Income Tax Appellate Tribunal - Hyderabad
Akula Venkati, Nizamabad vs Assessee on 31 March, 2003
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B', HYDERABAD
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI CHANDRA POOJARI ACCOUNTANT MEMBER
IT(SS)No.85/Hyd/2003 Asst. Years: 1988-99 to 1999-2000
Smt.Akula Suvarna, Nizamabad Vs. ACIT, Circle 7 (1),
Hyderabad
(PAN - ABQPA 5937 M)
(Appellant) (Respondent)
AND
IT(SS)No.86/Hyd/2003 Asst. Years: 1988-99 to 1999-2000
Shri. Akula Venkati, Nizamabad Vs. ACIT, Circle 7 (1)
Hyderabad.
(PAN - ABQPA 4743 R)
(Appellant) (Respondent)
Appellants by : Shri Dayakar
for Shri Ajay Gandhi
Respondent by : Smt. Vasundhara Sinha
Smt. Nivedita Biswas DRs
ORDER
Per: Chandra Poojari, Accountant Member These two appeals preferred by the assessees are directed against separate orders passed by the CIT(A)-Guntur (Camp at Hyderabad) both dated 31.3.2003, in the context of block assessments made under S.158BD of the Act for the block period consisting of assessment years 1988-99 to 1999-2000. Since there are certain 2 common issues involved in both the appeals, they are being disposed off by this common order for the sake of convenience.
2. The assessee, Akula Suvarna, raised the following grounds in her appeal, viz. IT(SS)A No. 85/Hyd/2003 :
1. The CIT(A) has erred in concluding that u/s 127 the opportunity of being heard should be given wherever it is possible and it was not mandatory to do so before changing jurisdiction.
2. The CIT(A) has erred in rejecting the assessee's submission that the assessment was without jurisdiction.
3. The CIT(A) has erred in ignoring the assessee's submission that the income was already offered to tax even before the provisions of chapter XIV B were applicable to her.
4. The CIT(A) has erred in ignoring the assessee's submission that the return was filed voluntarily and before she was subject to the provisions of block assessment, the income offered by the assessee in the regular returns should have been accepted and the assessment should have been done by way of regular assessment u/s 143(3) and not u/s 158BC.
5. The CIT(A) has erred in rejecting the assessee's submission that half of the rent earned is to be taxed in the hands of the husband of the assessee,
6. The CIT(A) has erred in ignoring the assessee's submission that she is entitled to the statutory deduction of repairs of income from house property.
7. The CIT(A) has erred in rejecting the assessee's submission that the property was purchased prior to the block period.
8. The CIT(A) has erred in rejecting the assessee's submission that the source for purchase of property was by way of sale of jewellery.
9. The CIT(A) has erred in rejecting the assessee's submission that for sale of jewellery made in small towns, may not be substantiated by documentary evidence.
3. The assessee, Akula Venkati, raised the following grounds in his appeal, viz. IT(SS) No.86/Hyd/2003:
1. The CIT(A) erred in concluding that u/s 127 the opportunity of being heard should be given wherever it is possible and it was not mandatory to do so before changing jurisdiction.2 3
2. The CIT(A) erred in rejecting the assessee's submission that the assessment was without jurisdiction.
3. The CIT(A) erred in ignoring the assessee's submission that the income was already offered to tax even before the provisions of chapter XIV were applicable to her.
4. The CIT(A) erred in ignoring the assessee's submission that the return was filed voluntarily and before she was subject to the provisions of block assessment, the income offered by the assessee in the regular returns should have been accepted and the assessment should have been done by way of regular assessment u/s 143(3) and not u/s 158BC.
4. During the course of hearing, the assessees' counsel has argued only the grounds (1) & (2) in the above two appeals, and as such, we are rejecting the other grounds, viz. ground Nos.2 to 9 in IT(SS)A No.85/Hyd/03 and grounds No.3 & 4 in IT(SS) A No.86./Hyd/03, as not pressed.
5. The main contentions of the assessee's counsel, in relation to grounds No.1 and 2, are that the issue relate to transfer of file u/s
127. The learned Authorized Representative submitted that the assessees were assessed in the normal course by ACIT Nizamabad, since they are residents of Nizamabad. Impugned block assessment proceedings were initiated by issuance of notice dated 13.10.1999 by DCIT Circle 3(2), Hyderabad u/s 158BD, as the assessees' case was said to have been notified vide orders u/s 127(1). The assessees in response to the said notice, vide letter dated 25.11.1999, informed the DCIT that their assessing officer was ACIT Nizamabad and the documents may be transferred back to him having jurisdiction over the cases of the assessee and notice u/s 158 BD may be withdrawn. He submitted that no orders u/s 127 were passed and the transfer of jurisdiction took place without passing any orders u/s 127. He further submitted that essential conditions so as to constitute a valid transfer u/s 127 and the actual 3 4 status as to fulfillment of those conditions in the present cases are as follows-
Essential requirements Status
Opportunity for hearing to be given No opportunity was given
before effecting transfer
Objections by assessee when No opportunity was given. However,
opportunity was given assessee objected to jurisdiction on
receipt of notice u/s 158BD. No
action taken on the objections
Reasons to be specific and be No show cause notice, no reasons
recorded recorded
Reasons to be communicated No reasons communicated to be
assessee as no order was served
Speaking order to be passed No speaking order was passed. The
order u/s 127 given during hearing
before ITAT gives a non specific
unsubstantiated reasons as to
facilitate detailed and coordinated
investigation
Order to be served No order was served on the assessee.
The assessee has consistently been
claiming that no order itself was
passed. A copy of the order u/s 127
was given during hearing before ITAT
for the time.
The AR submitted that the CIT(A) has given several reasons for not upholding the assessee's objections as to jurisdiction. He submitted that while the CIT(A) has held that procedure u/s 124 (4) is not applicable to notifications u/s 127, this observation of the CIT(A) is obviously not correct, since the provisions or S.124(4) and S.127 are very clear on this aspect, and there are several decisions in support of his contentions in this behalf. He submitted that while the CIT(A) observed that the assessee has not established that no opportunity was given, since it is the affirmation of the assessee that no opportunity was 4 5 given, it is for the department to prove that an opportunity was indeed given. In any event, assessee cannot be expected to establish negative fact. He placed reliance on the decision of the Hon'ble Bombay High Court in the case of Shantilal Hiralal & Co. (152 ITR 236) (Bom) wherein it was held that the actual service of notice and of hearing must be proved by department which has not been done in the present case. He submitted that the CIT(A) is competent to adjudge jurisdiction and legality of an assessment. When assessee denies liability to tax, challenges assessment, then the appellate authorities are not only entitled to but duty bound consider the legality of the assessment. He further submitted that the observation of the CIT(A) that proper remedy for the assessee is a writ petition is not correct, and the assessee is entitled to question legality of an assessment during assessment and appellate proceedings as well. He submitted that the assessee can very much deny the liability to be taxed and writ jurisdiction is only an alternative remedy and not the only one available or possible for the assessee. He further submitted that the order u/s 127 was never served on the assessee, and as such it was not possible for the assessee to file a writ petition in the absence of an order, which was offered for the first time only during the appellate proceedings before the Tribunal. He submitted that it is a fact that no order u/s 127 was served on the assessee. This non-service of the order under S.127 on the assessee results in that order not coming into effect and consequently not giving jurisdiction to the officer who passed the order. That being so, impugned assessments would be nullity.
6. He further submitted that no appeal lies against an order u/s
127. In the circumstances, assessees are challenging the assessments only as being without jurisdiction, to which the assessee's are very much entitled to. When the assessments are challenged on grounds that go to the root of the assessment, it is required by the appellate 5 6 authorities to examine the presence or absence of good and legal jurisdiction and adjudicate on the validity of the assessment. He also submitted that the authorities for various reasons discussed above which includes absence of opportunity of being heard vitiates orders, reasons to be specific, reasons to be communicated order to be communicated for better investigation etc. the transfer of jurisdiction in the present cases is not legal or valid. He placed reliance on the following decisions in support of the above contentions.
1. Vijayashanti Investments 187 ITR 405.
2. Ajantha Industries Vs. CBDT, 102 ITR 281 (SC)
3. Saptagiri Enterprises Vs. CIT (189 ITR 705) (AP)
4. Vijayakumar Gowrishankar (283 ITR 524)
5. Nitin Developers Vs. CIT (284 ITR 605) (Del.)
6. Mukutla Lalita Vs. CIT (226 ITR 23)
7. Vinaykumar Jaiswal Vs. CIT (221 ITR 568)
8. Melco India (260 ITR 450) (Del.)
9. ITO Vs. Mangilal Nandkishore (40 ITD 538) (JP)
10.All India Children care & Educational Developmental Society Vs. JCIT (87 ITD 209)
10. General Exporters Vs. CIT (234 ITR 860) (Mad.)
11. Bansal Sharevests Services Vs. CIT (283 ITR 332)
12. Shantilal Hiralal & Company (152 ITR 236) (Bom.)
13. Power controls Vs. CIT (241 ITR 807 (Del.)
14. Rajesh Mahajan Vs. CIT (257 ITR 577) (P&H) 6.1. He further submitted that the Tribunal has the power to examine jurisdiction in spite of judgement of the Apex Court in the case 6 7 of Rai Bahadur Seth Teomal V/s. CIT (36 ITR 9)- SC, it was only held in that case that objections as to the place of assessment cannot be made in an appeal. It means that once the place of jurisdiction is decided by an authority, it cannot be appealed against. This decision does not cover cases where assessments are made without jurisdiction being acquired legally. He also placed reliance on the following judgement of the Delhi High Court in the case of Kanjimal & Sons V/s. CIT (138 ITR 391) (Del.) wherein it was held at page 404 of the Reports (138 ITR) as follows-
"If an assessee fails to raise the objection before the ITO and within the time specified, he will be shut out from raising the question altogether. Where he raised the question and it is got decided by the CIT, that decision would be final and cannot be questioned in the appellate But where he raises the issue but the ITO does not refer the question to the CIT as in the present case (or the CIT or the Board does not decide the question before the assessment is completed) what will be the result of the failure?"
6.2. The Hon'ble Delhi High Court held that Tribunal can consider the jurisdiction issue in an appeal against the assessment and in the matter before it, it ought to have annulled the assessment as being without jurisdiction and ought not to have remanded the matter to the AAC for disposal as clearly sec 124(7)(as it stood then) did not apply. The Court also held that 'a failure to do so will render the assessment null and void and without jurisdiction as held in Dina Nath Hemraj v CIT, 2ITC 304 (All) which has been referred to and in no way disapproved in Teomal's case, 36 ITR 9 (SC)'. He further invited our specific attention to the decisions of the Allahabad High Court in the cases of CIT v Mohd Ayyub, 197 ITR 637, All and Abdul Majid v CIT, 281 ITR 366, All, wherein it has been held that when a plea of jurisdiction is taken before the Tribunal, it not only has the power, but a statutory obligation to entertain the plea and decide the same. Specific attention is also invited to the decision of the Guwahati High Court in the case of 28 ITR 265, (Guwahati), wherein it was held that the issue of jurisdiction (u/s 124) 7 8 going to the root of the matter, ITAT can look into it and adjudicate upon the same. He submitted that ITAT has always entertained appeals challenging the assessment on grounds of jurisdiction and adjudicated upon the same. Some cases where the Tribunal has done so (other than those referred to in other contexts in this document) are as follows-
(a) ACIT Vs. Pragati Ceramics (P) Ltd., 100 TTJ 167
(b) ACIT VVs.. Sahara Inddia (100 ITD 93)-Lucknow
(c) Ziaulla Sheriff v ACIT 7 DT 286
(d) MI Builders (P) Ltd., v ITO 115 ITD 419,Lucknow
(e) Ramesh Chand v ITO, 21 TTJ 460, Delhi, wherein it has been held that assessment done by ITO who had no jurisdiction is a nullity
7. He further submitted that it has consistently been held that when an assessment is done by an officer who has no jurisdiction, it results in an order which is void ab initio, and a nullity. The Tribunal has always annulled it. He relied on following Precedents:
1. All India Children Care & Educational Development Society Vs. JCIT, 87 ITD 209
2. Empire Estate Vs. ITO 41 ITD 23 Bom
3. Manak Chand Agarwal Vs. ACIT 61 ITD 60 Cal.
4. Amulya General Trading 65 ITD 329 Del.
5. ITO Vs. Prix Small Savings 69 ITD 51, Cal.
6. Kanji Mal & Sons Vs. ITO, 7 TTJ 222, Cal
7. Gurdev Singh Vs. ITO, 86 TTJ Chandigarn
8. Satyanarayana Preeti Vs. ITO, 7 ITD 496 Hyd.
7.1 He further referred to the judgement of the Punjab & Haryana, High Court in the case of Charan Pal Singh, (307 ITR 132) relied upon by the lower authorities and submitted that this case is 8 9 clearly distinguishable as there was a nexus with the place of transfer as clearly brought out by the Court. He further submitted that the documents seized have to be handed over only to the assessing officer having jurisdiction over the other person and only then the assessing officer can proceed u/s 158BC. He also submitted that the assessee has stated that she believes that no order u/s 127 was passed and her jurisdiction remains with the ITO, Nizamabad. In any case, no order can be passed without following due process of section 124 and as such the order is a nullity. As such the ITO Nizamabad ought to have proceeded u/s 158 BD and as such the resultant block assessments in the present cases are bad in law.
8. The learned Departmental Representative, on the other hand submitted that assessee has claimed that the assessment was made without jurisdiction. In the course of the hearing and through submissions it has been argued that the lack of jurisdiction arose out of the invalidity of the order u/s 127. Various arguments have been put forth to support the view that due procedure had not been followed while passing the section 127. She further submitted that it is a fact that an order u/s. 127 has been passed by the CIT, AP-II, Hyderabad on 1.4.1999. The assessing officer has issued the notice u/s 158BD on the strength of this order u/s 127. A copy of the order was placed before the bench as per its directions. The AR has fairly admitted in his written submissions that no appeal lies against an order u/s 127. However, it is claimed that the assessee is challenging the assessment as being without jurisdiction and not the order u/s 127. She submitted that broadly the objections raised by the assessee against the order under S.127 are that the assessee was not given an opportunity of being heard before the order was passed; that no reasons were recorded while passing the order; and that the order must be served on the assessee, and consequently due to these infirmities in the order u/s 127 the 9 10 legality of the assessment has been compromised. It is implicit in this argument that the assessment cannot be held as invalid unless and until it is first held that the order u/s 127 is invalid. In effect, the assessee has challenged the validity of the order u/s 127 in the garb of challenging the validity of the assessment order. She submitted that any decision by ITAT on the legality and validity of the order u/s 127 would be beyond the realm of its own jurisdiction u/s 253. She submitted that distinction must be drawn between the power of the ITAT to entertain the appeal challenging the appeals on grounds of jurisdiction and to entertain an appeal challenging validity of the action which preceded the assessment. He submitted that to entertain appeal challenging the order of jurisdiction itself, the first situation requires an examination whether the assessee falls within the ambit of existing jurisdictional orders and whether the particular assessing officer was empowered under those orders to action. The second situation calls for an examination of the validity and legality of the jurisdictional orders themselves. There is no dispute that the ITAT does have the authority to examine the issue of jurisdiction falling within the first situation. It is a second situation which falls beyond the scope of its power. She submitted that there can be no doubt that if the order u/s 127 is held to be valid the jurisdiction of the assessing officer cannot be questioned.
The jurisdiction of the assessing officer can be questioned only if the order u/s 127 itself is held as invalid. There is no doubt that there was an order u/s 127 passed on 14.9.99. The assessing officer assumed jurisdiction under this order. Thus the assumption of jurisdiction by the assessing officer cannot be faltered and indeed has not been faltered by the assessee till date. What has been contented is that the order u/s 127 did not follow due procedure and was thus rendered irregular. She submitted that the dispute therefore is not whether the assessing officer had been empowered by the order u/s 127 to assume jurisdiction over the assessee; but the dispute is whether there was a valid u/s 127 10 11 or not. She submitted that the Tribunal has always entertained appeals challenging the assessment on grounds of jurisdiction and adjudicated on them whether ITAT has the competent to examine existence of jurisdiction is not the issue in this appeal. The issue is whether the ITAT has the competent to adjudicate on the validity of an order u/s 127. In practical terms, the ITAT would have had the competence to adjudicate on jurisdiction if there had been no order u/s 127 at all but has no competence to adjudicate on the validity of such an order where such an order exists. She submitted that he has relied on certain case laws pertaining to section 124 to claim that the ITAT has on grounds of failure to following procedure u/s 124 struck down assessments as invalid or void ab initio. An assessee is entitled u/s 124 (4) to question the jurisdiction of the assessing officer. It is noteworthy that this right of the assessee pertains to questioning the jurisdiction of the assessing officer under the existing jurisdictional orders. This right does not extent to questioning the jurisdictional order itself. It is for this reason that various Courts including ITAT, have entertained appeals challenging lack of jurisdiction and held that if the due procedure u/s 124 (4) read with 124(2) is not followed, the assessment is invalid. He submitted that the situation is entirely different when it comes to challenging the validity of the jurisdiction order itself. Such challenge is envisaged in the Act exclusively u/s 127 itself before the order is passed and before the High Court after the order is passed. Referring specifically to the following case laws relied on by the assessee in support of the contention is that ITAT does have jurisdiction to examine the issue of jurisdiction in the assessee's case, he put forth elaborate reasons why these case laws are not applicable to the facts of the assessee's case, which are summarized hereunder
1) Raibahadur Seth Teomal Vs. CIT (36 ITR 9 )(SC)
2) Abdul Mazid Vs. CIT (281 ITR 366) All 11 12
3) Satyanarayan Peeti Vs. ITO (7 ITD 496) (Hyd.)
4) All India children care and educational development society Vs. JCIT (87 ITD 209) (All)
5) MI Buildings (P) Ltd. Vs. ITO (115 ITD 419) (Lucknow)
6) Ziaullah Sheriff Vs. ACIT (7 DTR 286) (Bangalore)
7) Mank Chand Agrawal Vs. ACIT (4 DTR (Jp) (TRB) 584)
8) ITO Vs. Gurudev Singh (86 TTJ (Chd.) 861)
9) Kanjimal & Sons Vs. CIT 138 ITR 391 (Del)
10) Cliftons Pearson Exports & Agencies Ltd. Vs. ACIT
11) 61 ITD 60 (Cal)
12) Amulya General Trading & Agencies Ltd. Vs. ACIT(65 ITD 329) (Del)
13) ITO Vs. Prixsmall Savings & Investments Ltd.(69 ITD 51) (Cal.)
14)ACIT Vs. Pragati Ceramics (P) Ltd. TTJ (Nag.) 167
14) Ramesh Chand Vs. ITO (21 TTJ (Del) 460)
15) ITO Vs. Kanjimal & Sons (7 TTJ (Del) 222) 8.1. She submitted that the decisions in the cases at S. No. 10 to 15 above pertain to validity of two simultaneous assessments, whether the procedure u/s 124 had been followed and whether sec. 124(7) was applicable. As submitted in para 9 above, sec. 124 permits challenging of assumption of jurisdiction by the Assessing Officer under existing jurisdiction orders; but it does not envisage a challenge to the jurisdiction orders themselves. These case laws are, therefore not relevant to the assessee's case sine what is under challenge here is not whether the assessee's case was covered by the order u/s 127 but whether the order itself was valid or not. She submitted that it may be 12 13 noted that all decisions on validity of the orders u/s 127 have been adjudicated upon and rendered by High Courts in writ petitions and not in appeals arising out of ITAT orders. She submitted that argument of the that learned AR that the order u/s 127 was never served on the assessee and that it was not possible for them to file writ petition in the absence of an order which was offered for the first time during hearing before the Tribunal, is not correct. As it is very clear from the order dated 31.03.2003 of the CIT(A) that the assessee was aware or made aware of the order u/s 127 in the course of the appeal proceedings. The assessee for her own reasons, chose not to file a writ petition before the High Court. She further submitted that even otherwise, the assessee's inability to file a writ petition so far, or the inconvenience that may have been caused by a long drawn out legal procedure in the appeal or other such considerations cannot confer on the assessee the right to agitate on the issues before the ITAT which is not within the jurisdiction of the ITAT under sec. 253. She proceeded to make the following submissions without prejudice to the above, to show that the order u/s 127 is legally valid:
9. The DR placed reliance on the arguments of the CIT(A) in support of the order u/s 127, which provides for an opportunity to be given 'wherever it is possible' and the words used in the Act is 'may'. She submitted that specific reasons have been recorded in the order u/s 127 and the sufficiency of such reasons has been upheld by the Courts as held in Charanpal Singh Vs. ITO 307 ITR (P & H). It is also submitted that it has been held by various courts and Benches of the Tribunal that lack of opportunity makes an order irregular but not illegal and such irregularity can be cured. She placed reliance on the following judgments:
1. CIT Vs. Damodardas Murarilal (222 ITR 401) 13 14
2. CIT Vs. Smt. Pushpa Devi (250 ITR 495).
9.1. She submitted that in the instant case, if at all there is any irregularity arising out of the alleged absence of due opportunity to the assessee, it can be cured; such irregularity cannot be a basis for annulling the assessment. She submitted that the Bench had directed that copy of the acknowledgement of service of order u/s 127 may be placed before it. Without prejudice to the submissions made earlier regarding the relevance of this document in the present proceedings and the competence of the ITAT to examine the validity of the order u/s 127,the Assessing Officer has submitted that the acknowledgement could not be readily traced and has sought further time for submission of the acknowledgement. In view of the above submissions regarding the position in law as per above submissions, it is prayed that the assessee's Grounds of Appeal nos. 1 and 2 may be rejected. The DR also submitted that the AR has filed written response in response to departmental submissions on 7.12.2009, in which the AR has referred to the observation of the DR that the assessee had been made aware of the order u/s 127 in the course of the appeal proceedings and concluded that the department has accepted that the order was not served on the assessee. The referred observation, it was submitted, had been made in the context of the assessee's claim that it was not possible for the assessees to file a writ petition in the absence of the order which was offered for the first time during hearing before the Tribunal. The AR has not countered the factual correctness of the observation that the assessee had been made aware of the order u/s 127 at least during the appeal proceedings before the CIT(A). She has also not offered any explanation why the assessee having been made aware of the order u/s 127 during the first appeal proceedings, then chose not to file a writ petition. The DR submitted that it is affirmed that the observation cited by the AR is not an admission that the order u/s 127 was not served 14 15 before the assessment proceedings. The observation is to be read in the limited context, as explained above.
10. We have heard the rival submissions and perused the records. S.127 of the Act reads as follows-
"127. Power to transfer cases.
(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.
(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 15 16 proceedings under this Act which may be commenced after the date of such order or direction in respect of any year."
10.1 The provisions of S.127(2) of the Act are relevant insofar as the assessees herein are concerned, as the case records were transferred from the jurisdiction of ACIT Nizamabad to DCIT Central Circle, Hyderabad. Clause (a) to S.127(2) of the Act categorically says that 'after giving an assessee a reasonable opportunity of being heard in the matter', and 'after recording his reasons for doing so, pass the order'. The Commissioner, having jurisdiction over ACIT Nizamabad under whose jurisdiction, assessees were being assessed, before transferring the case records, was required to give reasonable opportunity of hearing to the assessees in the matter, i.e. the matter of transfer of records. The rider in the said provision is 'wherever it is possible to do so'. In the facts of the present cases, the assessees are situated at Nizamabad and the Commissioner transferring records is at Hyderabad. No reasons have been brought on record to prove that 'it was not possible' to afford reasonable opportunity of hearing to the assessee. The opportunity of haring is not opportunity simplicitor, but reasonable opportunity of hearing, though it is the discretion of the officer to give such opportunity, as the term used is 'may' in conjecture with 'wherever it is possible to do so'. The provisions of S.127(2) further provide that the DG/CCIT/CIT shall, after recording the reasons for transfer, pass orders. It is a corollary that wherever reasonable opportunity is to be given and orders are passed after recording reasons for doing so, the same is to be communicated to the assessees. An order passed against any person is not only to be consigned to file, but also to be communicated to the respective parties, who are affected by such orders. The CIT(A) during the course of appellate proceedings, tried to call for the file of the Commissioner, AP-II, Hyderabad, who notified the cases of the appellants under S.127, but could not obtain 16 17 details of opportunities given to the assessees and it is not even established that such an opportunity was not given.
11. Their Lordships of Hon'ble Supreme Court in the case of Ajantha Industries(supra) held as under-
"We are clearly of opinion that the requirement of recording reasons under S.(1) is a mandatory direction under the law and non- communication thereof is not served by showing that the reasons exist in the file although not communicated to the assessee.
Thus not only the reasons are to be recorded prior to transfer of records but also communicated to the person concerned. Mere recording of reasons, without communicating the same to the concerned person is against the provisions of S.127 of the Act.
12. The question for further adjudication before us is whether any appeal is provided against the order under S.127 of the Act. The assessee has raised the issue of existing of jurisdiction in the ACIT Nizamabad on transfer of records from the ACIT Nizamabad. The vesting of jurisdiction is pursuant to the order passed under S.127 of the Act and the question of maintainability of appeal against the order of transfer under S.127 is to be decided before going into the question of vesting of jurisdiction in the assessing officer at Hyderabad. Their Lordships of Hon'ble Supreme Court in Ajantha Industries case (supra) had held on this aspect, as under-
"The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under Article 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question."17 18
13. The Chandigarh Bench of Tribunal in the case of Remaol Dass V/s. ACIT (53 TTJ 111) had held as under-
"...The High Courts and Supreme Court under the writ jurisdiction may strike down an order but no appeal is passed by the Board or the CIT under S.127 of the Act."
14. Further, in the case of DGP Hinoday Industries Ltd. V/s. DCIT (13 SOT 733)(Mum), it was held that as no appeal is provided against an order under S.127(2), the Tribunal cannot entertain the issue of vesting of jurisdiction in another assessing officer by order under S.127(2).
15. Further, we make it clear that the validity of the order under S.127 have been adjudicated by higher courts in writ petitions and not in appeals arising out of the orders of the Tribunal, and as such, in our humble opinion, the ratio laid down by the High courts in the cases relied upon by the learned counsel for the assessee cannot be applied by us in the present cases.
16. In the light of the above discussion, respectfully following settled position of law laid down by the Apex Court in the case of Ajantha Industries (supra) and in other cases discussed above, in our opinion, as no appeal is provided against a transfer order made under S.127 of the Act, this Tribunal cannot go into the issue of validity or legality of the transfer of records from ACIT Nizambad to ACIT (3)(2) Hyderabad. The remedy in the matter lies under the Writ jurisdiction before the respective High Court and/or Supreme Court. Consequently, we dismiss the grounds of appeal raised by the assessees in this behalf.
18 1917. In the result, appeals of the assessees are dismissed.
Order pronounced in the open Court on : 29 .1.2010
Sd/- sd/-
(N.R.S. GANESAN) (CHANDRA POOJARI)
Judicial Member Accountant Member
Dated the 29th January, 2010
Copy forwarded to:
1. Smt. Akula Suvarna, (Nizamabad) C/o. M/s Gandhi & Gandhi, CA, 1002, Paigah Plaza, Basheerbagh, Hyderabad
2. Smt. Akula Venkati, (Nizamabad) C/o. M/s Gandhi & Gandhi, CA, 1002, Paigah Plaza, Basheerbagh, Hyderabad
2. ACIT, Circle 7 (1), Nizamabad
3. CIT(A)Guntur, (Camp) Hyderabad.
4. CIT Hyderabad
5. The D.R., ITAT, Hyderabad.
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