SANDEEP BHURIA,JHABUA vs. ASST. COMMISSIONER OF INCOME TAX, RATLAM

Per Paresh M Joshi, J.M:

This is an appeal filed by the Assessee under section 253 of

the income tax Act 1961, [ hereinafter referred to as the Act

for the sake of brevity] before this tribunal, as & by way of a

second appeal. The Assessee is aggrieved by the order

bearing No: -CIT (A), Ujjain/10802/2017-18 dated

31.05.2023 passed by the Ld. CIT(A) u/s 250 of the Act,

which is hereinafter referred to as the “Impugned order”.

The Relevant Assessment year is 2010-11 and the corresponding previous year period is from 01.04.2009 to

31.03.2010.

2.1 That as and by way of an Assessment order made u/s

144/147 of the Act, the total income of the assessee was

computed and assessed at Rs. 1,67,35,717/-. The total

income as per ITR was at Rs. 20,00,833/-. The total income

of the assessee for the Assessment Year 2010-11 was

computed as under:- That the aforesaid assessment order is dated 29.12.2017,

which is hereinafter referred to as the “Impugned

Assessment Order” for the sake of brevity. This “Impugned

Assessment Order” was passed by Asst. Commissioner of

Income Tax Ratlam.

2.2 The department of Income Tax had an information that

the assessee had sold an immovable property for a

consideration of Rs. 1,70,46,000/- during the year, under

consideration. In this regard various letters were issued

by the ITO-3(4) Indore wherein the assessee was asked to

explain the taxability of income arising out of the said

transaction. However, no compliance was received from

the assessee accordingly the Ld. Assessing Officer[ITO-

3(4) Indore] basis material on record issued a notice u/s

148 on 28.03.2017 which was served on the assessee on

30.03.2017. That in the response to the said notice u/s 148,

a letter was filed by the assessee on 01.05.2017 wherein it

was stated that the “ROI” furnished by the assessee u/s

139 on 03.08.2010 declaring a total income of Rs.

20,00,833/- may be treated as a return in compliance to the

notice u/s 148. Later on, the present case was received on

transfer on 03.05.2017 by the Ld ACIT Ratlam. The issues of

objections with regard to the issuance of notice u/s 148 of

the Act was disposed off by the ITO-3(4) Indore on

22.05.2017.

2.3 That further a notice u/s 143(2) was issued by the Ld.

Assessing Officer on 25.05.2017 which was duly served

on the assessee through speed post, fixing the case for

hearing on 06.06.2017. Various letters objecting issuance

of notice u/s 143(2) as well as objection regarding exercise of

jurisdiction was raised by the assessee vide his letters dated

07.06.2017 and 18.07.2017. The objections raised by the

assessee vide above referred letters have been duly taken

into consideration and accordingly were disposed off vide

letters dated 12.06.2017 & 08.08.2017.

2.4 That despite various correspondences as well as

statutory notice(s) issued the assessee was non-compliant.

2.5 In view of the above the Ld. Assessing Officer concluded

that during the year under consideration the assessee had

sold an immovable property for a consideration or Rs.

1,70,46,000/-. However as per the computation of the total

income filed by the assessee a sale consideration only of Rs.

41,00,000/- was shown. After claiming the indexed cost of

Rs. 6,09,080/- the assessee had shown value of the said

property for capital gain at Rs. 34,90,920/-. The assessee

had further taken deduction u/s 54F of Rs. 17,88,884/- and

thereby shown income from capital gain at Rs. 17,02,036/-.

During the course of the assessment proceedings the

assessee has not produced any corroborate evidence with

regard to the indexed cost of acquisition as well as

deduction claimed u/s 54F. Accordingly long-term capital

gain was computed as under: -

Sale Consideration Rs. 1,70,46,000/-

Less Indexed Cost Rs. 6,09,080/- Long Term Capital Gain Rs. 1,64,36,920/- In addition to other incomes as stated above 2.6 That the assessee being aggrieved by the aforesaid

“Impugned Assessment Order” prefers the first appeal u/s

246A of the act before the Ld. CIT (A) who by the

“Impugned Order” has dismissed the first appeal of the

assessee on the grounds and the reasons stated therein. The

core grounds and the reasons for the dismissal of the first

appeal were as under:- 2.7 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

tribunal and has raised the following grounds of appeal in

the form no. 36 against the “Impugned Order” which are as

under: -

“Grounds of Income-Tax appeal before the

Hon'ble Income-Tax Appellate Tribunal, Indore,

against the Appellate Order passed under s.

250/144/147 of the Income-Tax Act, 1961 by

the learned Commissioner of Income-Tax

(Appeals)-27, New Delhi, pertaining to A.Y.

2010-11 in response to the appeal filed against

the Assessment Order, under s. 144/147 of the

Act, passed by the learned ACIT, Ratlam.

1(a). That, on the facts and in the

circumstances of the case, the learned CIT(A)

grossly erred, in law, in upholding the action

of the AO, passing the Assessment Order, in

assuming the jurisdiction of framing the assessment under s.144/147 of the Income-Tax

Act, 1961 without first issuing/ ensuring a

valid notice under s.148 of the Act.

1(b). That, the learned CIT(A) grossly erred, in

law, in dismissing the ground raised by the

appellant challenging the action of the AO [i.e.

ACIT, Ratlam] in assuming the jurisdiction for

framing the assessment under s.144/147 of the

Act on the strength of a Notice issued under

s.148 of the Act by some other officer who was

not having any valid territorial jurisdiction or

otherwise, over the case of the appellant.

1(c). That, the learned CIT(A) grossly erred, in

law, in dismissing the ground raised by the

appellant challenging the action of the AO in

assuming the jurisdiction for framing the

assessment under s. 144/147 of the Act without

considering and appreciating the material fact that the Income-Tax Officer, 3(4), Indore who

issued the notice to the appellant, was not the

Jurisdictional Assessing Officer of the

appellant in the eyes of the law and therefore,

any proceeding carried out by him was void-ab-

initio and consequently, there could not have

been any valid transfer of jurisdiction or any

proceeding by such Income-Tax Officer to the

Assessing officer who framed the impugned

assessment order.

1(d). That, without prejudice to the above, the

learned CIT(A) grossly erred, in law, in

dismissing the ground raised by the appellant

challenging the action of the AO in assuming

the jurisdiction for framing the assessment

under s.144/147 of the Act without having any

objective reason to believe as regard to

escapement of any income in the hands of the

appellant and as also, without providing any copy of the reasons, if any, recorded by the

ITO-3(4), Indore.

1(e). That, the learned CIT(A) grossly erred, in

law, in upholding the action of the AO in

assuming the jurisdiction for framing the

assessment under s.144/147 of the Act without

considering and appreciating the material fact

that in the case of appellant, in absence of any

valid notice under s. 148 of the Act, any

assessment for the assessment year could have

only been framed under s.143(3)/ 144 of the Act

and that too uptill 31-03-2013 only, thus, the

assessment order so passed by the learned AO

under s.144/ 147 of the Act on 29-12-2017 is

barred by limitation.

2(a). That, without prejudice to the above, the

learned CIT(A) grossly erred, in law, in

upholding the action of the AO in framing the

reassessment under s.144/147 of the Income- Tax Act, 1961 without considering the material

fact that in the case of the appellant, the

original return was filed under s.139 on 03-08-

2010 and in absence of any subsequent valid

return, no notice under s.143(2) could have

been issued to the appellant on 25-05-2017.

2(b). That, without prejudice to the above, the

learned CIT(A) grossly erred, in law, in

upholding the action of the AO in framing the

reassessment under s.144/147 of the Income-

Tax Act, 1961 without taking into

consideration the original return furnished by

the appellant under s. 139 of the Act.

learned CIT(A) grossly erred, in law, in

upholding the action of the AO for framing the

best judgment assessment under s.144 of the

Income-Tax Act, 1961 without first issuing either any show-cause notice to the appellant

to this effect or a notice under s.142(1) of the

Act, as contemplated under first proviso and

second proviso to sub-section (1) of section 144

of the Act, which is illegal and bad-in-law.

4(a). That, the learned CIT(A) grossly erred,

both on facts and in law, in computing the

taxable long-term capital gain from sale of

immovable property at Rs.79,13,920/- as

against the same already declared by the

appellant at Rs.17,02,036/- in his original

return of income furnished under s.139 of the

Act for the relevant assessment year, thereby

confirming an addition to the tune of

Rs.62,11,884/- out of the total addition of

Rs.1,47,34,884/- made by the Id. AO on this

count.

4(b). That, the learned CIT(A) grossly erred,

both on facts and in law, in computing the long-term capital gain, by taking the value of

sales consideration at Rs.85,23,000/-under

s.50C of the Act, being the stamp duty value as

adopted by the Stamp Valuation Authority, as

against the same shown by the appellant in his

original return, at Rs.41,00,000/-, without

properly considering the request of the

appellant, either himself or by giving direction

to the Id. AO, for making a reference to the

DVO as per the requirement of section 50C(2) of

the Act.

4(c). That, the learned CIT(A) grossly erred,

both on facts and in law, in rejecting the claim

of the appellant for grant of deduction made

under s.54F of the Act at Rs.17,88,884/- in

respect of investment in residential house, on

extraneous considerations, without properly

considering and appreciating the facts and circumstances of the case and as also, the

written submissions made before him.

add, alter or amend the foregoing ground of

appeal as and when considered necessary.”

3.1 The hearing in the matter took place before this Tribunal

on 14.10.2026 when the Ld. AR for & on behalf of the

Assessee appeared before us and interalia contended that

the “Impugned Order” is bad in law, illegal and not proper.

It therefore deserves to be set aside.

3.2 The Ld. AR has placed on the record of this tribunal a

paper book containing pages 1 to 121. A brief summary of

the case dated 13.01.2026. The Ld. DR has placed on

record of this tribunal a letter dated 12.10.2026

enclosing therewith reply of the Ld. Assessing Officer

dated 02.07.2026, filed on 13.10.2026. The Ld. AR has placed on the record of this tribunal few citations like

2017(3) TMI 1792 Allahabad High Court= PCIT v/s Moh.

Rizwan, 2023(6) TMI 277- ITAT Delhi= M\s Raghuraj

Laminates Pvt. Ltd. v/s ITO ward (3)(2)(2) Muzaffar nagar

and 2022(7) TMI 125 Madras High Court= Charu K Bagadia

v/s ACIT- 23(2) Mumbai/ACIT CC- 4(2) Chennai in support.

3.3 The Ld. AR then submitted as follows:-

(1) The relevant Assessment Year is 2010-11.

(2) The Impugned Assessment Order is under section

144/147 of the Act.

(3) Core dispute is stamp duty difference -immovable

property

(4) No notice u/s 148 of the Act by ACIT Ratlam.

(5) The relevant and competent JAO was ITO ward (2)

Ratlam, M.P at the material time & place.

(6) Our attention was invited to paper book page 37 which

was a copy of jurisdictional details downloaded by the

assessee from the official website of the income tax

department on 12.04.2017 by virtue of which jurisdiction was with ITO Jhabua and email id was

JHABUA.ITO@Incometax.gov.in. It was submitted that the

assessee was a public servant in govt. of M.P.

(7) Next our attention was invited to the paper book page 23

which was a copy of notice under section 148 of the

income tax Act 1961 dated 28.03.2017 issued by ITO 3(4)

Indore M.P. In the said Notice at PAN, it was remarked “Not

Available”. It was submitted that the ITO concerned had a

reason to believe that income chargeable to tax had escaped

assessment.

The assessee was called within 30 days from the date of the

receipt of the notice to file copy of the ROI for AY 2010-11.

[Upon a query by the bench as to when the aforesaid notice

was received by the assessee the Ld. AR replied and stated

that on 2nd and 3rd April 2017 on an approximation basis.

The said notice u/s 148 dt 28.03.2017 was issued on the

premise that it was non pan case and/or PAN was not

available but on the contrary the PAN was there(on the

sale deed document). In this regard our attention was

invited to PB page 19 which was a copy of ITR for AY 2010- 11 wherein the against the column designation of AO

(ward/circle)- the ward-2 Ratlam was stated. It was

original return dated 03.08.2010. PAN was:-

AFFPB5652K. Our attention was invited to PB page 24

which was a copy of letter dated 14.04.2017 of the

assessee addressed to ITO 3(4) Indore in response to the

Notice dt 28.03.2017 issued u/s 148 of the Act wherein it

was expressly stated “that without affecting my right to

question the validity of the notice so issued u/s 148 of

the income tax act 1961 at any appropriate time and at

any appropriate judicial form, it is submitted that the

return of income furnished by me u/s 139, as aforesaid,

may kindly be regarded as the return furnished in

compliance to your notice issued under section 148 of

the Income Tax Act,1961 and oblige.”

(8) Next our attention was invited paper book page 25& 26

which was an additional letter dated 09th May 2017 in

response to the Notice dt 28.03.2017 issued u/s 148 of

the Act to ITO 3(4), Indore wherein subject was: -

“Objection against exercise of invalid jurisdiction over my income tax case” was expressly stated. It was averred

therein as follows:-

“Since, according to me, the notice under s.148

so issued by your good office is not a valid

notice inasmuch, your good self was not

exercising any jurisdiction over my Income-Tax

case and therefore, no notice under s.148 could

have been issued by your good self to-me.

However, in order to have harmony and

eroperation with your esteemed Department,

through my previous letter dated 14-04-2017, I

have submitted before your good self my retum

objaconte already furnished by meanders 139

of the Act on 03-08-2010 vide Ack. No.

146022510030810 declaring an incotne of Rs

20,00,833/- with the Income-Tax Officer, Ward-

2, Ratlam.

It is submitted that I have been regularly filing

my returns of income with the Income-Tax Officer, Ward-2, Ratlam only and accordingly,

the correct jurisdiction over my income-tax

case lies only with the Income Tax Officer,

Ward 2, Ratlam and not with your good self. It

is further submitted that the charge of ITO,

Ward-2, Ratlam lies under the jurisdiction of

Hon'ble Commissioner of Income Tax, Ujjain,

which inter-alia, files under the jurisdiction of

Hon'ble Chief Commissioner of Income-Fax,

Bhopal and not under the jurisdiction of the

Hon'ble Commissioner of Income Tax-1, Indore

or Hon'ble Chief Commissioner of Income Tax,

Indore.

Sir, it shall be pertinent to note that the

jurisdiction over my case with ITO, Ward-2,

Ratlam is also getting clearly reflected on the

official portal of Income-Tax Department i.e.

www.incometaxindia.gov.in and not that with

ITO-3(4), Indore. A copy of Jurisdiction details

for my PAN as downloaded from the official portal of Income-Tax Department is being

submitted herewith for kind perusal and ready

reference of your good self.

Accordingly, through the present letter, I

hereby raise my strong objection against the

said notice on the ground of invalid

jurisdiction.

In view of the above facts and circumstances of

the case, it is now most humbly requested that

the re-assessment proceedings so initiated by

your good self through the aforesaid notice

under 148 of the Act may kindly be dropped

being devoid of proper jurisdiction.

Now, kindly do the needful and oblige.”

The Ld. AR basis Para 3.3(7) & Para 3.3 (8) above[supra] in

brief contended that a bare simple reading of the both the

letters dated 14.04.2017 and 09.05.2017 the assessee had expressly brought to the notice of ITO 3(4), Indore that he

had no territorial jurisdiction to the issue the notice u/s

148 dated 28.03.2017 which was received by the

2nd 3rd assessee on or about and April 2017

approximately. It was submitted that by virtue of law the

assessee had objected to the jurisdiction of ITO 3(4),

Indore at the earliest possible opportunity and that too

at the outset and at the threshold itself. Further a Co-

Joint reading of both the letter dated 14.04.2017 and

09.05.2017 clearly show that an objection on jurisdiction

was also taken in time stipulated by law i.e. 124 (3) of

the act (i.e. within one month). The Ld. AR then

submitted that his objection goes to the root of the

matter as ITO-3 (4), Indore had no territorial jurisdiction

over the assessee. The competent officer exercising the

jurisdiction was ITO ward 2 Ratlam. The Ld. AR

emphasised that since foundational notice itself is bad in

law and illegal subsequent proceedings which followed

are all nullity in the eyes of law. The assesse was vigilant

and conscious of his rights and obligation basis law only.

(9) Without prejudice to the aforesaid the Ld. AR Proceeded

further and invited out attention to paper book page 28

which was a transfer memo signed by ITO 3(4), Indore by

the virtue of which case of the assessee was transferred

from the ITO 3(4), Indore to circle 2(1), Ratlam on the

ground specified in column no. (7) & that the same was

read out. The Ld. AR then submitted that basis paper book

page 27 & 28 that this transfer memo came with notice u/s

143(2) dated 25.05.2017 by ACIT Ratlam. The Ld. AR then

submitted that there is “no transfer” within the meaning

section 127 of the act. The provisions of section 127 were

then read out and a brief discussion/debate took place on

127(a) & (b) and the difference was pointed out and

explained. In brief it was submitted that it is not in the

domain of the ITO 3(4), Indore to effect a valid transfer

in law basis section 127 of the Act and senior officer’s of

the department have been conferred such power. There

ought to have been PCIT order which is not in record. A

brief discussion took place on section 127(c) which speaks about “same city”. Section 127(3) was too spoken about by

the Ld. AR.

(10) The Ld. AR then submitted that the Ld. ACIT Ratlam

who passed the Impugned Assessment Order had no

jurisdiction in a sense that no foundational notice u/s 148

was issued by him.

(11) The Ld. AR once again came to the provision of the

section 127 of the Act that for a “transfer of a case” from one

jurisdiction to another jurisdiction and even for other

situations so described in the section 127 of the Act,

“Procedure” must be followed and that such power are given

to senior officer’s of the department which are all specified

but it cannot be done by an ITO, as it is done herein.

There is thus non-compliance of section 127 of the Act in

transfer of a case. Therefore, the proceeding since the outset

are all void abinitio.

(12) The Ld. AR then submitted that even the notice dated

25.05.2017 which was issued by ACIT Ratlam, u/s 143(2) of

the Act on PB page 27 there is no mention of section 148

notice issued earlier by ITO 3(4), Indore. No foundational notice u/s 148 by ACIT Ratlam after the alleged transfer;

[that to by an ITO Rank Officer of Indore] emphasised very

empathetically by the Ld AR.

(13) The Ld. AR then brought our attention to paper book

pages 38 to 43 which was a copy of CBDT notification

50/2014 dated 22.10.2014 wherein at serial no- 45 [PB

page 43] wherein in column 2 which deals with Designation

of Income tax authorities – Principle commissioner/

commissioner of income tax Ujjain is specified, in

column 3- speaks of “Head Quarters” Ujjain M.P. is

specified and column 4- which speaks of “Territorial area”

amongst others districts, the district of Ratlam and the

distt. Of Jhabua are stated. The Ld. AR then submitted that

distt. Ratlam and Jhabua fell under PCIT/CIT Ujjain which

were competent authorities and non-else.

(14) The Ld. AR then invited our attention to PB page 29& 30

which was a copy of letter dated 05.06.2017 of the assessee

to the notice dated 25.05.2017 issued by the “ACIT Ratlam”

wherein it was stated that the notice u/s 143(2) is time

barred as ROI was filed on 03.08.2010 and notice ought to have been served on the assessee on or before 30.09.2011

that is within six month from the end of the financial year in

which the return is furnished. It was submitted that even

no notice u/s 148 of the Act was issued to the assessee

either by the ITO Ward 2 Ratlam or by ACIT Ratlam for

AY 2010-11. Further by virtue of section 148 and 149 of the

Act any notice u/s 148 of the Act for AY 2010-11 could have

been issued from ACIT Ratlam latest by 31.03.2017 which

is not the case herein. It was finally submitted that

proceedings are all illegal, bad in law and without

jurisdiction. The Ld. AR additionally submitted that reply

letter dated 05.06.2017 was not controverted by the revenue;

in the material terms. The Ld. AR then invited our invited

to PB page 31 & 32 which was replied dated 12.06.2017 to

the assessee by ACIT Ratlam wherein AIR was

emphasised, besides non pan case, sale of immovable

property a consideration of Rs. 1,70,46,000/-, sale deed

mentioning address of scheme no. 78, Indore M.P., no

PAN mentioned, etc. The Ld. AR stated that the address of

scheme no. 78, Indore M.P. was of assessee’s mother address. The ACIT Ratlam spoke about jurisdiction of ITO

3(4), Indore. Spoke about letters dated 03.08.2016,

19.12.2016, 06.02.2017 and 27.02.2017 of ITO 3(4),

Indore and therefore notice u/s 148 dated 28.03.2017

followed, which for served on 30.03.2017. In compliance

to notice u/s 148 a letter dated 01.05.2017 by the assessee

to treat ROI u/s 139 to be under u/s 148. Hence notice u/s

148 accepted by the assesse. In this regard the Ld. AR

stated that there is no obligation on the part of the

assessee to reply these letters as they were all without

jurisdiction, perse. Further the letter was dated 14.04.2017

which was with a “Rider” that without affecting the

assessee rights to question the validity of the notice so

issued u/s 148 at any appropriate time and any

appropriate forum the ROI filed u/s 139 was requested to

be treated u/s 148. The Ld. AR then contended that in

continuation of the assessee letter dated 14.04.2017

which was with a rider (supra) the assessee, Further by

letter dated 09.05.2017 (wherein there is reference to

earlier letter dated 14.04.2017) the assessee had highlighted “no jurisdiction issue of ITO 3(4), Indore”.

The Ld. AR emphasised that in averment on Para 1.2 nothing

is stated and PB page 27 is notice u/s 143(2) simplicator

only. In Para 1.3 requirement of notice u/s 148 was not

there afresh due to transfer basis board notification dated

22.10.2014 [SO-2752(E) = 50/2014]. The Ld. AR stated that

since inception the ITO 3(4), Indore had no jurisdiction as

ROI was filed with AO- ward 2 Ratlam, only.

3.4 Per contra the Ld. SDR shri Rai contended that the

assessee had not provided PAN. The assessee has given

Indore address only. Hence the ITO 3(4), Indore is

competent Jurisdictional Assessing Order. Our attention was

invited to PB page 77 which was copy of sale deed dated

22.08.2009 wherein there else no mention of PAN of the

assessee and his mother.

3.5 The Ld. AR was then requested to address us on merits

of the case. The Ld. AR then invited out attention to PB page

77 wherein the assessee and his mother [ mother & son duo] has sold an immovable property which was located at

village Nipania Indore distt., M.P., Patwari Halka No:- 17 [

new 40] which was for agriculture. On PB page 78 M.V. was

at Rs. 1,70,46,000/-. Our attention was invited to PB page

77 to 97 copy of sale deed and basis paper book page 81 to

87 the consideration amount aggregating to Rs. 90,00,000/-

was received through banking channel only. Our attention

was invited to PB page 95 where stamp duty was borne by

the assessee. Deduction u/s 54F was not allowed. No

reference was made to DVO. Section 50C was invoked. Para

5 of the “Impugned Assessment Order” was read out. It was

submitted that 50C was invoked. The Hon’ble Supreme Court

order in case of KT Vergheese was not considered. Our

attention was invited to synopsis internal page 18 [Para 5.01

& 5.03] and it was submitted that law is well settled that

whether the request is made or not reference to DVO is a

must. Our attention was invited to PB page 111 that a house

was purchased. Our attention was invited to PB pages 117 &

118 on payments made for Rs. 21,10,000/- . 54F= purchase

of a house making.

3.6 Per contra the Ld. SDR on merits submitted that

“Impugned Assessment Order” is u/s 144. Para 10 of

“Impugned Order” was read out. Internal page 17 of

Impugned Order was read out and so also internal page 2 of

Impugned Order. Reliance was finally placed on “Impugned

Assessment Order” and “Impugned Order” by the Ld. SDR

and he stated that no intervention is called for.

3.7 In the rejoinder the Ld. AR stated that no reference to

DVO. No show cause notice u/s 144 of the Act. For

applicability of 54F no requirement of legal ownership. The

Ld. AR then read out Para 4.1 of the “Impugned Order” on

internal page 16. The contents of Para 4.1 were emphasised

emphatically and it was submitted that there is no fault of

the assessee in this regard. Few precedent case law were

given across bar citations of which were noted down by us

[supra]. Hearing was then over and closed.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case and after hearing and

further upon examining the rival contentions of the Ld. AR

and the Ld. DR canvassed before us, are of the considered

view that in the given facts and circumstances the ROI u/s

139 of the Act was filed by the assessee on 03.08.2010 for

the AY 2010-11 wherein the column designation of AO

(ward/circle) was shown as Ward-2 Ratlam. The case of the

assessee was reopened by issuing a notice u/s 148 of the

Act by ITO 3(4), Indore MP which was dated 28.03.2017

and that the same was received by the assessee on 2nd or

3rd April 2017 [approximately]. The assessee at the outset

and at threshold itself promptly wrote a letter dated 14th

April 2017 to the ITO 3(4) Indore MP wherein he had made it very clear to the ITO 3(4), Indore MP that

without affecting his rights to question the validity of

notice so issued u/s 148 of the Act, at any appropriate

time and at any appropriate judicial forum the ROI

furnished u/s 139 may kindly be regarded as ROI

furnished in compliance to the notice u/s 148. It was

stated that ROI was filed u/s 139 was before ward-2

Ratlam, MP. Further once again the assessee by letter dated

09.05.2017 by giving the reference of his earlier letter

dated 14.04.2017 [brought to the notice of the ITO 3(4),

Indore MP] questioned his Jurisdiction over the assessee

case/matter as ROI was filed before ITO ward 2 Ratlam

MP and the competent JAO is the ITO, ward-2, Ratlam and

not ITO 3(4), Indore MP. It was further stated that charge of

the ITO ward 2 Ratlam lies with the CIT Ujjain which in

turn further falls under the chief commissioner of Income

tax Bhopal and not under jurisdiction of CIT-I Indore or

chief commissioner of income tax, Indore MP. It was also

stated that the Jurisdiction over the assessee case with the

ITO ward 2 Ratlam is also reflected on the official portal of income tax department and not that with ITO 3(4), Indore

MP. A copy of jurisdiction details of the assessee’s PAN

was too submitted. It was further stated that the assessee

raises strong objection against the notice u/s 148 on

ground of invalid assumption of Jurisdiction. In view of

the above two letters dated 14.04.2017 & 09.05.2017(Co-

Jointly) the assessee had questioned the Jurisdiction of ITO

3(4), Indore MP in issuing notice u/s 148 of the Act dated

28.03.2017. The assessee’s by virtue of the section 124 of

the Act had questioned the Jurisdiction of ITO 3(4),

Indore MP on the Co-Joint reading of both the letters

within time frame provided u/s 124(3) before expiry of

one month window provided in the Act [124(3)(a)&(b)] and

in any event at the outset and at the threshold by virtue

of the applicability of the cardinal and fundamental

principles of civil Jurisprudence which are all too

applicable to the Proceedings under the act [in addition to

the Cardinal and fundamental principles of law relating to

evidences and so also the Principles of natural justice],

which mandates that the question of jurisdiction should always be raised at the outset and at the threshold before

the case is considered on merits because to consider the

case on merits itself amounts to assumption of

Jurisdiction. In view of the above, the Ld. ITO 3(4), Indore

MP ought to have taken the necessary steps within the

meaning of the section 124(4) which is reproduced by us as

below:-

“subject to the provisions of sub-section (3), where an

assessee calls in question Subject to the provisions of

sub-the jurisdiction of an Assessing Officer, then the

Assessing Officer shall, if not satisfied with the

correctness of the claim, refer the matter for

determination under sub-section (2) before the

assessment is made”

Since there is a reference of section 124(2) in section

124(4) we reproduce the same as below too: -

124(2)- “Where a question arises under this section as to

whether an Assessing Officer has jurisdiction to assess

any person, the question shall be determined by the Director General or the Chief Commissioner or the

Commissioner; or where the question is one relating to

areas within the jurisdiction of different Directors

General or Chief Commissioners or Commissioners, by

the Directors General or Chief Commissioners or

Commissioners concerned or, if they are not in agree-

ment, by the Board or by such Director General or Chief

Commissioner or Commissioner as the Board may, by

notification in the Official Gazette, specify.”

In view of the above, we hold that the ITO 3(4), Indore MP

under these facts and circumstances ought to have taken the

necessary steps basis law as stated above and ought not

to have transferred the case by issuing a transfer memo

PB page 28 which action on the part of the ITO 3(4),

Indore MP is not in accordance with law. Further it is well

settled law that when law requires an act to be done in a

particular manner the same should be done in a manner

known to law only and in no other manner. The Ld ITO

3(4) Indore therefore has “usurped” the Jurisdiction which

he did not have on “Transfer”.

4.4 In view of the premises drawn up by us we hold that

exercise of power on the part of the ITO 3(4), Indore MP by

issuing a notice dated 28.03.2017 u/s 148 of the Act is

wholly without jurisdiction and/or in excess of jurisdiction

and/or in irregular exercise of jurisdiction bad in law, illegal.

Under these facts and circumstances narrated by us herein

above we set aside the “Impugned Order” as notice dated

28.03.2017 (supra) was without a valid jurisdiction with the

ITO 3(4), Indore MP. Accordingly the appeal of the assessee

is allowed. Since the Assessee succeeds on this limited score

we refrain from examining the merits of the case. We

additionally hold that the Assessee had rightly followed the

decision of the Apex Court in case of DIT(Exemption) v/s

Kalinga Institute of Industrial Technology reported in [2023]

151 taxmann.com 434 which mandates that objection with

regard to the Jurisdiction must be made within the time limit

prescribed under 124(3).

5 Order

5.1 The appeal of the Assessee is allowed.

Pronounced in open court on 30.10.2026.

Sd/- Sd/- (ARVIND SONI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore Dated : 30/10/2026

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File Akhilesh Kumar Digitally signed by Akhilesh Kumar Date: 2026.11.02 17:27:20 +05'30' By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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