IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : A : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA No.3326/Del/2011
Assessment Year : 2002-03
Deepak Gupta, Vs. DCIT,
6/110, Sector-2, Circle,
Rajendra Nagar, Noida.
Sahibabad,
Ghaziabad.
PAN : AGSPG4546M
(Appellant) (Respondent)
Assessee by : Shri Salil Agarwal &
Shri T.R. Talwar, Advocates
Revenue by : Dr. Prabha Kant, Sr.DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER
This is assessee's appeal for Assessment Year 2002-03 against
the order dated 24.3.2011 passed by the CIT (A), Muzaffarnagar. The
following effective grounds have been raised by the assessee:-
"1. That the learned Commissioner of Income Tax (Appeals)
has grossly erred both in law and on facts by upholding the
order of assessment framed under section 147/144 of the IT Act
by failing to appreciate that the pre-conditions for invocation of
proceedings under section 147 of the IT Act were not satisfied
and as such, assessment so framed was wholly untenable in law
and is thus beyond jurisdiction.
2. That the learned Commissioner of Income Tax (Appeals) has
erred both in law and on facts in coming to a conclusion that
assessee's jurisdiction falls with ACIT, Noida relying on his own
order for A.Y. 1996-97. In doing so, the learned Commissioner of
Income Tax (Appeals) overlooked the fact that the order passed
2 ITA No.3326/Del/2011
under section 127 of the IT Act by CIT Delhi dated 09.03.2004
was in complete violation of the provisions of the IT Act. As no
reasonable opportunity was provided to the assessee before
transfer of jurisdiction from Delhi to Noida.
3. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining an addition of
Rs.33,90,038/- being cash deposits in bank account of Ms
Bhawana Makhijani, as alleged unaccounted income of the
appellant.
4. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining an addition of a sum
of Rs.21,21,300 out of Rs.21,97,400/- on account of alleged
investment in Property No.E-58, Sector 39, Noida.
5. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining the addition of a
sum of Rs.13,75,000/- on account of alleged unexplained
investment in bank account of Sh. Narpat Singh.
6. That the learned Commissioner of Income Tax (Appeals) has
erred in law and on facts in sustaining the addition of
Rs.4,14,000/- our of 19,54,000/- on account of alleged
unexplained investment in House No.6/111, Sector 2, Rajinder
Nagar, Sahibabad, in the name of assessee's minor son Master
Sunny Gupta.
7. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining the addition of
Rs.59,01,000/- on account of alleged unexplained investments
for the amounts deposited in the bank accounts of M/s Vijay
Rajeshwari Exports Pvt. Ltd.
8. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining an addition of
Rs.11,55,000/- on account of alleged unexplained investment
made in the Bank Account of M/s Xanadu exports, a 100% EOU
in Noida.
9. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining in addition of
Rs.9,24,000/- on account of unexplained expenditure being
alleged payment of rent.
10. That the learned Commissioner of Income Tax (Appeals)
erred both in law and on facts in sustaining an addition of
Rs.42,77,467/- on account of cash deposits in assessee's own
bank account.
3 ITA No.3326/Del/2011
2. Apropos ground Nos.1 &2, the facts are that notice u/s 148 of the
IT Act was issued to the Assessee on 6.3.07 by the DCIT, Circle, Noida.
In the reassessment proceedings, the assessee challenged the
jurisdiction of the DCIT, Circle, Noida, contending that he had all
through been assessed in Delhi and his jurisdiction to be assessed fell
in Delhi, rather than at Noida.
3. The Assessing Officer, however, referred to an Order dated
9.3.04, passed u/s 127 (2) of the IT Act, transferring the assessee's
case from New Delhi to Noida. The Assessing Officer observed that the
said order was a valid order, since the Assessee had not successfully
challenged the same. It was, thus, held that the jurisdiction of the
assessee stood transferred from Delhi to Noida. In this manner, the
assessee's challenge to the transfer of jurisdiction was rejected by the
Assessing Officer.
4. By virtue of the impugned order, the ld CIT (A) upheld the
Assessing Officer's order on this issue, following his order for
Assessment Year 1996-97.
5. Before us, challenging the impugned order, the ld. counsel for
the assessee has argued that the issue is squarely covered in favour of
the assessee by the consolidated Tribunal order dated 31.5.12, passed
in the assessee's case for Assessment Years 1996-97 to 2001-02 in ITA
Nos.1708 to 1713/Del/11 and in the case of Smt. Alka Tiwari, for
Assessment Year 2002-03, in ITA No.1562/Del/11. Copies of the said
Tribunal Order have been placed on record. It has been pointed out
from the said order that therein, the order dated 9.3.04 (supra), passed
u/s 127 (2) of the IT Act, transferring the assessee's jurisdiction for
assessment from New Delhi to Noida, has been held to be bad in law.
The ld. Counsel for the assessee has contended that due to this fact, all
4 ITA No.3326/Del/2011
the notices u/s 148 of the Act, whether issued to the assessee prior to
the date of issuance of the aforesaid order passed u/s 127(2) of the
Act, i.e., 9.3.04, or issued subsequently, are bad in law, requiring to be
cancelled, as by virtue of the Tribunal order dated 31.5.12, cancelling
the order dated 9.3.04 (supra), the jurisdiction of the assessee still
vests in New Delhi and not at Noida.
6. On the other hand, the ld. DR has contended that the facts for
the year under consideration are different from those present before
the Tribunal while passing the order dated 31.5.12 (supra). It has been
submitted that the order dated 9.3.04, transferring the assessee's
jurisdiction from New Delhi to Noida is a valid order, the same having
not been challenged by the assessee. The ld. DR has argued that as
held in `Mrs. Uma Loomba vs. Commissioner of Income-tax' 160 CTR
392 (Del), it is the assessing authority having natural jurisdiction over
the area where the business or profession of an assessee is situated,
which would have jurisdiction to assess such assessee. He has
contended that in the present case, the assessee, during the year
under consideration, resided at Ghaziabad and carried on business at
Noida also, besides Delhi, and so, his natural jurisdiction was rightly
transferred to Noida.
7. The Ld. DR has further submitted that in keeping with `Subhash
Chander vs. Commissioner of Income Tax, Rohtak', 166 Taxman 307
(P&H), in terms of Section 124 (3) (b) of the Act, the jurisdiction of an
Assessing Officer cannot be called in question by an assessee after
expiry of one month from the date on which he was served with a
notice under section 142 (1), or after completion of assessment,
whichever is earlier; and that herein, the notice under section 142 (1)
of the Act was issued to the assessee on 31.10.07, whereas the
assessee for the first time challenged the Assessing Officer's
5 ITA No.3326/Del/2011
jurisdiction only on 14.12.07, which challenge was null and void in
accordance with `Subhash Chander.'
8. The Ld. DR has further averred that as held in `J.L. Singhania vs.
Assistant Commissioner of Income-tax/Wealth Tax', 65 Taxman 479
(Del), where, like in the case of the present assessee, the case is
transferred from one Assessing Officer to another on the same floor, in
the same building and in the same city, it is not necessary to record
reasons for ordering the transfer and to give an opportunity to the
assessee, and that therefore, there was no infirmity in the transfer of
the assessee's case from the Assessing Officer at New Delhi to the
Assessing Officer at Noida.
9. The Ld. DR has further stated that in `Kanji Mal & Sons vs.
Commissioner of Income Tax', 12 Taxman 34 (Del), it has been laid
down that if the Assessing Officer otherwise has territorial jurisdiction
over an assessee under section 124 (7) of the Act, an assessment
completed without deciding the assessee's objection to the Assessing
Officer's jurisdiction under section 124 (4) will be valid. It has been
contended that in the present case, since the Assessing Officer, at
Noida did have territorial jurisdiction over the assessee, completion of
assessment sans decision on the assessee's objection to the Assessing
Officer's jurisdiction is not fatal to the assessment order, and that
though one was issued, no order under section 124 of the Act was
required.
10. The Ld. DR has also contended that the Tribunal order dated
31.5.12 (supra) is not binding on us. Reliance has been sought to be
placed on "Commissioner of Income-tax vs. B.R. Constructions', 220
ITR 200 (AP) (FB).
6 ITA No.3326/Del/2011
11. The Ld. DR has then pleaded that the Tribunal, while passing the
order dated 31.5.12 (supra), did not take into consideration the above
case laws.
12. In his counter, the ld. counsel for the assessee has submitted
that the facts for the year under consideration are exactly similar to
the ones present before the Tribunal while passing the order dated
31.5.12 (supra); that the factum of such parity of facts is also evident
from the order under appeal, wherein the CIT (A) has followed his order
for Assessment Year 1996-97, which could not have been possible but
for the similarity in the facts; that otherwise too, the Department has
not pointed out any single fact present for the year under
consideration to be a fresh fact absent in the other cases; that the case
laws cited by the Department apropos the issue of jurisdiction are not
applicable, since in those cases, the Assessing Officers had natural
jurisdiction over the assessees, whereas in the case at hand, the
Assessing Officer at Noida never had jurisdiction over the assessee, as
held by the Tribunal in its order dated 31.5.12 (supra); and that `B.R.
Construction' does not aid the cause of the Department, since it is
settled law that where the facts in the subsequent year are similar to
the facts in the earlier year/s, the order passed for the earlier year/s
requires to be followed.
13. We have heard the parties on the issue of jurisdiction, as raised
by the assessee by way of grounds of appeal Nos.1 and 2. We have
also examined the material placed on record qua this matter. The
short question up for determination is as to whether the Tribunal order
dated 31.5.12 is or is not to be followed for the year under
consideration in the case of the assessee.
7 ITA No.3326/Del/2011
14. It is seen that the assessee was assessed with ITO, Ward 33 (2),
New Delhi. The CIT-XI, Delhi, on 9.3.04, passed an order under Section
127 (2) of the Act, transferring the jurisdiction of the assessee to the
ACIT, Noida. This order stands reproduced at page 4 of the Tribunal
order dated 31.5.12. The DCIT, Noida issued to and served on the
assessee, a notice under section 148 of the Act, on 6.3.07. It is this
notice which resulted in the assessment order dated 28.12.07, which is
under challenge herein. Similar notices in the cases of the assessee,
for Assessment Years 1996-97 to 2001-02 and in the case of Smt. Alka
Tiwari, for Assessment Year 2002-03 (the same year as that presently
under consideration in the case of the assessee), along with the
Transfer Order dated 9.3.04 (supra), as well as the respective Re-
assessment Orders, were held to be had in law and were quashed.
15. The Tribunal, in the Order dated 31.5.07, held as follows:-
"6.1. Adverting to the first issue, from the entire record and
particularly the letter from the office of the CCIT, Meerut
addressed by Addl. Commissioner, Head Quarters, Meerut
dated 3-3-2004, it clearly emerges that till 3-3-2004 the
assessee and his wife have been filing their returns regularly
with AO, Delhi and were assessed by ITO Delhi. There is no
accusition in this letter that the Delhi jurisdiction was based on
misrepresentation of facts. This letter further clarifies that the
assessment of jurisdiction assumed by ACIT Noida was not on
good grounds and he should not have issued the notice
without the prescribed procedure of inter charge change of
jurisdiction between two regions of income tax department
with the endorsement of both the Commissioners. This letter
clinches the issue and belies the observations of CIT(A) that
Delhi and Noida are practically same locality and that the
assessee wrongly got himself assessed at Delhi. With this
authoritative communication of CIT, Delhi on the record issued
to all the officers, we are unable to sustain any finding of the
AO or ld. CIT(Appeals). There cannot be any hesitation in
holding that by the time 148 notices were issued by ACIT,
Noida, he had no jurisdiction, whatsoever on the assessee,
therefore, all the notices issued /s 148 are invalid as per the
provisions of Income-tax Act. This ground of the assessee is
allowed.
8 ITA No.3326/Del/2011
6.2. Coming to the issue raised by the assessee that the
transfer of jurisdiction order u/s 127(2) is also not proper in the
eyes of law, it is clear that the CCIT, Meerut issued the letter to
both the Commissioners i.e. CIT, Ghaziabad and CIT Delhi for
inter charge transfer of jurisdiction on 3-3-2004. The impugned
127(4) order has been passed by the CIT, Delhi on 9-3-2004 i.e.
within 5 days. There is no reference to any opportunity of being
heard given to the assessee. There is neither any reference in
the order nor ld. DR could dispute this fact. Ld. DR has only
argued that it is an administrative order and denial of
opportunity of hearing is not appealable, therefore, no
prejudice is caused to the assessee. We are unable to agree
with ld. DR. Statutory requirements are always mandatory
irrespective of the fact whether the same is appealable or not,
therefore, any transfer order passed u/s 127(2) of inter charge
jurisdiction , without complying with the statutory requirement
of giving opportunity of being heard to the assessee is invalid.
6.3. Hon'ble Delhi High Court's judgment in the case of Melco
India Pvt. Ltd. & others (supra) is binding on us and
observations are to be followed with utmost respect.
Respectfully following the Hon'ble Delhi High Court judgment in
the case of Melco India Pvt. Ltd. & others (supra), which in turn
followed Vijay Shanti Investment passed by the CIT, Delhi,
cannot be sustained as no notice was issued to the Pvt. Ltd.
187 ITR (Del), we hold that transfer order u/s 127 dated 9-3-
2004 assessee giving opportunity of being heard about the
transfer of jurisdiction. In view of these facts and observations
we hold that order of CIT, Delhi dated 9-3-2004, transferring
jurisdiction u/s 127(2) is bad in law. Consequently 148 notices,
reassessment and transfer of jurisdiction order u/s 127(2)
dated 9-3-2004 are quashed. This ground raised by the
assessee is also allowed.
6.4. Since we have held that the notices u/s 148, consequential
reassessments and transfer order u/s 127(2) to be bad in law,
therefore there is no need to decide merits of additions.
ITA no. 1562/Del/11 Smt. Alka Tiwari
7. Coming to the appeal filed by Smt. Alka Tiwari, facts and
circumstances in the case of Smt. Alka Tiwari are similar with
the case of Shri Deepak Gupta, except some details. In the
case of Smt. Alka Tiwari ACIT Noida's request letter for transfer
of jurisdiction is dated 22-3-2004 and the transfer order of
jurisdiction u/s 127(2) was passed within three days i.e. 26-3-
2004. There may be small variation in the date of notice u/s
148, however, facts and circumstances are similar that ACIT,
Noida issued notice u/s 148 prior to jurisdiction transfer.
Following our orders in the case of Deepak Gupta (supra), we
9 ITA No.3326/Del/2011
allow the appeal in the case of Smt. Alka Tiwari also quashing
148 notice, reassessment and 127(2) order."
16. Section 127 of the Act reads as follows:-
"Power to transfer cases.
127. (1) The Director General or Chief 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
subordinate to him (whether with or without concurrent
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 Director General or Chief
Commissioner or Commissioner,--
(a) where the Directors General or Chief Commissioners or
Commissioners to whom such Assessing Officers are
subordinate are in agreement, then the Director General or
Chief 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 Directors General or Chief Commissioners or
Commissioners aforesaid are not in agreement, the order
transferring the case may, similarly, be passed by the Board or
any such Director General or Chief Commissioner or
Commissioner as the Board may, by notification in the Official
Gazette, authorise in this behalf.
(3) Nothing in sub-section (1) or sub-section (2) shall be
deemed to require any such opportunity to be given where the
transfer is from any Assessing Officer or Assessing Officers
(whether with or without concurrent jurisdiction) to any other
Assessing Officer or Assessing Officers (whether with or without
concurrent jurisdiction) and the offices of all such officers are
situated in the same city, locality or place.
10 ITA No.3326/Del/2011
(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 direction or which may have been
completed on or before such date, and includes also all
proceedings under this Act which may be commenced after the
date of such order or direction in respect of any year."
17. Thus, Section 127 of the Act, in both the situations envisaged
therein, requires the grant of opportunity of hearing to the assessee
before passing of an order of transfer of jurisdiction.
18. The Tribunal, it is seen, held, inter alia, that the order dated
9.3.04, passed under Section 127 (4) of the Act, transferring the
jurisdiction of the assessee from New Delhi to Noida did not contain
any reference of any opportunity of hearing having been granted to
the assessee before the passing thereof. The Tribunal further
observed that the Department also remained unable to refute the
factum of such non-grant of opportunity to the assessee, and that it
was argued on behalf of the Department merely that the order dated
9.3.04 was an administrative order, qua which, the issue of denial of
opportunity of hearing to the assessee before passing thereof was not
an appealable issue. The Tribunal refused to be at one with this
argument of the Department, on the basis of their reasoning that
statutory requirements are always mandatory. The Tribunal held the
order dated 9.3.04 to be had in law for want of compliance of the
statutory mandate of grant of opportunity of hearing to the assessee
before the passing of that order. The notices issued to the assessee
under Section 148 of the Act by the Assessing Officer at Noida and the
11 ITA No.3326/Del/2011
assessment orders framed by him were also consequently held by the
Tribunal to be bad in law and were quashed.
19. Similar was the fate of the appeal filed before the Tribunal by
Smt. Alka Tiwari, for Assessment Year 2002-03, her facts being,
mutatis mutandis, in pari materia with those of the assessee.
20. Undisputedly, in the case at hand too, it remains the very same
order dated 9.3.04, which is the genesis of the bone of contention
between the parties. It is only pursuant to this order transferring the
jurisdiction of the assessee to the Assessing Officer at Noida from the
Assessing Officer at New Delhi, that the Assessing Officer at Noida
issued the notice dated 6.3.07 under section 148 of the Act to the
assessee and passed the consequential reassessment order dated
28.12.07 under Sections 143 (3)/147. If the order dated 9.3.04 no
longer stands, as has been ordered by the Tribunal, nothing carried out
in pursuance thereof also remains. In other words, neither the re-
assessment notice dated 6.3.07, nor the re-assessment order dated
28.12.07 can be sustained in face of the Transfer of Jurisdiction Order
dated 9.3.04 having been nullified and set at naught by the Tribunal.
21. As for the parity of the facts of the present case with those
before the Tribunal while passing the order dated 31.5.12, but for the
factum of issuance of Re-assessment Notice on 6.3.07 post the passing
of the Order of Transfer of Jurisdiction on 9.3.04, not even a single
material fact has been pointed out by the department to be a fresh
fact not available before the Tribunal at the time of the passing of its
earlier order. An the factum of the issuance of the Re-assessment
Notice having been ordered posterior to the issuance of the Order of
Transfer of Jurisdiction weighs in favour of the assessee rather than in
12 ITA No.3326/Del/2011
favour of the Department. All acts done in pursuance of an invalid
order are also invalid, which is indisputably the law.
22. In view of what we have considered above, none of the case laws
relied on by the Department pertaining to the issue of jurisdiction is
applicable. In those cases, as rightly averred on behalf of the
assessee, the respective transferee Assessing Officers had natural
jurisdiction over the respective assessees. Herein, on the other hand,
the Tribunal has already, on facts similar to the present case, held the
Order of Transfer of Jurisdiction to be bad in law. That Tribunal Order
has not been shown to have been upset, or even ad interim stayed, on
further challenge by the Department.
23. So far as regards `B.R. Constructions' (supra), that decision
holds, inter alia, that when an Hon'ble single Judge or an Hon'ble
Division Bench of a High Court doubts the correctness of an otherwise
binding precedent, the appropriate course would be to refer the case
to a Division Bench or a Full Bench, as the case may be. The
Department seeks to hold out that it is a similar situation here and so,
the case be referred to a larger Bench. We are afraid, it is not so at all.
Firstly, the expression `otherwise binding precedent' in `B.R.
Construction' when read in the context of the present case ab initio
recognizes the mandatory force the Tribunal order dated 31.5.12 holds
over this Bench, for the exact similarity of facts in the cases inter se,
as discussed. And the Department itself, while citing this decision,
must, obviously, be conscious of the use of such expression therein.
Thereby, it effectively realizes the precedence value of the Tribunal
Order dated 31.5.12. Thus, to state that the facts are different and so
the earlier Tribunal Order be not followed, while itself admitting the
`otherwise binding precedent' value thereof speaks volumes of the
13 ITA No.3326/Del/2011
hollowness of the claim of the Department and its self-knowledge
about it.
24. Then, as deliberated upon at length above, this Bench does not
harbour even a shadow of a doubt about the correctness of the
Tribunal Order dated 31.5.12. If the Department entertains any such
doubt, it is for the Department to get the matter set at rest by
adopting appropriate legal recourse, as advised. This, as observed,
has not been shown to have been done. Now once this Bench does not
doubt the correctness of the said Tribunal Order, even as per `B.R.
Constructions' (supra), and which is even otherwise the settled legal
position, there is no occasion, reason or cause to refer the matter for
decision to a larger Bench. All considered, reliance by the Department
on `B.R. Constructions', too, is inappropriate.
25. In so far as regards `Subhash Chander' (supra), once the Order of
Transfer of Jurisdiction has itself been cancelled by the Tribunal,
neither the notice under Section 148 of the Act, nor the one under
Section 142 (1) of the Act, issued in pursuance of that Transfer Order
also can stand. So, the assessee's challenge to the jurisdiction of the
Noida Assessing Officer cannot be said to be in contravention of
Section 124 (3)(b) of the Act. `Subhash Chander', therefore, is also of
no help to the Department.
26. For the above discussion, we are in respectful agreement with
the Tribunal Order dated 31.5.12 and we follow the same. The order of
Transfer of Jurisdiction dated 9.3.04 stands already cancelled/quashed
therein, letting the jurisdiction for assessment of the assessee remain
with the ITO, Ward 33 (2), New Delhi, while divesting the Assessing
Officer at Noida of such jurisdiction. This being so, we hold that the
Assessing Officer at Noida was not competent to perform any act in
14 ITA No.3326/Del/2011
pursuance of the invalidated Transfer Order dated 9.3.04. As such, the
notice dated 6.3.07, issued to the assessee under Section 148 of the
Act and the consequential Re-assessment Order dated 28.12.07,
passed under sections 143 (3)/147 of the Act are bad in law and are
hereby cancelled. Consequently, the CIT (A)'s order on this issue is
also cancelled as invalid.
27. Since this jurisdictional issue has been decided by us in favour of
the assessee, the additions made consequently do not survive any
longer and the merits thereof are not required to be gone into. Any
argument on such merits was also not addressed before us by either
party.
28. In the result, the appeal of the assessee is allowed, as indicated.
The order pronounced in the open court on 30.11.2012.
Sd/- Sd/-
[SHAMIM YAHYA] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 30.11.2012.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches
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