.-.BSS» .-^^^" ^^^'^- 'y<e^^....--" w t IN THE HI^fct«eOURTOF JUDICOTURE AT BIU\SPO;R ('CHH/VTTISGARH') TA?Q <^A^L Oj, NIRMAL CHAND KOTHARI COLLEGE ROAD, SONAR PARA, RA]NANDGAON VERSUS THE ASSISTANTCOMMISSIONER OF INCOME TAX, CIRCLE - 1 (1), RAIPUR APPELU\NT RESPONDENT ^. APPEAL U/S 260-A OF INCOME TAX ACT", 1961 against the order Dt. 17th March, 2006oftheIncomeTaxAppel[ateTribunal, NagpurBench, Nagpur in Appeal Case No. n (SS) A No. 747Nag/2004 relating to Block Period 01.0-4.90 to 08.02.2001. HIGH COURT OF CHHATTISGARH AT BtLASPUR D.B. HON'BLE SHRI DHIRENDRA MISHRA, & HON'BLE SHRI R.N. CHANDRAKAR. JJ Appellant Respondent Versus Tax Case No. 01 of 200G . Nirmal Chand Kothari, College Road, Sonar Para, Rajnandgaon. The Assistant Commissioner of IncomeTax, Circle-1(1), Raipur. Present: Mr. Anup Majumdar, leamed counsel for the appellant. Mr. S. Rajeshwara Rao, learned counset forthe respondent. ORAL ORDER . i (Delivered on 23ri September, .•^". Per Dhirendra Mishra.J "® The appellant-assessee has preferred this appeaWnder Section 260- A of the Income Tax Act, 1961 (in short "the Act") against the impugned order dated 17th March, 2006 (Annexure P/2) ofthe Income TaxAppellate Tribunal, Nagpur (for brevity "Tribunal") on following substantia] questions of law: "1. Whether Tribunal is justified in holding that before transferring the case from the Assessing Officer of Rajnandgaon to the Assessing Officer of Bhilai or Raipur, the notice or opportunity of hearing u/s 127 of the Act to the Asse'isee/Appellant is not required? 2. Whether the Tribunal is justified in holding that reasons should not be recorded u/s 127 of the Act for transferring the case from Assessing Officer of Rajnandgaon to Bhi'ai or Raipur? 3. Whether Tribunal is justified in not deciding the order passed by the Commissioner of Income Tax, Raipur as NUL and VOID or VOID AB NITIO merety because of not issuing notice or giving opportunity of hearing to the Assessee and Vi/ithout recording reasons for transferring the case from Assessing Officer of Rajnandgaon to the Assessing Officer of Bhilaior Raipur?" , 2. Brief facts of the case are that the assessee was regularly assessed by the Income Tax Officer (in short "ITO"), Rajnandgaon. A search was conducted in the premises of the assessee on 8.2.2001 and order under Section 127 was passed on 22.5.2001 by the Commissioner of Income Tax (for brevity "CIT"), Raipur transferring the case from ITO, Rajnandgaon to Deputy Commissioner of Income Tax (in short "DCIT"), Circle, Bhilai. As per notification dated 21.8.2001, the case was again'!(ransferred to DCIT, Bilaspur. A notice under Section 158BC was issued to the assessee by the ACIT, Bilaspur. The assessee filed his return on 10.2:2002 with a note that the same is being filed under protest. An objection was taken that the notice issued under Section 158BC was withoutjurisdiction. Thereafter, the case of the assessee was again transferred to DCIT, Raipur. 3. The Assessing Officer (inshort "AO") completed assessment under Section 158BC(c) read with Section 143(3) of the Act and assessed the total income at Rs.17,16,0537- vide its order dated 28.2.2003 and accordingly, demand notice was ordered to be issued. He also directed for initiation of penalty proceedings under Section 158BFA. 4. The Commissioner of Income Tax (Appeals), {in short "CIT(A)}, Raipur allowed the appeal of the assessee vide his order dated 12.4.2004 and held that the order under Section 127 of the Act was passed without any notice to the assessee. If the order under Section 127 is held to be illegal, then the order under Section 158BC cannot stand as transfer of the case from Bhilai to Bilaspur would be illegal because DC, Bhilai himself had no jurisdiction. Even if the order under Section 127 is held to be legal, the matter could be transferred from Bhilai to Bilaspur by passing another order under Section 127, which was never passed and thus, the DCIT, Bilaspur had no jurisdiction to issue notice under Section 158BC. Since the DCIT, Bilaspur had no jurisdiction overthe assessee, then theACIT, Raipur could also hold no jurisdiction over the assessee. The assessee had raised jurisdictional issue at the outset and it was obligatory for the AO to decide the issue of jurisdiction. Since the AO has completed the assessment without following the above procedure, the order of assessment is against the provisions of law. Accordingly, the CIT(A) set aside the Qrder passed by the AO. 5. However, the Tribunal, on appeal by the revenue, set aside the order of the CIT(A), Raipur with a finding that the CIT(A) has exceeded its jurisdiction in passing the impugned order by dealing with the issue of validity of the order under Section 127 passed by the CIT, Raipur. Since the CIT, Raipur is equal or high ranking officer dealing with the administration, theflrst appellate authority does not have power and jurisdiction to sit over the order of the CIT (Administration), and accordingly, remanded the matter to the CIT(A) with a direction to decide the case on merits. 5\ ^: 6. Shri Anup Majumdar, learned counsel for the appellant submits that ;i admittedly, the matter was transferred in exercise of ppvSgrs under Section 127 of the Act from ITO, Rajnandgaon to DCIT, Bhilai, and' the same was subsequently transferred from DCIT, Bhilai. Referring to'Section 127, it is argued that the order under Section 127 can be passed only after affording a reasonabte opportunity of being heard to the assessee and after recording his reasons for doing so. In the instant case, the matter was transferred without any notice to the assessee to DCIT, Bhilai and thereafter, from DCIT, Bhilai to DC, Bilaspur, who issued notice under Section 158BC to the assessee. In reply thereto, theassessee filed his return and also submitted a preliminary objectionwith respect to jurisdiction of the AO. The matter was again transferred from DCIT, Bhilai to Raipur and the assessment was compteted there. However, the preliminary objection of the assessee with respect to jurisdiction of the AO was not considered and decided. 7. He further submits that the C!T(A) by a well reasoned order has held the assessment proceeding initiated against the assessee by the DCIT, Bilaspur without jurisdiction and the same is strictly in accordance with law and therefore, the substantial questions of law, as proposed above, arise for adjudication of this appeal. 8. Reliance is placed on the judgments in the matters of M/s Ajantha Industries and others Vs. Central Board of Direct Taxes, New Delhi and others and Mukutla Lalita Vs. Commissioner of income Tax and others2. 9. On the other hand, Shri S. Rajeshwar Rao, learned counsel for the revenue, would argue that from bare reading of the order passed by the Tribunal, it would be evident that appeal of the revenue has been allowed only on the ground that the CIT(A) has exceeded its jurisdiction by commenting upon the order passed under Section 127 by the CIT, Raipur. The scope of appeal under Section 246A of the Act is confined to the orders enumerated in the section and no appeal lies against any order passed under Section 127 before the CIT(A). The order transferring the assessment proceedings was passed by the Commissioner way back in the year 2001- 02. The assessee without challenging the order of transfer passed on administrative side by the CIT, raised objection before the AO while participating in the assessment proceedings. SC 437 0997) 226 ITR 23 %• 10. The appeal has been allowed by the Tribunal with a finding that the CIT(A) has exceeded its jurisdiction. None of the auE^tantial questions of law proposed by the assessee-appellant herein deals with the grounds, on which the Tribunal has passed the impugned order, and'therefore, the same do not arise foradjudication ofthis appeal- 11. We have heard learned counsel for the parties. 12. From perusal of the impugned order passed by the Tribunal, we find that the appeal of the revenue has been allowed only on the ground that the CIT(A) while considering the appeal of the assessee has dealt with the jurisdictional orders passed under Section 127 by the CIT on administrative side without adverting to merits of the case. The Tribunal has allowed the appeal with a finding that the CIT(A) has exceeded its jurisdiction by commenting upon the order of the CIT, Raipur passed on administrative side, who is an officer of equal rank or a rank higher to the appellate authority and as such.the order is withoutjurisdiction. The appellant either in the memo of appeal or during the course of oral submission, did not dwell upon the finding of the Tribunal wherein it has been held that the CIT(A) has exceeded its jurisdiction While passing the order in appeal by the assessee. The substantial questions of law proposed by the appellant in the memo of appeal have neither been considered nor decided by the Tribunal. The transfer order under Section 127 of the Act was passed by the Commissioner way back in the year 2001-02. No appeal li'es under Section 246/246A of the Act against the order passed under Section 127 of the Act as is evident from bare reading ofthe provisions ofthe section. 13. In the matters ofM/s Ajantha Industn'es , the assessees impugned the order passed under Section 127 by the Central Board of Direct Taxes proposing to transfer their case fites for facility of investigation. Since there was no provision of appeal or revision under the Act, the application was preferred under Article 226 of the Constitution before the High Court and in these circumstances, the Hon'ble Supreme Court allowed the appeal of the assesses and quashed the order of transfer by holding that when the law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge,the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. ..^^£s^s-^\^ /^ ^^i"% f -(I ] '%^^-^ Wv '<»:• 14. Similarly, jn the matter of Mukutla Lalita ais&, file of the petitioner was transferred from the jurisdiction of Income Tax Offic^r, Kakinada to Assistant Commissioner of IT, Rajamundry in purported eXeroise of powers under Section 127(2) of the Act. The petitioner filed a wrlt petition on the ground that before effecting transfer, no notice was issued to the petitioner as contemplated under Section 127(1) and 127(2) of the Act. In these circumstances, the petition was allowed and it was held that in transfer of the case file of the petitioner, provisions of Section 127 of the Act were to be complied with. 15. However, in the instant case, the assessee did not challenge the transferorder of his case file passed under Section 127 by the CIT by filing appropriate proceedings in the Court of law. Instead, he participated in the assessment proceedings and raised objection before the AO, who had no authority/jurisdiction to entertain such objection undertheAct. 16. In view of foregoing discussions, we are ;of the opinion that no substantial question of law.as proposed by the appellant in the memo of appeal, arises from the impugned order of the Tribunal for adjudication. The appeal is devoid of substance, the same deserves to be dismissed and is, accordingly, dismissed. s&'- R.N. Chandrakar Judge Sd/- Dhirendra Mishra Judge