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Facts
The assessee's appeal is directed against the order passed by the NFAC, which upheld the assessment order. The assessee had initially filed a revised ITR declaring nil income after a previous order cancelling its registration was quashed.
Held
The Tribunal held that the assessment order was passed without proper jurisdiction as there was no order under Section 127 of the Act transferring jurisdiction. The Tribunal further noted that the notice under Section 143(2) was not issued by the Assessing Officer who passed the assessment order.
Key Issues
Whether the assessment order is liable to be quashed on grounds of lack of jurisdiction and improper issuance of notice under Section 143(2)?
Sections Cited
143(3), 12AA(3), 143(2), 141(1), 142(1), 127
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, DELHI
Before: MS. MADHUMITA ROY & SHRI NAVEEN CHANDRA
The instant appeal filed by the assessee is directed against the order passed by the Ld. National Faceless Appeal Centre (NFAC) Delhi dated 27.09.2023 arising out of the Assessment Order dated 31.12.2016 passed by the DCIT(Exemption) Circle, Ghaziabad (hereinafter referred to as ‘the Act’) under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.
The assessee upon getting the order dated 12.01.2015 passed by the Hon’ble Delhi Bench in in assessee’s own case whereby and whereunder the order passed by the Ld. CIT(A) in invoking the power under Section 12AA(3) of the Act cancelling the registration granted to the assessee dated 04.06.2008 and the subsequent orders including the order dated 16.05.2013, the order giving effect to the order passed by the Delhi Bench stood quashed, filed its revised ITR on 31.03.2016 declaring total income at Rs.nil the assessment whereof was finalized on 31.12.2016 by the Ld. DCIT(Exemption) Circle, Ghaziabad under Section 143(3) of the Act upon making addition in the hands of the assessee which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us.
At the time of hearing of the matter, the Ld. Counsel appearing for the assessee raised objection in regard to the jurisdiction of the Ld. AO being the DCIT(Exemption) Circle, Ghaziabad in finalizing the assessment. In fact, the DCIT(Exemption) Circle, Ghaziabad in its order dated 31.12.2016 though mentioned that the case was selected for compulsory scrutiny and notice under Section 143(2) dated 31.08.2015 was issued and duly served upon the assessee on 14.09.2015 i.e. within the stipulated time in terms of the provision of law but has not made any reference to any order under Section 127 of the Act. In that view of the matter, the Ld. DCIT(Exemption) Circle, Ghaziabad on illegal assumption of jurisdiction finalized the assessment of the assessee and thus, the same is liable to be quashed as was the crux of the submissions made by the Ld. AR.
On the other hand, the Ld. DR relied upon the orders passed by the authorities below.
We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. It appears from the order dated 31.12.2016 passed by the Ld. DCIT, Exemption, Circle, Ghaziabad that he has duly mentioned statutory notice under Section 143(2) dated 31.08.2015 and service of the same upon the assessee on 14.09.2015 and then proceeded with the process of assessment by mentioning the issuance of notice under Section 141(1) dated 12.05.2016 followed by further notice dated 15.06.2016 under Section 142(1) of the Act; neither he has mentioned that the initial notice under Section 143(2) dated 31.08.2015 was issued by the ITO, Ward 2(1) Muzaffar Nagar nor referred any order under Section 127 of the Act conferring him jurisdiction to proceed with the assessment proceeding against the assessee.
Under this facts and circumstances of the matter by and under an order dated 23.06.2025 the Ld. DR was directed to file a report from the Ld. AO with regard to the order under Section 127 of the Act. On 24.07.2025 the Ld. DR took adjournment and failed to submit any such report from the Ld. AO. Even on 30.07.2025 when the matter was finally heard, the Ld. DR was not been able to submit any report from the Ld. AO in regard to the issuance of order under Section 127 of the Act for assumption of jurisdiction by the Ld. DCIT(Exemption) Circle, Ghaziabad. It is a trite law that in the absence of order under Section 127 of the Act having effect of transferring the jurisdiction from ITO, Ward 2(1) Muzaffar Nagar – 2, DCIT (Exemption) Circle, Ghaziabad, in the present facts and circumstances of the matter, the assessment order is not liable to be sustained. We note that no notice under Section 143(2) by the author of the impugned assessment order being the Ld. DCIT(Exemption) Circle, Ghaziabad has ever been issued. Neither the order under Section 127 of the Act, nor issuance of notice under Section 143(2) of the Act by the DCIT(Exemption) Circle, Ghaziabad is on record before us. In spite of opportunity being given to the Ld. DR he has not been able to submit the same. In this regard, we have considered the following judgments passed by the different judicial forum as relied upon by the Ld. AR:
“1. Kusum Goyal Vs. ITO ]329 ITR 283 (Cal)] 2. Kanwar Singh Saini Vs. High Court of Delhi [Criminal Appeal No. 1798 of 2009 (SC)] 3. CIT Vs. Lalitkumar Bardia [404 ITR 63 (Bom)] 4. ITO Vs. M/s Ghagyaarna Gems & Jewellary Pvt. Ltd. [ITA No. 2/RPR/2021 (Order dated 31.01.2025)]”
The assessment cannot be automatically vested with the jurisdictional officer in the absence of order under Section 127 of the Act. Even in the case of Intra city Transfer without issuance of order under Section 127 of the Act cannot be entertained in view of the settled position of law as held in the case of Kashiram Aggarwalla v. Union of India, reported in (1965) 56 ITR 14 (SC) and in the case of S.L. Singhania (1992) 193 ITR 275 (Delhi) which have been categorically held that an order recording transfer has to be on records. In all the cases referred by the Ld. AR it was further held that the explanation under Section 127 of the Act clearly provides that all the proceedings under the Act which are pending on the date of such order of transfer and all the proceedings which may commence after the date of order of transfer would stand transferred to the Ld. AO to whom the case is transferred by Section 127(1) of the Act. The provision of law itself is very clear to this effect that though transfer would come into effect from the date of order of the Commissioner passed under Section 127(1) of the Act, the proceeding already commenced would not abate and continue with new AO who assumes charge consequent to transfer subject of course to the pending notices being within the jurisdiction of the officer issuing the notices. It is not a provision which validates without jurisdiction notice issued by an ITO. If the submission made by the Revenue as in this case in hand that no order under Section 127 of the Act is required to be made in the present facts and circumstances of the matter is accepted then an order which is without jurisdiction could be bestowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if the jurisdiction is transferred to a new officer by an order under Section 127 of the Act. Thus, in the present facts and circumstances of the matter, assumption of jurisdiction by the Ld. DCIT (Exemption) Circle, Ghaziabad in the absence of any order of transfer of jurisdiction from the ITO, Ward 2(1), Muzaffar Nagar is found to be illegal, arbitrary, bad in law and thus, liable to be quashed. We note that we are inspired with the ratio laid down on this identical issue in all the judgments referred by the Ld. AO as cited above and respectfully relying upon the same, we quash the order impugned passed by the Ld. AO itself.
The appeal of the assessee is allowed.
Order pronounced in the open court on 15.10.2025