KUSUM DUBE,NEW DELHI vs. ITO, WARD- 2(3), GURGAON

4. At the time of hearing of the matter, the Ld. A.R also submitted before us that the issue is squarely covered on identical facts in the case of Ms. Ekta Gupa in for A.Y. 2015-16 by the Coordinate Bench, a copy whereof has also been filed before us. We note that submission made by the Ld. A.R has not been able to be controverted by the Ld. D.R. However, it was submitted by him that since on request made by the assessee the case has been transferred to Gurgaon, there is no requirement of issuing notice under Section 143(2) of the Act by the AO of Gurgaon which in our considered opinion is not acceptable.

“10. Thus, it appears that notice under section 143(2) of the Act is required to be issued by the jurisdictional AO having regard to the place of residence of the assessee. In this particular case, the ITO, Gurgaon is, therefore, supposed to issue the notice u/s. 143 (2) of the Act and not the ITO, Ward- 58(2), Delhi.

7. The appeal preferred by the assessee is allowed.

PER AVDHESH KUMAR MISHRA, AM:

a. The appellant/assessee applied for PAN with Dibrugarh address in 2010 and filed her first Income Tax Return (hereinafter, the ‘ITR’) on 17.03.2015 for the Assessment Year (hereinafter, the ‘AY’) 2014-15.

There was no ITR filed ever before the AY 2014-15. Thereafter, the ITR of AY 2013-14 was filed on 18.03.2015 and ITR of the relevant year; i.e. AY 2015-16 was filed on 04.08.2015. Thus, the Revenue was not having any record to know the change of address of the appellant/assessee prior to filing of the ITR of the relevant year. b. The appellant/assessee never challenged the jurisdiction and or the notice issued under section 143(2) of the Act by the ITO, Ward-1(4),

Dibrugarh during the one month; the prescribed time limit under section 124(3) of the Act. c. The appellant/assessee participated in the assessment proceedings and never questioned the jurisdiction and validity of the notice issued under section 143(2) of the Act by the ITO, Ward-1(4), Dibrugarh. d. The appellant/assessee did not update her address in PAN and never informed the AO about change in address before filing the ITR of the Relevant year. e. The cases are transferred on the basis of jurisdiction under section 124 of the Act through the Officers using their user id and password.

Such works have been assigned to various officers as per their hierarchy in the I. T. Department in accordance the role & functions as per the Act and also as per the business rules of the I. T.

System/Computerization Scheme approved by the CBDT. f. The Ld. CIT(A) has dealt the issue of jurisdiction, which is self- explanatory, as under:

“4.11 Further, as reported by the A and as per the information provided by the appellant, it is evident that no objection had been raised by the appellant before the ITO, Dibgrugarh or before the ITO, Gurgaon during the course of assessment proceeding. As per Section 124(3)(a), no person can challenge the jurisdiction after one month from the date of service of notice w/s 143(2) and 142(1). In this regard reliance is placed on the decision of Hon'ble Punjab & Haryana High Court in case of Smt, Jaswinder Kaur Kooner v. CIT(Appeals) [2007] 291 ITR 80/2008] 170 Taxman 35. Réference in this regard may also be made to the decision of Hon'ble Punjab & Haryana High Court in case of Subhash Chander v. CIT [2008] 166 Taxman 307 where it was clearly held that jurisdiction cannot be called in question into by the assessee after expiry of one month from the date of service of notice. Similar view has been further taken by Hon'ble Allahabad High Court in case of CIT v. Sohal Lal Sewa Ram Jaggi [2009] 222 CTR 412. Reference in this regard may also be made to the decision of the Hon'ble ITAT Chandigarh in the case of Assistant Commissioner of Income-tax, Circle -6(1), Chandigarh v. Punjab Urban Development Authority, Mohali (2014] 42 taxmann.com 160 (Chandigarh - Trib.) wherein Hon’ble ITAT held that once a notice under section 143(2) is issued by a particular officer and if assessee wishes to object to such jurisdiction then objection has to be raised in terms of section 124(3)(a) within 30 days of issue of such notice and, in absence of such objection, assessee cannot challenge jurisdiction later on. The Hon'ble ITAT held as under:

"Firstly if the assessee had problem with the jurisdiction then the assessee should have raised the objection us 124(3)(a) which clearly provides that if the objection is not raised during the assessment within a period of one month from the issue of notice us 143(2) then the issue of jurisdiction cannot be called in question after completion of assessment. The Hon'ble Punjab & Haryana High Court in case of Subhash Chander (supra) has clearly held that jurisdiction cannot be called in question by the assessee after expiry of one month from the date of completion of assessment if no objection is raised during that period. ------------------Requirement for raising the objections regarding jurisdiction has been incorporated in Section 124(3)(a) because it is settled law that the issue of transfer is a administrative matter and if any question arises regarding jurisdiction the same can be determined by the Director General of Income Tax or the Chief Commissioner of Income Tax. This is specifically provided in subsection (2) of Section 124. Another aspect is that in Section 246A which gives right to assessee for filing of appeals, no appeal has been prescribed in respect of jurisdiction issues i.e. against Sections 120, 124 and 127 etc. The reason for not making a provision for filing of an appeal is that the issue of jurisdiction is an administrative act and that is why issue of jurisdiction has been left alone to be decided by the administrative authority u/s 124. Therefore, merely not mentioning sub-section (5) of Section 139 in Section 124(3)(a) cannot lead to the conclusion that objection is not required to be raised u/s 124(3)(a) if the assessee disputes the jurisdiction. If this interpretation is adopted then that would mean that first the assessee allows the assessing authority to complete the assessment and then later on dispute the jurisdiction by way of an appeal which is not provided in the Act itself. It is settled law that appeal is a statutory right and no appeal can be entertained which has not been provided in a particular statute. In other words, the remedy has been provided to the assessee by making a provision for raising the objection regarding jurisdiction by Section 124(3)(a) and that is why no appeal has been provided in the Act."

4.12 Moreover, even in a case where jurisdiction is irregularly exercised, the assessee can be said to have waived the objection regarding jurisdiction if such assessee has participated in the proceedings. In this regard reliance is placed on the decision of Hon'ble Punjab & Haryana High Court in case of CWT v. Siri Paul Oswal [2007] 293 ITR 273/[2008 169 Taxman 212.

4.13. Keeping in view the aforesaid facts, the assessment made by the ITO, Ward-2(3) based on the notice u/s 143(2) issued by ITO, Dibrugarh is well within the provisions of the Law.

4.14. This ground of appeal is accordingly dismissed.”

4. The Hon’ble Delhi High Court, in the case of Mega Corporation Ltd; has held that the ITAT fell into error in interpretation of provisions of Section 124(3)(a) and holding that the ACIT could not have completed the assessment by virtue of Section 120(4)(b). The assessee could have raised objection to jurisdiction only within a month. In the case of Abhishek Jain 94 taxmann.com 355, the Hon’ble Delhi High Court has held that in terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148 of the Act. In view of the above cited decisions, whether the appellant/assessee, in the case in hand, can question after expiry of one month from date on which he was served with a notice for scrutiny assessment under section 143(2) of the Act.

5. From the perusal of the decision of the coordinate bench of the ITAT relied upon by the Ld. Ld. Counsel it is evident that the decisions of the Hon’ble High Courts cited above were not brought to the notice of the Tribunal.

I find merit in the argument of the Ld. Sr. DR that the decisions of the Hon’ble Jurisdictional High Court/Punjab & Haryana High Court in the cases of Jaswinder Kaur Kooner and Subhash Chander (Supra), relied upon by the CIT(A) have to be followed being binding in nature in this case. Our attention was also drawn to the decision of the ITAT Chandigarh in the case of Punjab Urban Development Authority, Mohali (2014] 42 taxmann.com 160 (Chandigarh - Trib.) wherein the Tribunal has held that once a notice under section 143(2) of the Act is issued by a particular officer and if assessee wishes to object to such jurisdiction then objection has to be raised in terms of section 124(3)(a) within 30 days of issue of such notice and, in absence of such objection, assessee cannot challenge jurisdiction later on.

6. In view of the foregoing discussions, I am of the considered opinion that the order of the Ld. CIT (A) is in accordance with the ratio laid down by Hon'ble Jurisdictional High Court cited above being binding decisions. The case in hand is also held covered by the decision of the ITAT Chandigarh in the case of Punjab Urban Development Authority Tribunal Chandigarh.

7. In the light of the above discussions and judicial pronouncements, I decline to interfere with the impugned order, dated 04.09.2018, passed by the CIT(A).

8. Consequently, the appeal stands dismissed.

PER: MAHAVIR SINGH, VICE PRESIDENT AS THIRD MEMBER: By the order of President, ITAT vide U.O. No.F.28-Cent.Jd(AT)/2025 dated 17th February, 2025, the undersigned has been nominated to adjudicate the difference of opinion between the learned Judicial Member and learned Accountant Member on the following question:-

“As to whether, under the present facts and circumstances of the matter, the assessment order is sustainable in the eyes of law in the absence of any notice under Section 143(2) of the Income Tax Act, 1961, issued by the jurisdictional officer or not.”

“KusumDube F2484, PalamVihar, 122017, Haryana India”

3. I noted from the assessment order that the assessee has requested to transfer his file from ITO, Dibrugarh to the current jurisdiction of ITO at Gurgaon and CIT(A) also noted that the assessee also requested that she is residing in Gurgaon, Haryana and hence, her case may be transferred to Gurgaon for administrative convenience vide email sent to ITO, Ward-1(4), Dibrugarh vide her letter dated 19.01.2017. But, the factum of the case ascertained from order sheet entries (which are enclosed in assessee’s paper book at page 5) that assessee sent documents in compliance to notice under Section 143(2) of the Act and this is noted by the AO vide order sheet entry dated 03.10.2016. In this very communication, it was also requested that the assessee is residing at Gurgaon and the assessment records can be transferred to the ITO at Gurgaon, where assessee is filing her returns of income. The AO also noted in the order sheet entry dated 22.09.2016, while issuing notice under Section 143(2) of the Act, that the copy of the notice is sent on her email ID mentioned in the ITR and copies being sent by speed post to the ITR address available in the assessment records. The ITO, Ward-1(4), Dibrugarh was aware about the address of the assessee that she is residing at F-2484, PalamVihar, Gurgaon, Haryana 122 017. As per assessment order, accordingly, the case was received on transfer to the office of ITO, Ward-3(4), Gurgaon vide office letter F.No. T-1/ITO/Ward 1(4)/DBR/2016-17/458 dated 29.03.2017 of ITO, Ward-1(4), Dibrugarh and thereafter, notice under Section 142(1) of the Act was issued by ITO, Ward 3(4), Gurgaon on 5th June, 2017 requiring the assessee to file information.The assessee, before Tribunal, raised the issue of jurisdiction vide ground No.1 and 1.1 vide revised grounds filed on 28/27.02.2024 and the relevant grounds read as under:-

“1. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO (ITO Ward 2(3) Gurgaon) u/s 143(3) without appreciating that said AO never issued any valid notice u/s 143(2) of the Act and assessment is framed on basis of invalid notice u/s 143(2) issued by non jurisdictional officer from ITO Dibrugarh who admittedly has no jurisdiction;

1.1 That on the facts and in the circumstances of the case and in law, ld CIT-A erred in sustaining the order passed by Ld AO (ITO Ward 2(3) Gurgaon) u/s 143(3) without appreciating that section 127 prescribes transfer between AO's falling in different CCIT/CIT’s where no order in present case u/s 127 was ever passed for transfer of proceedings from ITO Dibrugarh to ITO Ward 2(3) Gurgaon;”

4. When the matter was argued before the Tribunal, the Tribunal heard the matter and learned Judicial Member framed draft order and quashed the assessment proceedings in the absence of notice issued by the jurisdictional Assessing Officer under Section 143(2) of the Act by observing in paragraph 6 as under :-

“6. Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the matter and particularly the judgment passed by the Coordinate Bench, we find that the ratio of the judgment is to be applied in the instant case wherein admittedly no notice under Section 143(2) of the Act has been issued by the jurisdictional AO i.e. ITO, Ward 2(3) Gurgaon, once the case records got transferred from the Dibrugarh. Thus the order passed by the Assessing Officer on the basis of the notice issued by the AO, Dibrugarh under Section 143(2) dated 19.02.2017 is found to be non-est in the eyes of law; the entire proceeding is thus void-ab-initio and quashed.”

5. Whereas, learned Accountant Member upheld the issuance of notice under Section 143(2) of the Act by upholding the findings of learned CIT(A) by observing in paragraphs 3 to 6 as under :-

“3. In view of the facts and impugned order mentioned above in para-2, I am unable to persuade myself with the finding of the draft order holding the assessment order as non-est in the eyes of the law and the entire proceedings as void-ab-initio in view of the facts of the case highlighted in the impugned order and in light of the decisions of the Hon’ble Jurisdictional (P & H) High Court in the cases of Jaswinder Kaur Kooner, 291 ITR 80, SubhashChander 166 Taxmann 307 &Siri Paul Oswal 293 ITR 273 and the Hon'ble Delhi High Court in the cases of Mega Corporation Ltd; and Abhishek Jain (2018) 94 taxmann.com 355.

5. From the perusal of the decision of the coordinate bench of the ITAT relied upon by the Ld. Counsel it is evident that the decisions of the Hon’ble High Courts cited above were not brought to the notice of the Tribunal. I find merit in the argument of the Ld. Sr. DR that the decisions of the Hon’ble Jurisdictional High Court/Punjab &Haryana High Court in the cases of Jaswinder Kaur Kooner and SubhashChander (Supra), relied upon by the CIT(A) have to be followed being binding in nature in this case. Our attention was also drawn to the decision of the ITAT Chandigarh in the case of Punjab Urban Development Authority, Mohali (2014) 42 taxmann.com 160 (Chandigarh – Trib.) wherein the Tribunal has held that once a notice under section 143(2) of the Act is issued by a particular officer and if assessee wishes to object to such jurisdiction then objection has to be raised in terms of section 124(3)(a) within 30 days of issue of such notice and, in absence of such objection, assessee cannot challenge jurisdiction later on.

6. In view of the foregoing discussions, I am of the considered opinion that the order of the Ld. CIT(A) is in accordance with the ratio laid down by Hon'ble Jurisdictional High Court cited above being binding decisions. The case in hand is also held covered by the decision of the ITAT Chandigarh in the case of Punjab Urban Development Authority Tribunal Chandigarh.”

6. Now, on difference of opinion between the learned Judicial Member and learned Accountant Member, the above question of dissent was referred by President for adjudicating the same.

7. Learned Counsel for the assessee stated that when return of income under section 139 of the Act for the relevant assessment year 2015-16 was filed on 09.08.2015 with ITO, Ward 3(4), Gurgaon and assessee’s residence from 2014 was same i.e., F-2484, PalamVihar, Gurgaon, Haryana having jurisdiction with ITO, Ward 3(4), Gurgaon. In such facts can ITO Ward 1(4), Dibrugarh issue notice u/s. 143(2) dated 22.09.2016.Ld. Counsel further argued that without any valid order u/s. 127(2) of the Act, the ITO Ward 1(4), Dibrugarh cannot transfer the file to the ITO, Ward 2(3), Gurgaon. Ld. Counsel further argued that how can revenue raise the issue of assessee not raising objection within 30 days of issuing of notice u/s. 143(2) of the Act by the ITO, Ward 1(4), Dibrugarh in terms of section 124(3)(a) of the Act. Ld. Counsel stated that in the return of income as well as the notice issued by the ITO, Ward 1(4), Dibrugarh u/s. 143(2) of the Act, the address declared of the assessee is “F.2483, Palam Vihar, Gurgaon, Haryana.” The assessee was merely having PAN in the jurisdiction of ITO, Dibrugarh and merely on the basis of PAN lying in his jurisdiction cannot he issue notice u/s. 143(2) of the Act. Further, the action of the ITO, Dibrugarh in transferring the file to the ITO, Ward 2(3), Gurgaon without any valid order u/s. 127 of the Act is nullity. In view of these facts , when both the Income Tax Officers falls the jurisdiction of the different CCIT/CIT, consequent assessment order by ITO, Ward 2(3), Gurgaon is valid or not. The CIT(A) during appellate proceedings also asked a remand report from the ITO, Ward 2(3), Gurgaon with regard to jurisdiction and issuance of notice u/s. 143(2) of the Act by ITO ward 1(4) Dibrugarh. The AO vide her Report dated 01.06.2018 submitted, which is part of the appellate order of the CIT(A)but, for the sake of clarity, the same is reproduced as under:-

“4.3 A copy of the appellant's submissions was forwarded to the Assessing Officer and the Assessing Officer was requested to verify the facts with regard to the jurisdiction and issue of notice u/s 143(2) and submit a report. The Assessing Officer vide her report dated 01/06/2018 submitted as under:-

"In this connection, it is submitted that the assessee was resided at Dibrugarh (Assam) with her husband where he was posted in Indian Army. The case was selected for scrutiny and notice u/s 143(2) was issued by the ITO, Dibrugarh where the PAN of the assessee lies at that time, within time allowed w/s 143(2) and duly served and complied with by the assessee through e-mail dated Oct.

I, 2016. In response to notice u/s 143(2), assessee also replied to the query raised in CASS and also furnished copy of sale deed and payment receipts made to M/s M3M. Further, during assessment proceedings the assessee also made request to ITO, Ward-1(4), Dibrugarh, on "letter head" of her husband who was Major General in Army and extract of relevant portion as per para 8 of her letter is as under:

"I got my PAN Card from Assam while my husband was serving in East, now he has retired and we are living/settled down at Gurgaon. I have already initiated action for change of address in PAN Card to Gurgaon."

In addition to above letter assessee sent e-mail to ITO W-1(4), Dibrugarh vide dated 19.02.2017 relevant extract of which is as under:

"Please refer to your Tele communication of 16 Feb 2017. Since I am residing at Gurgaon, Haryana, it is requested that case may please be transferred to Gurgaon for administrative convenience."

Thus, in view of stated events, it is clear that case was transferred to ITO Ward-2(3), Gurgaon on request of the assessee and PAN was also transferred by passing order us 127 on system. As per provision of section 143(2);

“Where a return has been made under section 139, or in response to a notice under section (1) of section 142, the Assessing Officer shall, if he considers it necessary expedient to ensure that the assessee has not understand the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend hisoffice or to produce or cause to be produced there, any evidence on which the assessee may rely in support of the return:

Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished."

Accordingly, upto 30.09.2016, the jurisdiction of the assessee's case lies with ITO Ward 1(4), Dibrugarh and notice us 143(2) was rightly issued on 22.09.2016 which was duly served and complied with by e-mail dated Oct. 1, 2016. Furthermore, it is very important to mention here that assessee has not challenge the notice upto completion of Assessment Proceedings. It is also important to mention here that notice u/s 143(2) can be issued only once in assessment proceedings which was duly issued by the then Jurisdictional Assessing Officer and there is no need to issue of notice u/s 143(2) time and again in case of transfer of jurisdiction. Further assessee has not made any request for transfer of her PAN before 30.09.2016. Rather, assessee has made request for transfer of his assessment proceeding only vide c-mail dated 19.02.2017.

Further, the case law quoted, are distinguished from the facts of the present case.In view of above stated facts, notice u/s 143(2) was rightly issued by the then Jurisdiction Assessing Officer before transfer of the case to this office and assessment was rightly completed. Copies of letter in response of notice us 143(3) and e- mail of Oct. 1, 2016 and 19.02.2017 are enclosed for ready reference and for kindly necessary action."

7.1 In reply to the same, the assessee also stated that the jurisdiction of the AO of the assessee as stated by the AO in his remand report that for issuance of notice under Section 143(2) is of Dibrugarh is not correct, because the assessee has filed her returns of income for assessment years 2013-14 on 17.03.2015, 2014-15 on 18.03.2015 and for the relevant assessment year 2015-16 on 09.08.2015 at the address at F2484, PalamVihar, Gurgaon, Haryana. The assessee filed the copies of ITRs and in addition to this, the jurisdiction details of the assessee from income tax web site is also enclosed which also showed jurisdiction of the assessee at Gurgaon. Admittedly, in the assessment year 2015-16 assessee filed his return of income on04.8.2015 which was revised under Section 139(5) of the Act on 09.08.2015. The ITO Ward 1(4), Dibrugarh issued notice under Section 143(2) of the Act after one year on 22.09.2016. Admittedly, the assessee is an individual and residing at the above address at Gurgaon, Haryana. The assessee herself admitted that she got PAN from ITO, Dibrugarh jurisdiction where her husband was serving, but, since now he has retired and they are living /settled down at Gurgaon since 2014, shehad already intimated this information to the Income Tax Department as also the request for changing the address in PAN. From such facts, the following two issues arises, which are as under:-

(i) 1st issue is that where is the territorial jurisdiction for the purpose of assessment within the meaning of section 124 of the Act for which the AO has to issue a valid notice under Section 143(2) of the Act. (ii) 2nd issue is that whether the assessment farmed by the ITO, Ward 2(3), Gurgaon, Haryana will be a valid assessment when revenue claimed on the basis of issuance of notice under Section 143(2) of the Act, the ITO, Ward 1(4), Dibrugarh, in the absence of any order passed under Section 127 of the Act by the CIT(A) transferring the jurisdiction from ITO, Ward 1(4), Dibrugarh to ITO, Ward 2(3), Gurgaon.

7.2 Admittedly, there is no Transfer Order under Section 127 of the Act in the present case transferring the jurisdiction from ITO, Ward 1(4), Dibrugarh to ITO, Ward 2(3), Gurgaon. The provisions of Section 124 of the Act provide jurisdiction of the AO where the assessee is assessed. The provision of Section 124(1) defines the jurisdiction of the AO or any area within the limits of such area i.e., the territorial jurisdiction. The relevant provisions of Section 124(1) of the Act read as under:-

“124. Jurisdiction of Assessing Officers (1) Where by virtue of any direction or order issued under sub- section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction – (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area.”

7.3 The objection raised by the Revenue as regards the applicability of Section 124(3) of the Act that assessee has not objected to the notice issued by the ITO, Ward 1(4), Dibrugarh under Section 143(2) of the Act, as argued by the learned Counsel that the pre-condition of Section 124(3) is that where the assessee has made a return of income under Section 139(1) and that AO has issued under Section 143(2) of the Act, he can raise the objection within one month. The relevant provisions of Section 124(3) reads as under:-

“(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer – (a) where he has made a return [under sub-section (1) of section 115WD or] under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of the section 142 or [subsection (2) of section 115 WE or] sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115 WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144] to show cause why the assessment should not be completed to the beset of the judgment of the Assessing Officer, whichever is earlier;

(c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section of section 153C or after the completion of the assessment, whichever is earlier.] 7.4 The above provisions of Section 124(3) explain that a person is entitled to call in any question and dispute the jurisdiction of the AO:

(a) In case where he has furnished a return of income under Section 139(1) of the Act or his assessment has been completed, within one month from the date on which he was served with notice under Section 142(1) or 142(3) or completion of assessment,whichever is earlier.

(b) In cases where he has not furnished a return under Section 139(1) of the Act, within the time allowed by the notice under Section 142(1) or under Section 148 of the Act for furnishing of the return or by the notice under the first proviso to Section 144 of the Act to show cause as to why the assessment should not be completed to the best of the judgment of the AO, whichever is earlier.

7.5 The above two conditions should be fulfilled and, in the present case, assessee has not filed return of income with ITO, Ward 1(4), Dibrugarh whereas she actually filed the return for Assessment year 2015-16 with ITO, Ward 3(4), Gurgaon, where she resides. Even the notice under Section 143(2) of the Act was issued by ITO, Ward-1(4), Dibrugarh at the Gurgaon address of the assessee, where the assessee has filed her return of income. The AO i.e., ITO, Ward-1(4), Dibrugarh was aware of the filing of the return of income by the assessee at Gurgaon address because he has noted this fact in the order sheet entry dated 22.09.2016, which reads as under :-

“Notice u/s 143(2) of the Income Tax Act, 1961 sent to the assessee by official email ID to her email ID mentioned in the ITR and also copy send by speed post to the ITR address available in the AST.”

7.6 I noted from the case law referred by the learned Accountant Member of Hon’ble Punjab and Haryana High Court in the case of Subhash Chander Vs. CIT, Rohtak [2008] 166 Taxman 307 ((P&H) wherein, the issue under challenge is issuance of notice under Section 142(1) of the Act in terms of Section 124 of the Act. The Hon’ble High Court noted that the notice under Section 142(1) of the Act was issued to the assessee on 25.02.1993 and the return in response to the same was to be filed on or before 15.03.1993, which, in fact, was filed on 01.03.1993 and assessee has not objected to the jurisdiction till 06.09.1994. It is the same AO before whom the assessee has filed return of income and therefore, Hon’ble High Court concluded that it is not possible or under obligation for the AO to refer the question of jurisdiction to the DG or Chief Commissioner as per the provisions of Section 124(2) read with Section 124(4) of the Act as contended by the learned Counsel for the assessee. Hon’ble High Court noted the fact that the records at one stage was transferred and therefore, the assessment order passed by the Assessing Officer at Sirsa is bad, this argument cannot be accepted. Hon’ble High Court, in view of the above gave findings in para 6 to 8 as under:-

“6. A perusal of sub-section (3)(b) of section 124 of the Act shows that the jurisdiction of an Assessing Officer cannot be called in question by an assessee after the expiry of one month from the date of which he was served with a notice under sub-section (1) of section 142 of the Act or alter completion of assessment, which was to be earlier. It is further evident that 1 sub-section (4) of section 124 has been made subject to the provisions of sub-section (3) in case an assessee has questioned the jurisdiction of an Assessing Officer. It is only in those jurisdictions that the Assessing Office is to refer the matter for determination to the Director General or the Chief Commissioner or the Commissioner as per the provisions of section 124(2) of the Act. It is, thus, evident that before the expiry of the period of one month from the date of service of notice under sub-section (1) of section 142 of the Act, no right to question the jurisdiction of an Assessing Officer would survive.

8. We are further of the view that it would not make any difference even if at one stage accounts for assessment year 1992-93 were transferred to New Delhi, which were returned to the Assessing Officer, Sirsa, because there was no effective transfer of record. Moreover, the substantial business in the financial year 1992-93 was transacted at Sirsa. The argument that the record at one stage was transferred and, therefore, the assessment order passed by the Assessing Officer at Sirsa is bad cannot be accepted and we have no hesitation to reject such an argument.”

But, the facts in the present case before me are distinguishable from the facts before Hon’ble High Court that in the present case, the notice under Section 143(2) was issued by ITO, Ward-1(4), Dibrugarh, who was not having any jurisdiction on the assessee by way of transfer order under Section 127 or as territorial jurisdiction under Section 124(1) of the Act because assessee is regularly filing her return of income with ITO, Ward-2(3), Gurgaon. Simplicitor ITO, Ward-1(4), Dibrugarh was having PAN jurisdiction as the assessee’s husband being Major General in Army and due to her husband’s posting in East, she applied for PAN from that address.

7.7 Similarly, another case law relied upon by the learned Accountant Member of Hon’ble Punjab and Haryana High Court in the case of Commissioner of Wealth Tax vs. Siri Paul Oswal[2007] 293 ITR 273 (P&H) wherein Hon’ble High Court noted the fact that the CIT passed order in December, 1978 under Section 127(1) of the Act and directed that the power conferred on the ITO shall be exercised by the Inspecting Assistant Commissioner of Income Tax (Assessment) in respect of cases mentioned in the said order but there was no order passed in respect of jurisdiction of the WTO, Central Circle-1, Ludhiana, but the Inspecting Assistant Commissioner of Income Tax (Assessment) passed assessment order under the Wealth-tax Act also in respect of the same assessee. The assessee did not raise any objection to the assessment before the AO but raised objection before the appellate authority. In such circumstances, Hon’ble High Court held that the assessee having not raised any objection as to the jurisdiction before the AO, he was debarred from raising the same before the appellate authority on the question of jurisdiction. Hon’ble High Court has laid down the ratio as under :-

“16. A distinction has to be made between a situation when there is inherent lack of jurisdiction and a situation where jurisdiction is irregularly assumed and plea of want of jurisdiction can be waived by a party. In the latter situation, the question arises whether party who could waive the plea of jurisdiction, raised such a plea and whether such a party had been prejudiced on account of erroneous assumption of jurisdiction. The present case, in our view, falls in the second category. The assessee participated in assessment proceedings by the assessing officer to whom assessment proceedings under the Income Tax Act were transferred and who exercised jurisdiction to assess wealth-tax also with the participation of the assessee without any objection by the assessee. If the assessee had raised an objection, the proceedings could have been transferred back to the concerned Wealth-tax Officer. The assessing officer having proceeded further and assessment having been finalised, plea of lack of jurisdiction could not be raised for the first time in appeal, without showing error in the order on the merit and without showing any prejudice to the assessee by exercise of jurisdiction by the assessing officer.”

The facts in the present case before me are quite distinguishable from the facts before Hon’ble High Court for the reason that only the PAN number of the assessee fell within the jurisdiction of ITO, Ward-1(4), Dibrugarh. Since the assessee is not obliged to file any return of income before ITO, Ward-1(4), Dibrugarh and assessee is regularly filing her return of income with ITO, Ward- 2(3), Gurgaon, the question of availing objection or informing ITO, Ward-1(4), Dibrugarh under Section 124(3)(a) of the Act does not arise.

7.8 Again, another case of law relied upon by the learned Accountant Member of Hon’ble Punjab and Haryana High Court in the case of Smt. Jaswinder Kaur Kooner Vs. CIT [2007] 291 ITR 80 (P&H) wherein the issue under challenge was transfer of jurisdiction under Section 127 of the Act and not the issue of notice under Section 143(2) of the Act and consequent jurisdiction under Section 124(3) of the Act. The Hon’ble Punjab and Haryana High Court held that assessee having not raised the objection as to jurisdiction at the appropriate time before the Assessing Officer cannot be permitted to take up the issue in appeal. The Hon’ble High Court affirmed the action of transfer under Section 127 of the Act and not the issuance of notice under Section 143(2) of the Act in the facts of the present case. But, in the present case before me, the issue under challenge is firstly, the issuance of notice under Section 143(2) where assessee is not at all residing nor being assessed by filing return of income. Secondly, the assessee is regularly being assessed by filing return of income with ITO, Ward-2(3), Gurgaon and ITO, Ward-2(3), Gurgaon never issued notice under Section 143(2) of the Act. Hence, the facts in the present case are clearly distinguishable from the judgment whether the jurisdiction can be challenged in appeal or not.

7.9 Now, the question that arises before me is that whether the ITO, Ward- 1(4), Dibrugarh has valid jurisdiction to issue notice under Section 143(2) of the Act or not. Under Section 120 of the Act, the CBDT may issue directions or orders determining the jurisdiction of the income tax authorities on the basis of one or more of the following criteria viz., (a) in respect of any person carrying on a business or profession if the place at which he carries on his business or profession is situate within the area or where his business or profession is carried out in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. The assessee being a human being is not resident of Dibrugarh, rather, she is resident of Gurgaon. Section 124(3) of the act stops the assessee from raising objection about jurisdiction of an AO where the assessee has filed her return of income under Section 139 after the expiry of one month from the date on which she was served with notice under Section 143(2) of the Act or after the completion of the assessment, whichever is earlier. It is a fact that the assessee filed her returns of income with ITO, Ward-2(3), Gurgaon from AY 2014-15 on 17.03.2015, for AY 2013-14 on 18.03.2015 and for AY 2015-16 on 04.08.2015, which was revised under Section 139(5) on 09.08.2015. This fact is within the knowledge of the ITO, Ward-1(4), Dibrugarh and this is proved by the very order sheet entry recorded while issuing notice under Section 143(2) of the Act because he notes that the notice is being sent by speed post on the address available in the assessment records. The address available in the assessment records is “F2484, PalamVihar, Gurgaon, Haryana” and which is the address noted on the notice under Section 143(2) even.I noted that notice under Section 143(2) was issued by ITO, Ward-1(4), Dibrugarh, who was not having any jurisdiction on the assessee by way of transfer order under Section 127 or as territorial jurisdiction under Section 124(1) of the Act because assessee is regularly filing her return of income with ITO, Ward-2(3), Gurgaon. Simplicitor ITO, Ward- 1(4), Dibrugarh was having PAN jurisdiction as the assessee’s husband being Major General in Army and due to her husband’s posting in East, she applied for PAN from that address. In my view PAN cannot be the basis for jurisdiction and in any case the assessee is regularly filing her return of income with ITO, Ward-2(3), Gurgaon and there is no denial to the fact that these returns of income filed by assessee have been processed by ITO,Ward-2(3), Gurgaon.

Question framed by the Bench Answer to the Question As to whether, under the present In the given facts and circumstances facts and circumstances of the of the case and discussion carried matter, the assessment order is above, in the absence of any notice sustainable in the eyes of law in the under Section 143(2) of the Act by absence of any notice under the jurisdictional Assessing Officer, Section 143(2) of the Income Tax the assessment order is not Act, 1961, issued by the sustainable. The answer to this jurisdictional officer or not. question is in the negative.

11. The matter shall now be placed before the regular Bench for passing appropriate order in accordance with the majority opinion.

PER BENCH:

This appeal was filed by the assessee against the order dated 04.09.2018 passed by the CIT(A), Gurgaon arising out of the order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) dated 22.08.2017 passed by the ITO, Ward 2(3), Gurgaon for Assessment Year 2015-16.

After hearing the appeal, the Judicial Member allowed the appeal preferred by the assessee. The Accountant Member opined otherwise and wrote a separate appeal. On account of difference of opinion between the Members constituting the Bench, a reference was made to the Hon’ble President ITAT u/s 255(4) of the Act.

The Hon’ble President vide order dated 17.02.2025 nominated Third Member to decide the reference. The ld. Third Member vide order dated 08.08.2025 concurred with the view of Judicial Member. Consequent to the opinion of Third Member, appeal of the assessee is allowed.

Order pronounced in open court on 14.08.2025