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Facts
The assessee, Ganges Tieup Pvt. Ltd., filed an appeal for A.Y. 2012-13 with a delay of 658 days, which was condoned. The AO made an addition of ₹7,50,00,000/- as unexplained cash credit under Section 68, which was confirmed by the CIT(A). The assessee raised an additional ground challenging the jurisdiction of the AO and the validity of the assessment proceedings.
Held
The Tribunal held that the assessment framed by ITO Ward 9(2), Kolkata, was invalid and a nullity because the mandatory notice under Section 143(2) was not issued by the jurisdictional AO after the case transfer. Furthermore, the case file was transferred between AOs without a proper administrative order under Section 127(3) by the PCIT. Citing various High Court and Supreme Court decisions, the tribunal quashed the assessment framed by the AO.
Key Issues
Whether the assessment order is void ab initio due to non-issuance of mandatory notice under Section 143(2) by the jurisdictional AO and invalid transfer of the case without a specific order under Section 127 of the Income Tax Act.
Sections Cited
143(2), 120, 127, 143(3), 142(1), 68, 131, 127(3), 158BD, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
2. The appeal of the assessee is barred by 658 days. In this regard, the assessee has filed an application for condonation of delay stating therein the reasons for delayed filing of appeal. We note that the assessee was not been knowing about the appellate order having been passed by the ld. CIT(A). It is only when the ld. AO started pressing hard for the deposit of demand, the assessee came to know about it upon accessing the ld. CIT(A) portal. Thereafter immediately the appeal was filed with a delay of 658 days. In our opinion there are sufficient reasons for delay, which are plausible and bonafide.
At the outset, the ld. Counsel for the assessee drew our attention of the bench to the letter dated 22.08.2025, wherein an additional ground has been raised by the assessee, for the sake of ready reference the same is extracted below: - “1. For that on the facts of the case, the assessment order is void ab initio in as much as, no mandatory notice u/s. 143(2) of the IT. Act Issued by ITO Ward-9(2), Kolkata before he framed to assessment stage, hence the assessment proceedings and assessment order was bad in law and hence the same be quashed.
For that on the facts of the case, ITO Ward-35(4)), Kolkata was not issued notice as per Jurisdictional Transfer Provision of the IT Rules to ITO Ward-6(2), Kolkata and then ITO Ward-9(2), Kolkata and not intimated to the assessee transfer order u/s. 120 or 127, therefore, he did not enjoy the jurisdiction to frame the assessment u/s. 143(3) of the Act and order passed by the AO, as well as the CIT(A) is null in the eyes of law and it has to be quashed.
3. For that the competent authority has not passed any transferred order u/s 127 of transferring the assessee's file from ITO Ward-35(4), Kolkata to ITO Ward-6(2), Kolkata, and then ITO Ward-9(2), Kolkata. As such, without transferred order u/s 127 the ITO Ward-9(2), Kolkata cannot assume the jurisdiction over the assessee. Hence, the assessment order passed u/s. 143(3) dated 26.03.2015 by the ITO Ward-9(2), Kolkata without jurisdiction over the assessee is invalid, bad-in-law and ab-initio-void, and liable to be quashed.
For that on the facts of the case, that ITO Ward-9(2), Kolkata should not automatically assume jurisdiction over the case, the inter charge change of jurisdiction between two regions of requires concurrence of the concerned both the Commissioners, in exercise of powers under sub section (2) of section 127 of the Income Tax Act needs to passed specific order u/s. 127 of the Income Tax Act, therefore, the assessment order passed is bad in law and should be quashed.
5. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.”
4. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal
The ld. Counsel for the assessee at the outset submitted that in this case the assessee filed the return of income on 22.03.2013, with ITO Ward 35(4), Kolkata, declaring total loss of ₹12,435/-. The notice u/s 143(2) of the Income-tax Act, 1961 (the Act) was issued by ITO Ward 35(4), Kolkata on 08.08.2013, a copy of which is available at page no.1. Thereafter, the notice u/s 142(1) of the Act was issued by ITO Ward 6(2), Kolkata, on 30.07.2014, copy of which is available at page no.2 of the Paper Book. Again, notice u/s 142(1) of the Act dated 09.01.2015 was issued by ITO Ward 9(2), Kolkata, copy of which is available at page no.3 of the Paper Book. Finally, the assessment was framed by ITO Ward-9(2), Kolkata by making an addition of ₹7,50,00,000/- vide order dated 26.03.2016, passed u/s 143(3) of the Act. Pertinent to state that the assessee has raised the share capital / share premium of ₹7,50,00,000/- by issuing equity shares during the year and accordingly, the AO called upon the assessee to prove the identity and creditworthiness of the investors and genuineness of the transaction. The assessee accordingly furnished all the details and evidences before the AO. The AO however
In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. AO on the ground that the assessee has not complied with the summons issued u/s 131 of the Act to the director of the assessee company.
The ld. AR vehemently submitted before us that the assessment order passed by the ITO Ward 9(2), Kolkata, is invalid and nullity in the eyes of the law as the ITO Ward 9(2) has not issued the mandatory notice u/s 143(2) of the Act, after the case of the assessee was transferred to him. In this case, the ld. AR submitted that the notice u/s 143(2) of the Act dated 8.8.2013 was issued by ITO Ward 35(4), Kolkata, who is a non-jurisdictional AO and that correct jurisdictional AO was ITO Ward 9(2), Kolkata. The ld. AR assailed the order passed by the ld. AO on two counts; firstly, that notice u/s 143(2) of the Act, which is mandatory/ statutory requirement under the Act, was not issued; secondly, that the file was transferred from one AO to another AO without any order passed by the PCIT. The ld. AR argued that the file cannot be transferred without there being an administrative order of the PCIT, who is authorized to transfer the cases intra AOs falling under his administrative charge and therefore, the assessment framed is ex-facie, nullity and voidab-initio. Hefurther contended that no assessment can be framed by the ld. AO without issuing notice u/s 143(2) of the Act. So far as second contention is concerned that the file cannot be transferred by one AO to another AO in the same jurisdiction without an order of PCIT u/s 127(3) of the Act the ld. counsel relied on the decision of the Hon'ble High Court in case of Kusum Goyal Vs. ITO reported in (2010) 329 ITR 283 (Calcutta).
The ld AR in the rebuttal submitted the decision of the Hon’ble Apex Court is not applicable to the present facts as in the present case the notice was issued by non-jurisdictional AO who was not having any jurisdiction and thereafter transferred to another AO who was having the jurisdiction over the assessee but the notice u/s 143(2) was not issued by the jurisdictional AO and assessment was framed sans issuing notice u/s 143(2) of the Act. The counsel further argued that the said transfer was also invalid as there was no order passed by the jurisdictional principal commissioner transferring the file from one AO to another. Whereas in the case before the Hon’ble Apex Court, the notice was issued by the non-jurisdictional AO and thereafter the case records were transferred to AO having jurisdictional who framed the assessment sans issuing any notice u/s 143(2).
We have heard the rival contentions and perused the materials available on record. We note that the assessment order was passed by “10. It is evident that respondent No. 2 had sought to justify his action by stating that the jurisdiction automatically gets vested with the jurisdictional officer and no order under section 127 is required to be passed. In my view, the letter/notice dated October 21, 2009 is patently illegal since it has been held in this judgment that in case of transfer within the same city, locality or place although the opportunity of hearing as postulated in section 127(1) and (2) has been dispensed with, other statutory formalities which includes issuing an order are required to be complied with. Similarly transfer of files for the assessment years 2007-08, 2008-09 and the earlier years as intimated in the letter/notice dated July 30, 2009 issued by respondent No. 1 is also bad in law. The argument of the respondents that in case of intra city transfer no order is required to be passed, cannot be accepted in view of the settled position of law in KashiramAggarwalla [1965] 56 ITR 14 (SC) and in S.L. Singhania [1992] 193 ITR 275 (Delhi) wherein the validity of the orders were under challenge, meaning thereby an order recording transfer has to be on the records. The
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14.10.2025.