the Section 292BB of the I. T. Act, 1961 do not apply to the assessment year under consideration.
3. For that in the facts and circumstances of the case the CIT(A) erred in holding that the reopening u/s. 148 of the I. T. Act 1961 was valid in terms of section 124 of the I. T. Act 1961. The CIT(A) failed to appreciate that in view of order u/s. 127 of the I. T. Act, 1961 the Assessing Officer ceased to have jurisdiction over the case and hence the reopening was invalid.
4. For that in the facts and circumstances of the case the CIT(A) erred in holding that the section 124 of the I. T. Act 1961 applied to the case of the appellant."
3. Briefly stated facts are that the assessee filed its return of income at Delhi in the office of ITO, Ward-3(3) Delhi on 02-12-2003. Subsequently, notice u/s. 148 of the Act was issued on 25-03-2010 with the permission of Addl. CIT, Range-3, New Delhi. But, in the meantime, CIT-1, Delhi passed an order u/s. 127(2) transferring the jurisdiction of this case vide its order No.CIT-1/Cent/09-10/1874 dated 04-01-2010 from ITO, Ward-3(3), New Delhi to ITO, Ward-6(1), Kolkata. The assessee claimed before the AO as well as before CIT(A) that ITO, Ward-3(3), New Delhi did not have jurisdiction to issue notice u/s. 148 of the Act on 25-03-2010 as the case was transferred u/s. 127(2) of the Act from New Delhi to Kolkata on 04-01-2010. The assessee before CIT(A) filed written submissions as under:
"This appeal is against the reopening of assessment u/s. 147 of the I. T. Act 1961. The assessee has challenged the reopening by the ITO Ward 3(3) Delhi. The notice u/s. 148 of the I.T. Act 1961 was issued by the ITO Delhi after receipt of approval from Additional CIT Delhi on 25-03-2010.
However the CIT Delhi had passed an order u/s. 127 transferring the file to Kolkata on 4-1-2010 as such on 25-3-2010 the AO in Delhi did not have jurisdiction over the case, hence the reopening it without jurisdiction as it is based on the notice u/s. 148 of the I. T. Act, 1961 issued by the ITO Delhi. We have requested the AO at Kolkata to issue the copy of the order of 127 and 151 of the I.T. Act, 1961 but the same has not been issued yet.
We therefore request you to either, call for the records and adjudicate the validity of reopening or grant an adjournment of 15 days to obtain certified 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. Wd-6(1)/Kol/Chanakya Finvest/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, Ward-3(3), New Delhi. |
|
5. |
30-11-10 |
Record received by the under signed from ITO, Ward-3(3), New Delhi. |
|
6. |
03-12-10 |
The assessee complied to the notice u/s 148 vide petition dated 03.12.10. |
|
7. |
03-12-10 |
Notice u/s 143(2) and 142(1) both were issued and served. |
|
8. |
29-12-10 |
Assessment completed u/s 147/144 as there were non-compliance |
Though the order u/s 127 was passed by Ld. CIT, Delhi-I, on 04-01-10, but till the time the records are not transferred to the transferee AO, the jurisdiction lies with the Assessing Officer holding the charge over the case and all action as per the law is required to be initiated or taken by that jurisdictional AO only. Hence the jurisdictional AO at Delhi has rightly re-opened the case on approval from higher authority and issued notice u/s 148.
On receiving the records on 30-11-10 the undersigned disposed off the case u/s. 147/144 as per the law after offering reasonable opportunities of being heard to the assessee."
During the appellate proceedings on 16-02-2010, CIT(A) recorded following order sheet entry:
"Mr. Miraj D. Shah, Advocate attended the proceedings & filed written submission of one paper along with the copy of reasons recorded, order sheet of 147 proceedings given. The appellant has submitted that file was transferred to Kolkata on 4-1-10 by order u/s 127. Copies of order u/s 127 and section 151 approved by Addl. CIT to be submitted tomorrow.
The issue of jurisdiction of Delhi A.O. was not taken before the A.O. who completed the assessment.
Adj. to 20-2-12."
4. CIT(A) discussed the issue and observed in paras 8 and 9 as under:
"8. The appellant submitted during the appellate proceedings that he does not submit any additional evidences, books of account or other documents either before the appellate authority or Assessing Officer since these are not available with appellant. The appellant has never taken objection regarding the jurisdiction of issuance of notice u/s 148 by the Assessing Officer of New Delhi or initiation/continuation of assessment proceedings by the Income-tax Officer, Ward 6(1), Kolkata before the Assessing Officer during the assessment proceedings even when the authorised representative attended the proceedings on 08-12-2010 and 16-12-2010. The authorised representative asked for the extension of 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 of Hindustan Transport Co. v. IAC [1991] 189 ITR 326 (All.) has held that when there is a time-limit prescribed in the Act to which the plea of the jurisdiction may be raised, it cannot be challenged before the appellate authorities. This judgment of the Hon'ble Allahabad High Court has been upheld by the Hon'ble Supreme Court reported at [1991] 188 ITR (St.) 84. The Hon'ble Calcutta High Court in the case of Grindlays Bank Ltd. v. CIT [1992] 193 ITR 457 (Cal.) has held that the assessee who had not raised the objection at the time of hearing of the case by the Assessing Officer or within the period of one month as is prescribed under section 124, the same could not be challenged subsequently.
18. The order u/s 127 was passed by Ld. CIT, Delhi-l, on 04-01-10, but before the time the records were not transferred to the transferee Assessing Officer, the jurisdiction lies with the Assessing Officer holding the charge over the case and all action as per the law is required to be initiated or taken by that jurisdictional Assessing Officer only as per the submissions of current Assessing Officer i.e. Income-tax Officer, Ward 6(1), Kolkata and he further submitted that the jurisdictional Assessing Officer at Delhi has rightly re-opened the case after due approval from his jurisdictional Joint commissioner of Income-tax and issued notice u/s 148 before actually transferring the case.
19. The appellant never raised the question of jurisdiction before the Assessing Officer either at New Delhi when the notice u/s 148 was issued or at the time of assessment with the Assessing officer at Kolkata. There was a possibility to the Assessing Officer at New Delhi to get the records transferred immediately to Kolkata and a fresh notice may have been issued during the time-limitation by Assessing Officer at Kolkata.
20. Following the law laid down and upheld by the Hon'ble appellate authorities as discussed above, the legal provisions of section 124(3) on this issue and in the facts and circumstances of the case, it is held that the assessment order passed u/s 147/144 of the I.T. Act 1961 is not without jurisdiction and is as per law and hence the assessment order passed by the Assessing Officer is held to be a valid order. In the facts and circumstances of the case the proceedings u/s 148 of the I T Act 1961 is upheld to be valid in absence of any 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 issued and served by ITO, Ward-3(3), New Delhi. |
5. |
30-11-10 |
Record received by the under signed from ITO, Ward-3(3), New Delhi. |
6. |
03-12-10 |
The assessee complied to the notice u/s 148 vide petition dated 03-12-10. |
7. |
03-12-10 |
Notice u/s 143(2) and 142(1) both were issued and served. |
8. |
29-12-10 |
Assessment completed u/s 147/144 as there were non-compliance |
6. We find that the AO in his remand proceedings noted that although the order u/s. 127 of the Act was passed by CIT, Del-1 on 04-01-2010, reasons were recorded for reopening on 23-03-2010 for issuance of notice u/s. 148 of the Act on 25-03-2010 because till the time the records are not transferred to the transferee AO, according to him, the jurisdiction lies with the AO holding the charge over the case and all action as per law are required to be initiated or taken by that jurisdiction AO only. Even the CIT(A) noted that the assessee has never objected regarding the jurisdiction of issuance of notice u/s. 148 of the Act by the AO of New Delhi or initiation/continuation of assessment proceedings by the ITO, Ward-6(1), Kolkata before the AO during the assessment proceedings. Whether such a plea can be accepted or not? Before us, Ld. Sr. DR heavily relied on the decision of Hon'ble Punjab & Haryana High Court in the case of Subhash Chander v. CIT [2008] 166 Taxman 307 wherein the non-objection as per section 124(2) read with section 124(4) of the Act, the jurisdiction assumed by AO was held to be valid. Further, there was reliance by Sr. DR on the case law of Hon'ble Allahabad High Court in the case of CIT v. British India Corpn. Ltd. [2011] 337 ITR 64 [2012] 20 taxmann.com 446, wherein assumption of jurisdiction, by AO for assessment, u/s. 124 of the Act that when the ITO had jurisdiction when assessment proceedings commenced and a draft assessment order was submitted to IAC but due to subsequent change in jurisdiction, unless the same brought to the notice of the authority concerned, the assessment would not be vitiated. We are with the argument of Ld. Sr. DR in respect to this argument that where the jurisdiction assumed by the AO, assessee has to object to the same u/s. 124 of the Act in case hr us aggrieved. 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 of Lt. Col. Paramjit Singh v. CIT [1996] 89 Taxman 536.
7. After going through the provisions of sections 120, 124 and 127 of the Act, the plenary powers regarding conferment of jurisdiction has been vested, by delegation by the statute, on the Commissioner having jurisdiction in respect of assessment of the case. This power, in the absence of any prohibition or restriction, empowers the Commissioner of Income-tax to effect realignment of jurisdiction. The Commissioner of Income-tax by order or direction, while divesting these authorities of the power in respect of performance of their duties under the Act conferred earlier, may confer such jurisdiction to other authorities under the Act, as he may direct. As soon as such order or direction is made completely divesting the jurisdiction of the authorities so long so empowered, all proceedings including those which might arise thereafter, before them as also proceedings pending before them, come within the jurisdiction of the newly conferred authorities unless any specific provision is made in respect of any pending proceedings. Such consequence is inevitable when there is withdrawal of jurisdiction, which means automatic extinction of jurisdiction of one authority with simultaneous conferment of jurisdiction on another authority under the Act in respect of all pending and future proceedings. Explanation to section 127 of the Act makes it clear that the word "case" in relation to any person whose name is specified in the order of transfer means all proceedings under the Act in respect of any year which may be pending on the date of the transfer, and also includes all proceedings under the Act which may be commenced after the date of transfer in respect of any year. The word "case" is thus used in a comprehensive sense of including both pending proceedings and proceedings to be instituted in the future. Consequently, an order of transfer can be validly made even if there be no proceedings pending for assessment of tax and the purpose of the transfer may simply be that all future proceedings are to take place before the officer to whom the case of the assessee is transferred.
8. In view of the above principle regarding jurisdiction and facts of the present case, the order passed by CIT-1, Delhi, transferring jurisdiction from ITO, Ward-3(3), New Delhi on 04-01-2010, subsequent action of the AO i.e. ITO, 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 result, appeal of assessee is allowed.