Deluxe Enterprises Vs ITO (Himachal Pradesh High Court)
Conclusion: Assessee was justified in objecting to jurisdiction of AO and transfer of his case, which obviously could not have been adjudicated upon without affording an opportunity of hearing and disclosing to him the reasons for not accepting his point of view. An order passed in absence of any reasons for transfer had essentially to be construed to be the one as having been passed without application of mind.
Held: Assessee was established M/s. Deluxe Enterprises, Delhi, in the year 1997 as partnership firm and obtained permanent account number (PAN) with registered office at New Delhi. In the year 1999, assessee established industrial undertaking/manufacturing unit/branch at Himachal Pradesh and commenced its operations manufacturing different types of cotton yarn, textiles etc. Assistant Commissioner of Income Tax assessed the income of assessee under section 143(3). Thereafter, Respondent No. 5, i.e. Income Tax Officer, Baddi issued notices under Section 143 (2) and 142(1), initiating proceedings under Section 144 for the assessment year 2009-2010. According to assessee, he had been regularly filing his income tax returns for the assessment years 19971998 to 2012- 2013 at Delhi with respondent No 4. AO without considering the written reply submitted by the respondents framed the best judgment/assessment under section 144 for the assessment year 2009-2010 and made additions without first deciding the preliminary issue of jurisdiction. Assessee filed an appeal before CIT (Appeals), Shimla, which came to be rejected. Thereafter assessee preferred second appeal before Tribunal against the order, which too, had been decided against assessee on 16.1.2017, which had been separately assailed by medium of ITA No. 23/2017. Assessee contended that once he was being assessed by the Assistant Commissioner, Income Tax, New Delhi, respondent No.5 i.e. Income Tax Officer, Baddi had no authority to issue notice under Section 143(2) read with Section 142 (1) of and finalize the assessment of assessee without transferring his case file under Section 127. Revenue contended that assessee though had already availed alternate remedy of filing statutory appeals against the assessment orders for the assessment year 2009-10 and order of the CIT Appeals in respect of that year, hence, assessee could not seek the same relief in respect of the present assessment year by filing the writ petition. It was held that the twin conditions to be complied with by the respondents for transferring the case of assessee from respondent No.4 to respondent No.5 were: (i) assessee should have been given a reasonable opportunity of being heard and (ii) the reasons for transfer should have been recorded. Admittedly, the above procedure had not at all been complied with and the only explanation offered for the same was that Section 127 was not attracted to the instant case as it was respondent No.5 alone, who had the authority to issue notices under Section 143(2) read with Section 142 (1). Even the respondents could not dispute that AO in this case had been changed and the records too stands transferred to him which could have only been done after complying with provisions of Section 127 and an order passed in absence of any reasons for transfer had essentially to be construed to be the one as having been passed without application of mind.
