Assessment order quashed due to invalid jurisdiction transfer without proper Section 127 order

The ITAT Raipur quashed an assessment order for lack of valid jurisdiction. The case was transferred from ITO Ward-1(2) to DCIT Circle-1(1) without proper order under Section 127 of the Income Tax Act. Subsequently, ACIT Circle-3(1) framed the assessment despite lacking jurisdiction over cases with nil income declarations per CBDT Instructions. The tribunal held that Section 127(3) mandates a formal transfer order in all cases, which cannot be dispensed with. Since the assessing officer had no valid jurisdiction to frame the assessment, the order was struck down and the assessee's ground was allowed.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (A.O)
2. Validity of assessment under Section 147 vs. Section 153C
3. Addition of Rs. 21,75,000 under Section 69
4. Violation of principles of natural justice

Summary of Judgment:

1. Jurisdiction of the Assessing Officer (A.O):
The assessee contested that the ACIT-3(1), Raipur, did not have jurisdiction over his case as per the monetary threshold limits laid down by CBDT Instruction No. 1/2011 and No. 6/2011. The Tribunal found that the ACIT, Circle-3(1), Raipur, had wrongly assumed jurisdiction. The CBDT instructions specified that cases with declared income up to Rs. 15 lakh should be handled by ITOs, not ACs/DCs. The assessee had declared Nil income, so the jurisdiction should have been with the ITO, Ward-1(2), Raipur. The Tribunal quashed the assessment order passed by ACIT, Circle-3(1), Raipur, for lack of valid jurisdiction.

2. Validity of assessment under Section 147 vs. Section 153C:
The assessee argued that the assessment should have been framed under Section 153C, not Section 147, as the proceedings were based on documents seized during a search on the "Sharma Group." The Tribunal did not delve into this issue as the assessment was already quashed for lack of jurisdiction.

3. Addition of Rs. 21,75,000 under Section 69:
The A.O had made an addition of Rs. 21,75,000 to the assessee's income under Section 69, based on cash transactions found in seized documents. Since the assessment itself was quashed for lack of jurisdiction, this issue was not addressed further by the Tribunal.

4. Violation of principles of natural justice:
The assessee contended that the CIT(A) had passed an ex-parte order without providing sufficient opportunity for a hearing, violating the principles of natural justice. This issue was also left open as the assessment was quashed on jurisdictional grounds.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment order for want of valid jurisdiction by the A.O. The other contentions raised by the assessee were left open.

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