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Facts
The assessee was involved in share trading and reported income accordingly. The Assessing Officer (AO) selected the case for scrutiny and issued notices. The AO made an addition on account of alleged bogus Long Term Capital Gain (LTCG) from penny stock trading.
Held
The Tribunal held that the assessment order was passed by a non-jurisdictional Assessing Officer, rendering it without jurisdiction and liable to be quashed. The assessee's appeal was allowed on this legal issue.
Key Issues
Whether the assessment order was passed by an officer having the requisite jurisdiction, especially when the assessee raised an objection regarding jurisdiction without it being disposed of.
Sections Cited
139, 143(2), 142(1), 143(3), 68, 10(38), 127, 250, 148
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Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: October 28, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 18.01.2025 of the CIT(Appeals)-27, Kolkata [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2015–16.
Brief facts of the case are that during the year under consideration, the assessee was involved in share trading and having Income from Share Trading & Other Sources. The assessee filed original return of Income for AY 2015-16 u/s 139 of Act on 07.09.2015 declaring total income at Rs.6,47,970/-. The case was selected for scrutiny through CASS to verify "suspicious sale transaction in shares (Penny Stock tab in ITS)" with penny stocks in this case. Notice u/s. 143(2) was issued on 19/09/2016 which was duly served on the assessee. Notice u/s. 142(1)
Ritu Patwari along with questionnaire was issued on 28/02/2017. In response to the same, the assessee through her AR had filed her reply along with certain basic information as asked for. The same was perused by the AO. However, during the assessment proceedings, the AO had noticed that the assessee had acquired 1,00,000 no. of shares of a privately held company CCL International Pvt Ltd through off-market on 05/09/2013 from the broker Admit Vintrade Pvt. Ltd., 3,70,000 no. of shares of Cressanda Solutions Ltd. on 10/04/2013 from Omex Suppliers Pvt. Ltd. and 6,802 no. of shares of Microsec on 15-07-2011 for a consideration of Rs.34,79,307.13. The AO had also noticed that Assessee sold the 30700 shares of CCL International Ltd., 370000 shares of Cressanda Solutions Ltd. & 6,802 shares of Microsec during the subjected AY for a total sale consideration of Rs.6,86,38,605/- and earned Long Term capital Gain (LTCG) of Rs.6,51,59,298/- and claimed exemption of such income u/s 10(38) of the Act, as the shares were held for more than 12 months' time. Later, the assessee was show caused by the AO on 23.10.2017 to furnish certain details and documents in respect of the price hike of the shares. Ultimately, the Assessing Officer without being fully satisfied with the document furnished by the assessee passed an assessment u/s 143(3) of the Act dated 15.12.2017 making an addition of Rs.6,86,38,605/- u/s 68 of the Act on account of bogus LTCG earned by the assessee by trading in penny stock.
Aggrieved by the said order, the assessee filed an appeal before the CIT(A) wherein the appeal of the assessee has been dismissed.
Aggrieved and dissatisfied, the assessee is in appeal before us. The ld. AR challenges the very impugned thereby submitting that the order passed by the Assessing Officer in fact has no jurisdiction to pass the order. The ld. AR submits that the assessee filed return of income with Ritu Patwari ACIT, Central Circle-3(1), Kolkata though the notice u/s 143(2) of the Act was issued to the assessee by Office of ITO, Ward-43(2), Kolkata and the assessee within five days from the issuance of the notice objected the very jurisdiction of ITO, Ward-43(2), Kolkata for issuing of the said notice u/s 143(2) of the Act. The ld. AR submits that without disposing of the objection of the assessee, the ITO, Ward-43(2), Kolkata wrongly proceeded to issue notice u/s 143(2) of the Act and after conducting assessment proceedings also passed the assessment order dated 15.12.2017. The ld. AR further submits that before the ld. CIT(A), the same issue has been raised by the assessee but the ld. CIT(A) without applying his mind ignored the jurisdictional issue and arbitrarily dismissed the appeal of the assessee. He further submits that in the absence of order u/s 127 of the Act, transferring of the jurisdiction of the Assessing Officer from the office of ACIT, Central Circle-3(1), Kolkata to the Office of ITO, Ward-43(2), Kolkata is invalid and the non- jurisdictional notice issued by ITO, Ward-43(2), Kolkata is illegal and the assessment order framed u/s 143(3) of the Act in pursuance of the invalid notice u/s 143(2) of the Act by the ITO, Ward-43(2), Kolkata is without jurisdiction and liable to be quashed. The ld. AR further submits that in order to strengthen the jurisdictional objection, the ld. AR filed an application u/s 6 of Right to Information Act, 2005 to obtain copy of the order u/s 127 of the Act and vide order u/s 7(1) of the Right to Information Act, 2005, the ld. DCIT, Central Circle-3(1), Kolkata clearly mentioned that the copy of the order u/s 127 is very old and not traceable. The ld. AR submits that the department is still not able to produce order u/s 127 for validating of the transfer of jurisdiction from the office of ACIT, Central Circle-3(1), Kolkata to the Office of ITO, Ward- 43(2), Kolkata and hence the order passed by ITO, Ward-43(2), Kolkata is without jurisdiction. He has placed reliance on the following decisions:
Ritu Patwari 1. PCIT vs. Manish Jain in ITAT/82/2025 IA No.GA/2/2025 of Calcutta High Court 2. Raj Sheela Growth Fund (P) Ltd. vs. ITO [2024] 165 taxmann.com 182 (Delhi HC) 3. Kusum Goyal vs. ITO [2010] 329 ITR 283 (Cal) of Calcutta High Court 5. Contrary to that, the ld. DR supports the impugned order.
Before adverting to the issue raised by the assessee, it is pertinent to mention here that at the time of hearing of the case, the ld. DR sought 15 days’ time to submit a written submission but still the department did not file any submission to counter the argument advanced by the Assessee.
We have perused the facts of the case and find that the assessee company filed its return of income for the relevant year declaring total income of Rs.6,47,970/-. Income Tax Verification Form clearly reveals that it was filed before the Central Circle-3(1), Kolkata. It is further important to mention here that on 19.09.2016, a notice u/s 143(2) of the Act was issued to the assessee by the Office of the ITO, Ward-43(2), Kolkata. The assessee filed a letter dated 24.09.2015 i.e. 5 days from the issuance of the notice u/s 143(2) vehemently objecting the jurisdiction of ITO, Ward-43(2), Kolkata in issuing the said notice u/s 143(2) of the Act. On perusal of the said notice, we find that the assessee unequivocally petitioned the ITO, Ward-43(2), Kolkata that the notice issued by his office on 19.09.2016 u/s 143(2) of the Act is lacked jurisdiction over the case of the assessee and that in the absence of an order u/s 127 of the Act. We further find that the assessee has also applied for certified copy of the order-sheet of the assessment proceedings which has been filed by the assessee before us and we find that the Assessing Officer without Ritu Patwari disposing of the objection of the assessee proceeded with issuance of notice u/s 143(2) of the Act and after conducting the assessment proceedings, passed assessment order. The assessee has filed objection letter dated 24.09.2016, certified copy of the order-sheet upto 14.03.2018. It is further important to mention here that there is no order u/s 127 of the Act transferring the jurisdiction of the assessee’s case from the office of the Central Circle-3(1), Kolkata to the Office of the ITO, Ward-43(2), Kolkata. We also note that DCIT, Central Circle-3(1), Kolkata in disposing of the application filed by the assessee u/s 6 of Right to Information Act, 2005 has mentioned that copy of the order u/s 127 of the Act is very old and not traceable. There is no dispute that the department has failed to produce order u/s 127 of the Act in this case. It is also undisputed fact that the assessee had filed the return of income with Central Circle-3(1), Kolkata and notice u/s 143(2) of the Act was issued to the assessee by the Office of the ITO, Ward-43(2), Kolkata. We have perused the judicial pronouncements cited by the assessee and we find that the Hon’ble Jurisdictional High Court in the case of PCIT vs. Manish Jain (supra) has held as under:
We have heard Mr. Tilak Mitra, learned senior standing counsel appearing for the appellant/revenue and Mr. Subash Agarwal, learned counsel appearing for the respondent/assessee. The short issue which falls for consideration in the instant case is whether the assessment order passed under Section 147 read with 143(3) of the Act dated 11.12.2017 was passed by the officer having jurisdiction. The undisputed facts are that the assessee had filed a return of income with the Assistant Commissioner, Range - 24, Kolkata. However, the notice under Section 148 of the Act dated 31.3.2017 and Section 143(2) of the Act dated 6.7.2017 were issued by the Income Tax Officer, ward - 61(4), Kolkata. The assessee filed an objection dated 25.8.2016 stating that the Income Tax Officer, ward- 61(4), Kolkata does not have jurisdiction over his case and objected to the issuance of the notice. The objection raised by the assessee was accepted and, accordingly, the case was transferred to the Income Tax Officer, ward - 6(1) and the assessment was framed. The learned Tribunal found that it is an admitted fact that Ritu Patwari the notice under Section 148 as well as under Section 143(2) were issued by the Income Tax Officer, ward - 61(4), Kolkata and no notice was issued by the Income Tax Officer, ward - 6(1). In this regard we take note of the decision in case of PCIT Vs. Bhagyalaxmi Conclave Pvt. Ltd., reported at 2022(12) TMI 1514 wherein the appeal filed by the department was dismissed upholding the order passed by the learned Tribunal which quashed the assessment proceedings on the ground of lack of jurisdiction. The facts of the case are identical and, therefore, the decision in the case of Bhagyalaxmi Conclave Pvt. Ltd. will clearly apply to the facts of the case on hand. Thus, the Tribunal having rightly taken note of the undisputed factual position and applied the legal principle. We find no grounds to interfere with the impugned order. In the absence of any question or law much less substantial question of law, this appeal cannot be entertained. For the above reasons, the appeal fails and is dismissed. Consequently, the connected application stands closed.
7.1 Keeping in view the above discussion as well as going over the judicial precedent, we do not have any hesitation to hold that the assessment order passed u/s 143(3) of the Act by non-jurisdictional Assessing Officer is without jurisdiction and the same is hereby quashed. All other order is also set aside.
In the result, the appeal filed by the assessee is allowed on legal issue.
Kolkata, the 28th October, 2025.