MUZAFFAR NAGAR DEVELOPMENT AUTHORITY,NEW DELHI vs. DCIT EXEMPTION CIRCLE, GHAZIABAD

At the time of hearing of the matter, the Ld. Counsel appearing for the assessee raised objection in regard to the juri iction 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

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 juri iction 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 juri iction 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 juri iction 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:

Kanwar Singh Saini Vs. High Court of Delhi [Criminal Appeal No. 1798 of 2009 (SC)]

CIT Vs. Lalitkumar Bardia [404 ITR 63 (Bom)]

ITO Vs. M/s Ghagyaarna Gems & Jewellary Pvt. Ltd. [ITA No.

The assessment cannot be automatically vested with the juri ictional 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 juri iction of the officer issuing the notices. It is not a provision which validates without juri iction 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 juri iction could be bestowed with juri iction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without juri iction, even if the juri iction is transferred to a new officer by an order under Section 127 of the Act. Thus, in the present facts and circumstances of the P a g e | 6 Muzaffar Nagar Development Authority (AY: 2014-15) matter, assumption of juri iction by the Ld. DCIT (Exemption) Circle, Ghaziabad in the absence of any order of transfer of juri iction 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.