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Facts
The assessee appealed against an assessment order for AY 2012-13. A key ground of appeal was that the assessment was completed by ITO-3(1) Raipur without a valid transfer order under Section 127 of the Income Tax Act, as the initial notice was issued by a different ITO (ITO-2(1) Raipur). The assessee also raised concerns about violations of faceless assessment framework and principles of natural justice.
Held
Following its precedent in `Rahul Tyagi Vs. ITO`, the Tribunal held that the assessment framed by ITO-3(1) Raipur was without jurisdiction, invalid, and bad in law due to the absence of a mandatory transfer order under Section 127 of the Act. The assessment order was quashed based on this jurisdictional defect, rendering other grounds academic.
Key Issues
Whether an assessment order passed by an Assessing Officer is valid and has proper jurisdiction in the absence of a formal order of transfer of the case under Section 127 of the Income Tax Act, 1961, when notices were initially issued by a different Assessing Officer. Also, whether the disclosure of the identity and location of the Addl./JCIT(A) violates the faceless appellate mechanism and principles of natural justice.
Sections Cited
Section 250, Section 246(5), Section 282A(1), Section 144B(1), Article 14 of the Constitution, Section 143(3), Section 143(2), Section 127, Section 127(1), Section 127(2), Section 69C, Section 142(1)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 08.08.2025 for the assessment year 2012-13 as per the following grounds of appeal: “Ground 1-Violation of Statutory Faceless Framework That the learned Addl./JCIT(A)-2, Chandigarh erred in law in issuing an appeal order under section 250 by disclosing his name, designation, and location, in contravention of the faceless appellate mechanism established under section 246(5) and the e-Appeals Scheme, 2023 (CBDT Notification No. 33/2023 dated 29-05-2023). Ground 2- Breach of Section 282A (Mode of Authentication) That the order is bad in law as it violates section 282A(1) of the Income-tax Act, which requires electronic documents to be authenticated only as prescribed by the system, without manual identifiers. Mentioning the officer's location and handwritten or typed designation constitutes an invalid mode of authentication that renders the order procedurally defective. Ground 3-Non-compliance with CBDT's Faceless Assessment and Jurisdiction Schemes That by disclosing his identity and jurisdiction (Chandigarh), the Addl./JCIT(A) has acted contrary to CBDT Notification No.76/2020 (Faceless Appeal Scheme, 2020) and Notification No.33/2023, which centralize jurisdiction and allocate cases via automated systems, ensuring officer anonymity. Such disclosure violates the principle of faceless adjudication and anonymity intended by section 144B(1), read with section 246(5). Ground 4 - Jurisdictional Error and Ultra Vires Action
That the officer, in issuing a non-faceless order with identity disclosure, acted without jurisdiction, since appeals handled under the e-Appeals Scheme are required to be processed only through the centralized system of the National Faceless Appeal Centre (NFAC). An order passed in breach of statutory procedure is invalid ab initio. Ground 5 - Violation of Article 14 and Natural Justice That the impugned order undermines the faceless concept designed to uphold equality, impartiality, and elimination of human bias. By revealing identifying details, the decision loses the procedural neutrality envisaged under the faceless system, offending the spirit of Article 14 of the Constitution. Ground 6 – The ITO Ward 3(1), Raipur passed the assessment order u/s 143(3) of the Income ax Act 1961 without issuing statutory notice u/s 143(2) of the Act. Ground 7 – That the learned Assessing Officer erred in law and on facts in proceeding with the assessment without there being a valid order of transfer under section 127 of the Income-tax Act, 1961. No proper notice or opportunity of hearing, as mandated under section 127(1) and (2), was granted to the assessee before transferring the case from the original jurisdiction. Ground 8 – The Ld. A.0 has erred in law as well as in fact while making an addition of Rs.4,87,689/- as unexplained investments. The addition is not sustainable in law. Ground 9 – The Ld. A.O has erred in law as well as in fact while making an addition of Rs.30,00,000/- as unexplained investments. The addition is not sustainable in law. Ground 10 –
The Ld. A.O has erred in law as well as in fact while making' an addition of Rs.8180/- u/s.69C, the same is bad in law and liable to be deleted. Ground 11 - The Ld. A.O has erred in law as well as in fact while making an addition of Rs.40,055/- u/s. 69C, the same is bad in law and liable to be deleted. Ground 12 – The appellant reserves the right to add, amend or alter any ground or grounds at the time of hearing.”
At the very outset, the Ld. Counsel for the assessee submitted that he is not pressing ground of appeal No.6 in the grounds of appeal memo. Having heard the submissions of the Ld. Counsel for the assessee, the Ground of appeal No.6 is dismissed as not pressed.
Other grounds in the grounds of appeal memo pertains to both merits as well as legal grounds. The Ld. Counsel for the assessee assailing Ground of appeal No.7 submitted that assessment completed is invalid so far as there was no valid order of transfer u/s.127 of the Income Tax Act, 1961 (for short ‘the Act’) and neither any notice or opportunity of hearing was provided to the assessee as mandated u/s.127(1) & (2) of the Act. In this regard, the Ld. Counsel had referred to the decision of this Bench in the case of Rahul Tyagi Vs. ITO, Ward-3(1), Raipur (C.G.), for A.Y.2016-17, dated 19.03.2025. It was further contended by the Ld. Counsel that if this ground is answered in affirmative, rest all other grounds except Ground of appeal No.6 shall stand academic only.
In this case, notice u/s.143(2) of the Act was issued by the ITO-2(1), Raipur on 16.10.2014 and served on 17.10.2014. Thereafter, another notice u/s.143(2) of the Act for A.Y.2012-13 was issued by the ITO-3(1), Raipur on 15.12.2014 and served on 16.12.2014 who finally completed the assessment. It is, therefore, contention of the assessee that there is no mandatory order of transfer u/s.127 of the Act regarding transferring of jurisdiction from ITO-2(1), Raipur to ITO-3(1), Raipur in the case of the assessee.
5. In this regard, the Ld. Sr. DR was provided an opportunity to furnish a report and she had submitted the said report dated 09.12.2025 which reads as follows:
From the aforesaid, it is discernible that there is no order of transfer u/s. 127 of the Act in respect of the assessee nor the A.O could trace any such order. Therefore, relying on the said report, the Ld. Sr. DR submitted that there is no order u/s.127 of the Act in the case of the assessee.
6. In this spectrum of the circumstances, I refer to the decision of this Bench in the case of Rahul Tyagi Vs. ITO, Ward-3(1), Raipur (C.G.), for A.Y.2016-17, dated 19.03.2025. The relevant paras of the said order are extracted as follows: “4. I have carefully considered the submissions of both the parties, considered the material available on record and facts and circumstances involved in the present case. In so far the legal issue is concerned, it is apparent from record as annexed in the paper book that the first notice u/s.143(2) of the Act, dated 18.09.2017 has been issued by the ITO, Ward- 4(5), Raipur. Thereafter, second notice u/s.142(1) of the Act, dated 09.06.2018 was issued by the ITO, Ward-3(1), Raipur. However, there is no iota of evidence whether there is any order of the Pr. CIT u/s. 127 of the Act for transferring of the jurisdiction from one Assessing Officer to another in the present case of the assessee. It is also noted from the e-filed return and the acknowledgement of the department that the designation of the jurisdictional Assessing Officer is mentioned as ITO, Ward-3(1), Raipur. If that is so, then also, the first notice i.e. notice issued u/s. 143(2) of the Act, dated 18.09.2017 by the ITO, Ward-4(5), Raipur is without jurisdiction, invalid and bad in law.
In so far the reliance placed by the Ld. Sr. DR on the judgment of the Hon’ble Apex Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra), wherein, the conduct of the assessee was determined while accepting or non-accepting the jurisdiction by way of participation in the proceedings, the word “participating” in this present context should not be construed in any manner given the text of the said decision to prevent the right of the assessee for challenging any legal issue including the issue of jurisdiction before any appellate forum as had been held by the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). Rightfully so mentioned in the said judgment, the Hon’ble Apex Court held that when certain legal issues have been arisen and the assessee has failed to raise such legal issues before the sub-ordinate authorities, then he should not be prevented from raising the same before any other appellate authority. Therefore, taking guidance from the aforesaid judicial pronouncement of the Hon’ble Apex Court, the contention regarding the issue of jurisdiction is held to be valid as had been raised by the assessee first time before the Tribunal. The decision of the Hon’ble Supreme Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra) as has been relied on by the Ld. Sr. DR is clearly focused on the parameter of compliance. However, in the present case as demonstrated in the record, it is not that of compliance and rather, it is ambiguity in issuance of notice and denying an opportunity to the assessee as to whether he should respond to the ITO, Ward-4(5), Raipur or ITO, Ward- 3(1), Raipur. There are plethora of judicial pronouncements wherein it had been held that the tax payer should be provided opportunity to prepare for his defence in timely and appropriate manner and if there is any ambiguity/confusion arising in the said hearing notice which prevents the assessee to defend himself, then such hearing notices and subsequent proceedings have to be struck down holding them to be arbitrary, bad in law. If this kind of ambiguity in issuance of notice by the appropriate authority is allowed then it would highly effect smooth running of business activities or for that matter generating income to the assessee tax payer. If the assessee tax payer is not able to earn income, then there is no question of paying any taxes. Therefore, the assessee should be allowed to prepare his defence as regards the proper jurisdiction before whom he shall make necessary compliances.
Derived from the Latin word “notitia”, which means being known, notice is the starting of any hearing. Unless a person knows the issues of the case in which he is involved, he cannot defend himself. For a notice to be adequate it must contain- (a) Time, place and nature of hearing; (b) Legal authority under which hearing has to be held; and (c) The specific charges, grounds and proposed actions the accused has to meet. This is the very edifice of the principle of natural justice. There is mandatory requirement of reasonable opportunity of being heard. This pre-requires issuance of a proper notice. The authority has to issue Show Cause to the party/assessee to explain and produce evidence before an adverse inference may be drawn against him. The notice should be specific and unambiguous so that proper compliance can be made by the assessee. The importance of a show cause notice has been reiterated by Supreme Court in the case of Umanath Pandey v. State of UP (2009) 12 SCC 40-43 wherein the Hon’ble Apex Court has held that “Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated”. In the case of Biecco Lawrie Ltd v. State of West Bengal (2009) 10 SCC 32, the Supreme Court observed that “One of the essential ingredients of fair hearing is that a person should be served with a proper notice, i.e. a person has a right to notice. Notice should be clear and precise so as to meet and make an effective defence. Denial of notice and any ambiguity there denied the right of the assessee for fair and judicious proceedings. The adequacy of notice is a relative term and must be decided with reference to each case.”
7. Rebutting the facts of the present case, it is noted as per the documents on record that the first notice u/s. 143(2) of the Act, dated 18.09.2017 was issued by the ITO, Ward- 4(5), Raipur and thereafter, another notice u/s. 142(1) of the Act, dated 09.06.2018 was issued by the ITO, Ward-3(1), Raipur who had framed the assessment without any order of transfer as required u/s.127 of the Act by the Ld. Pr. CIT. Similarly, if it is to be accepted that the actual jurisdiction is with the ITO, Ward-3(1), Raipur then first notice u/s. 143(2) of the Act, dated 18.09.2017 which had been issued for initiating the scrutiny proceedings by the ITO, Ward-4(5), Raipur is definitely without a valid jurisdiction over the assessee. When the issuance of notice and framing of assessment order suffers from lack of jurisdiction as enshrined in the statute then all subsequent proceedings becomes non-est in the eyes of law. I find that the Hon’ble Supreme Court in its recent 8. order passed in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Elaborating further, the Hon’ble Apex Court had observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and without jurisdiction. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “xxxx xxxx xxxx xxxx xxxx 30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. (Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT Vs. Anjum M.H. Ghaswala; State of Uttar Pradesh Vs. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid…………. xxxx xxxx xxxx xxxx xxxx 32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench). There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes Vs. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT Vs. Kelvinator of India Ltd.)”
9. With these observations, the assessment framed by the ITO-3(1) Raipur vide his order passed u/s.143(3) of the Act, dated 26.10.2018 in absence of an order of transfer u/s.127 of the Act having been passed by the Ld. Pr.CIT and without any issuance of notice by him u/s. 143(2) of the Act
to the assessee, is held to be without jurisdiction, invalid and bad in law and thus, the same is quashed. 10. Needless to say, once the assessment has been quashed for want of valid assumption of jurisdiction then all the other proceedings subsequent thereto becomes non-est in the eyes of law. As the legal issue has been answered in favour of the assessee then the grounds on merits becomes academic. 11. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed.
12. In the result, appeal of the assessee is allowed.”
Respectfully following the aforesaid decision on the same parity of reasoning, I hold that the assessment framed by the ITO-3(1) Raipur vide his order passed u/s.143(3) of the Act, dated 28.03.2015 in absence of an order of transfer u/s.127 of the Act is held to be without jurisdiction, invalid and bad in law and thus, the same is quashed.
Since the assessment itself has been quashed for want of valid assumption of jurisdiction thereafter all proceedings becomes non-est as per law. This legal ground i.e. Ground of appeal No.7 is answered in favour of the assessee therefore all other grounds except Ground of appeal No.6 becomes academic only.
As per the aforesaid terms the grounds of appeal raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed. 10. Order pronounced in open court on 10th day of December, 2025.