Appeal successful as Tribunal quashes assessment order: Lack of valid notice and improper transfer.

The Tribunal allowed the appeal, quashing the assessment order passed by the AO in Kolkata. The lack of a valid notice under Section 143(2) and the improper transfer of jurisdiction without an order under Section 127 rendered the assessment order null and void. The Tribunal did not assess the merits of the AO's actions due to jurisdictional issues, leading to the appeal's success. The order was pronounced on 10.03.2021.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) in issuing the notice under Section 143(2) of the Income Tax Act, 1961.
2. Validity of the assessment order passed without the service of a valid notice under Section 143(2).
3. Transfer of case without an order under Section 127 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO) in issuing the notice under Section 143(2) of the Income Tax Act, 1961:

The primary issue raised by the assessee was that the notice under Section 143(2) was issued by the DCIT, Circle-2, Gorakhpur, who did not have jurisdiction over the assessee's case. The assessee's registered office was in Kolkata, West Bengal, and thus the jurisdiction lay with the AO in Kolkata. The legal framework for the jurisdiction of Income Tax authorities is outlined in Sections 120, 124, 127, and 129 of the Income Tax Act. It was argued that the DCIT, Circle-2, Gorakhpur, did not have territorial jurisdiction as per Section 124 or by virtue of Section 120 or by transfer under Section 127. The Tribunal noted that the issuance of a valid notice under Section 143(2) is mandatory for framing an assessment under Section 143(3), as held by the Supreme Court in CIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC).

2. Validity of the assessment order passed without the service of a valid notice under Section 143(2):

The Tribunal observed that the AO in Kolkata, who framed the assessment order under Section 143(3), did not issue a fresh notice under Section 143(2) after the case was transferred from Gorakhpur. The legal issue was whether the AO in Kolkata could frame the assessment without issuing and serving a notice under Section 143(2). The Tribunal relied on the Supreme Court's ruling in CIT v. Hotel Blue Moon, which mandates the issuance of a valid notice under Section 143(2) for jurisdiction to frame a scrutiny assessment under Section 143(3). Since the AO in Kolkata did not issue the mandatory notice, the assessment order was deemed null and void.

3. Transfer of case without an order under Section 127 of the Income Tax Act, 1961:

The assessee argued that the transfer of the case from Gorakhpur to Kolkata was not made by passing an order under Section 127, which governs the power to transfer cases. The Tribunal noted that the transfer of jurisdiction should be done following the provisions outlined in Section 127, which requires a reasonable opportunity of being heard and recording reasons for the transfer. The lack of a valid transfer order under Section 127 further invalidated the jurisdiction of the AO in Kolkata.

Conclusion:

The Tribunal concluded that the assessment order passed by the AO in Kolkata was null and void due to the lack of a valid notice under Section 143(2) and the improper transfer of jurisdiction without an order under Section 127. Consequently, the appeal of the assessee was allowed, and the assessment order was quashed. The Tribunal did not delve into the merits of the AO's action as the jurisdictional issue rendered the assessment order invalid. The order was pronounced in the open court on 10.03.2021.

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