E- Appell v. Ashwanlgandhi,B

ITA No. 10 of 2017 (O&M)Date of decision: 30.07.2018 The Pr. Commissioner of Income Tax (Central), Ludhiana .--e- Appell Vs. AshwanlGandhi,B-5/617,BhattColony,ChandigarhRoad,Nawanshahr. .--Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Rajesh Katoch, Senior Standing Counsel for the appellant-TEVEeENUE.TEVEeENUE. Mr. Ashok Paul Batra, Advocate for the respondent-assessee. Ajay Kumar Mittal,J. 1]This order shall dispose of ITA Nos. 10 to 13, 16, 30, 33, 44, 62,63, 74, 75, 80 and 92 of 2017 as according to the learned counsel for theparties, the issues involved in all the appeals are identical. However, the factsare being extracted from ITA No. 10 of 2017. 2 ITA No. 10 of 2017 has been preferred by the appellant-revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) againstthe order dated 30.06.2016, Annexure A.IIJ, passed by the Income TaxAppellate Tribunal, Amritsar Bench, Amristar (in short, “the Tribunal”) inITA No. 351/Asr/2013, for the assessment year 2008-09, claiming followingsubstantial questions of law. “(1) Whether on the facts and in the circumstances of the case, theHon’ble Income Tax Appellate Tribunal has erred in law inquashing the order under Section 127 of the Income Tax Act,1961 dated 14.11.2011 of the transfer of jurisdiction of the caseHon’ble Income Tax Appellate Tribunal has erred in law inquashing the order under Section 127 of the Income Tax Act,1961 dated 14.11.2011 of the transfer of jurisdiction of the case of the assessee to the DCIT, Central Circle-II, Jalandhar andconsequently reversing and nullifying the assessment orderunder Section 153A/144 of the Income Tax Act, 1961 passed bythe DCIT, Central Circle-Il, Jalandhar, ignoring the specificfinding of the CIT(A) that the order under Section 127 of theIncome Tax Act, 1961 dated 14.11.2011, had been passed bycomplying with the requisite procedure of granting theopportunity of being heard?|consequently reversing and nullifying the assessment orderunder Section 153A/144 of the Income Tax Act, 1961 passed bythe DCIT, Central Circle-Il, Jalandhar, ignoring the specificfinding of the CIT(A) that the order under Section 127 of theIncome Tax Act, 1961 dated 14.11.2011, had been passed bycomplying with the requisite procedure of granting theopportunity of being heard?| (11) Whether on the facts and in the circumstances of the case, the|Hon’ble Income Tax Appellate Tribunal has erred in law innullifying and reversing the assessment order under Section153A/144 of the Income Tax Act, 1961 passed by the DCIT,Central Circle-Il, Jalandhar, ignoring the specific finding of theCIT(A) on the applicability of the provisions of Section 292BBof the Income Tax Act, 1961 as the assessee had not raised anyobjection to the assumption ofjurisdiction by the DCIT, CentralCircle-II, Jalandhar after the order dated 14.11.2011, was passedunder Section 127 of the Income Tax Act, 1961? |Hon’ble Income Tax Appellate Tribunal has erred in law innullifying and reversing the assessment order under Section153A/144 of the Income Tax Act, 1961 passed by the DCIT,Central Circle-Il, Jalandhar, ignoring the specific finding of theCIT(A) on the applicability of the provisions of Section 292BBof the Income Tax Act, 1961 as the assessee had not raised anyobjection to the assumption ofjurisdiction by the DCIT, CentralCircle-II, Jalandhar after the order dated 14.11.2011, was passedunder Section 127 of the Income Tax Act, 1961? | (111) Whether the order of the Hon’ble ITAT, quashing the order|under Section 127 of the Income Tax Act, 1961 dated14.11.2011 is perverse as an order passed under Section 127 ofthe Income Tax Act, 1961 is not appealable before the IncomeTax Appellate Tribunal under Section 253 of the Income TaxAct, 1961?”under Section 127 of the Income Tax Act, 1961 dated14.11.2011 is perverse as an order passed under Section 127 ofthe Income Tax Act, 1961 is not appealable before the IncomeTax Appellate Tribunal under Section 253 of the Income TaxAct, 1961?” 3,A few facts relevant for the decision of the controversy involved as narrated in ITA No. 10 of 2017 may be noticed. A search under Section132 of the Act was conducted in the case of the assessee on 18.02.2010.|Thereafter, order under Section 127 of the Act was passed by theCommissioner of Income Tax, Jalandhar-I, Jalandhar (CIT) on 10.08.2010—transferring the jurisdiction of the case of the assessee to Central Circle-I,Jalandhar. A notice under Section 153A of the Act was issued on 05.10.2010.by the Deputy Commissioner of Income Tax, Central Circle-II, Jalandhar (DCIT) which was duly served but the assessee did not comply with thenotice. Thereafter, a number of statutory notices were issued and served uponthe assessee which also remained un-complied with. For continuous noncompliance of the statutory notices, penalty under Section 271(1)(b) of theAct amounting to410,000/- was also imposed by the Assessing Officer. Lateron, a letter dated 26.09.2011 alongwith a fresh notice under Section 153A ofthe Act was issued and duly served on the assessee. But no compliance was.made by him. Thereafter, jurisdiction of the case of the assessee was restoredto the Income Tax Officer, Nawanshahr by the CIT, Jalandhar-I, Jalandhar bypassing order dated 28.10.2011. Another notice under Section 153A of theAct dated 28.10.2011 was issued by the Income Tax Officer, Nawanshahr forfurnishing return of income. Again, no reply was furnished by the assessee.The CIT Jalandhar-I, Jalandhar passed another order dated 14.11.2011 re-centralising the case of the assessee with DCIT, Central Circle-l, Jalandharwho proceeded with the scrutiny assessment proceedings. Additions ofS|1,85,000/-,zy85,000/-,.zy3,60,417/-,.zy74,937/-,.S|1,07,000/-,.S|96,318/-,S|1,00,000/-,.S|1,86,600/-,.zy12,14,805/- andzy40,90,000/- were made by theAssessing Officer on various issues. Aggrieved by the assessment order dated28.12.2011, the assessee filed appeal before the Commissioner of IncomeTax (Appeals) [CIT(A)]|. The assessee, besides challenging on merits, variousadditions made by the Assessing Officer, also challenged the assessment.order on the ground that the same was illegal and bad in law and withoutjurisdiction. It was observed by the CIT(A) that there had been a transfer ofjurisdiction of the case of the assessee from Income Tax Officer, Nawanshahrto DCIT, Central Circle-Il, Jalandhar which was later on cancelled by theCIT on the representation of the assessee that no opportunity before passingthe impugned order had been granted. The CIT(A) also referred to the applicability of the provisions of Section 292BB of the Act. Contentionraised by the assessee on the issue of jurisdiction was not accepted by theCIT(A). However, on merits, the CIT(A) partly allowed the appeal filed bythe assessee, by deleting some of the additions and confirming the other ones.Aggrieved by the order dated 26.03.2013 passed by the CIT(A), the assesseefiled appeal before the Tribunal. The assessee raised the contention that theCIT(A) had grossly erred in law in concluding that the Assessing Officer hadframed assessment on assumption of valid jurisdiction and that the impugnedassessment framed under Section 153A read with Section 144 of the Act didnot suffer from any jurisdictional infirmity. Vide order dated 30.06.2016,Annexure A.III, the Tribunal held that no opportunity was granted to theassessee before transfer of the jurisdiction of the case, vide order dated14.11.2011, passed under Section 127 of the Act. It was further recorded thatjurisdiction of the assessee laid with the Assessing Officer at Nawanshahrwho had not made the assessment and that being so, the order passed by theAssessing Officer, Central Circle-I], Jalandhar was vitiated. Consequently,the Tribunal quashed the order under Section 127 of the Act dated14.11.2011 and reversed the assessment order passed by the DCIT CentralCircle-II, Jalandhar. Hence the instant appeals by the appellant-revenue. | 4We have heard learned counsel for the appellant-revenue. ©5 Challenge in all these appeals is to the order passed undersection 127 of the Act by the CIT, whereby the case of the assessee wastransferred to DCIT, Central Circle-I], Jalandhar from Income Tax Officer,|Nawashahr. In the present case, undisputedly, a search was conducted on18.02.2010. Vide order dated 10.08.2010 passed under section 127 of theAct, the CIT transferred the jurisdiction of the case of the assessee to DCIT,Central Circle C-IJ, Jalandhar. Later on, vide order dated 28.10.2011, the said| order dated 10.08.2010 was cancelled and the CIT restored the jurisdiction tothe Income Tax Officer, Nawanshahr. Still later, vide order dated 14.11.2011,the jurisdiction was again transferred by the CIT to Central Circle-II,Jalandhar. According to the respondent-assessee, no opportunity was evergranted to him to enable him to raise any objection against transfer ofjurisdiction. Reliance was placed by the learned counsel for the respondent-assessee on various judgments. 6 Examining the case law on which reliance had been placed by| the assessee-respondent, inAnil Mittal and others Vs. Chief Commissioner|ofIncome Tax1997 (225) ITR 282 it was held by this Court that since noreasons had been recorded in the order by the revenue while passing orderunder Section 127 of the Act transferring the case of the assessee fromGurdaspur to New Delhi, the order was held to be against the provisions ofSection 127 of the Act and the law laid down by the Apex Court in|AjantaIndustries Vs. CBDT(1976) 102 ITR 281 and was quashed. InSmt SmritiKedia Vs. Union of India and others,WP 1984 of 2006 decided on.11.4.2011, it was recorded by the Calcutta High Court that there was nothingon record to show that pursuant to an order under Section 127 of the Act, theassessment records of the petitioner were transferred either from Calcutta toNew Delhi or from New Delhi to Calcutta. It was, thus, held that unless.records were validly transferred from Calcutta to New Delhi, the respondenthad no jurisdiction to issue notice under Section 148 of the Act for theassessment year in question. In|Lieutenant Colonel Parampit Singh Vs.Commissioner ofIncome Tax (1996) 220 ITR 446, it was held by this Court|that the assessee has to be a given reasonable opportunity of being heardbefore an order of transfer is passed and that the competent authority shallrecord his reasons for the transter. Further, Explanation to Section 127 of the Act makes it clear that once an order of transfer is made under the section, allpending proceedings for different years are transferred. In Nitin Developersand Const Vs. Commissioner ofIncome Tax(2006) 284 ITR 605, it was|held by Delhi High Court that the order of transfer ought to disclose properapplication of mind to the objections which the assessee may have raised.Similar view was taken by the Gujarat High Court in|Dr. Parthasarathy Seshan Iyengar Vs. Dy. Commissioner ofIncome Tax and another,SpecialCivil Application No’s. 8337 to 8342 of 2010 decided on 17.08.2010. InCommissioner of Income Tax, Faridabad Vs. M/s Cebon India Limited,ITA No. 85 of 2009 decided on 07.07.2009, it was held by this Court that inthe absence of notice being served under Section 143(2) of the Act, theAssessing Officer had no jurisdiction to make assessment. Further, absenceof notice could not be held to be curable under Section 292 BB of the Act. vaThere is no quarrel with the propositions of law enunciated inthe above mentioned decisions. However, the Tribunal was not competent toenter into the domain of testing the validity of the order under Section 127 ofthe Act in the appeal as it is not an appealable order under the Act. That ordercan only be assailed in independent proceedings where question of validity orotherwise of the said administrative order could be examined. Similar issuearose before the Division Bench of this Court inCommissioner ofIncomeTax Vs. Paras Rice Mills, (2009) 313 ITR 182, where it was held that whilehearing an appeal against an order of assessment, the Tribunal cannot go intothe question of validity or otherwise of any administrative decision forconducting search and seizure. The relevant para of the judgment reads thus:- “ 11. We are of the view that the Tribunal when hearing anappeal against the order of assessment, could not go into thequestion of validity or otherwise of any administrative decision for conducting search and seizure. The same may be subject-matter of challenge in independent proceedings where questionof validity or otherwise of administrative order could be goneinto. The appellate authority was concerned with the correctnessor otherwise of the assessment.” Since, in the present case, assessment was framed under Section 144 of theAct, it would now be in the interest ofjustice, if the matter is referred back to’the Assessing Officer who shall pass a fresh order after affording anopportunity of hearing to the assessee in accordance with law. 8 In view of the above, the impugned orders dated 28.12.2011,26.03.2013 and 30.06.2016, Annexure A.I to A.III are set aside and the:matter is remanded to the Assessing Officer in all these 14 appeals to decideit afresh in accordance with law after affording an opportunity of hearing tothe assessee. The appeals are disposed of accordingly. Needless to say thatthe findings recorded by any of the authorities in earlier assessmentproceedings shall not come in the way of the Assessing Officer while passingfresh assessment order. (Ajay Kumar Mittal)JudgeJuly 30, 2018(Avneesh Jhingan)JudgeWhether speaking/reasonedYes.Whether reportableYes