Jurisdictional defect in assessment by Additional Commissioner renders the order void ab initio and collapses the penalty.

An assessment framed by an Additional Commissioner was held void ab initio where no valid order under section 120(4)(b) conferred Assessing Officer powers and no transfer under section 127 existed. The Tribunal treated the jurisdictional challenge as a root issue, noting that an Additional Commissioner can exercise assessment powers only when duly authorised under the statutory scheme. Mere participation in the proceedings and a claim of concurrent jurisdiction did not cure the defect. The assessment order was quashed for want of jurisdiction, and the penalty founded on that assessment could not stand.

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Issues: Whether the assessment framed by the Additional Commissioner of Income Tax was without jurisdiction for want of a valid order under section 120(4)(b) and, in the absence of transfer under section 127, could be sustained.

Analysis: The additional ground challenging jurisdiction was admitted as it went to the root of the matter and did not require fresh facts. The statutory scheme distinguished between officers who derive jurisdiction under section 120(1) or 120(2) and an Additional Commissioner who can exercise the powers of an Assessing Officer only when duly directed under section 120(4)(b). The record did not contain any valid order transferring the case under section 127 or any authorization validly conferring Assessing Officer powers on the Additional Commissioner. Mere participation in the assessment proceedings and the plea of concurrent jurisdiction did not cure the jurisdictional defect. Since the assessment was made by an lacking lawful authority, the assessment was treated as void ab initio.

Conclusion: The assessment order was quashed for want of jurisdiction, and the penalty based on that assessment could not survive.

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