Reassessment Order Quashed: Tribunal Rules Lack of Jurisdiction, ITO's Authority Declined Due to Transfer.

The Tribunal quashed the reassessment order dated 25.03.2014, ruling it legally unsustainable due to lack of jurisdiction. The ITO, Ward-5(3), Kolkata, was deemed functus officio following a jurisdiction transfer to DCIT, Central Circle-XVII, Kolkata, under Section 127. The assessee's appeal was allowed, invalidating the reassessment order.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) to pass the reassessment order.
2. Applicability of Section 124(3) and Section 124(5) of the Income Tax Act, 1961.
3. Validity of the reassessment order dated 25.03.2014.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO) to Pass the Reassessment Order:
The primary issue raised by the assessee was that the Income Tax Officer (ITO), Ward-5(3), Kolkata, did not have the jurisdiction to pass the reassessment order dated 25.03.2014. The jurisdiction was initially with ITO, Ward-5(3), Kolkata, who passed the reassessment order for AY 2008-09 on 29.09.2010. The name of the assessee company changed on 22.03.2011, and a search was conducted on 25/26.08.2011. Subsequently, on 28.08.2012, the jurisdiction was transferred from ITO, Ward-5(3), Kolkata to DCIT/ACIT, Central Circle-XVII, Kolkata under Section 127 of the Act. This transfer was absolute and without reserving any right of concurrent jurisdiction to ITO, Ward-5(3). Therefore, the ITO, Ward-5(3), Kolkata did not have the jurisdiction to frame the reassessment order on 25.03.2014.

2. Applicability of Section 124(3) and Section 124(5) of the Income Tax Act, 1961:
The Department argued that the assessee was estopped from challenging the jurisdiction of ITO, Ward-5(3) under Section 124(3) since the assessee did not raise the jurisdictional issue within the prescribed time. However, the Tribunal held that Section 124(3) applies only when an AO assumes jurisdiction under Section 124 based on directions/orders issued under Section 120. Since the jurisdiction was transferred under Section 127, Section 124(3) did not apply. Furthermore, Section 124(5) was argued by the Department to save the action of the AO. However, the Tribunal clarified that Section 124(5) overrides only the provisions of Section 124 and orders/directions under Section 120, not an order of transfer under Section 127. Thus, the ITO, Ward-5(3), Kolkata, was divested of jurisdiction after the transfer order dated 28.08.2012.

3. Validity of the Reassessment Order Dated 25.03.2014:
Given the transfer of jurisdiction to DCIT, Central Circle-XVII, Kolkata, the ITO, Ward-5(3), Kolkata, became functus officio and could not pass the reassessment order dated 25.03.2014. The Tribunal held that the reassessment order was legally unsustainable and null in the eyes of law. The reassessment order was quashed, and the appeal of the assessee was allowed.

Conclusion:
The Tribunal upheld the objections raised by the assessee regarding the jurisdiction of ITO, Ward-5(3), Kolkata, and quashed the reassessment order dated 25.03.2014 as it was passed without jurisdiction. The appeal of the assessee was allowed.

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