Invalid jurisdictional transfer leads to quashing of assessment under Income Tax Act

The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-appeal, quashing the assessment due to an invalid jurisdictional transfer and reference made under Section 92CA of the Income Tax Act, 1961. The Tribunal held that the ACIT, Circle-10(1), Mumbai, lacked authority after the jurisdiction transfer to DCIT, Circle-1(2), Pune, rendering subsequent proceedings void ab initio. The impugned assessment was quashed as it exceeded statutory limitations, leading to the dismissal of the Revenue's appeal and acceptance of the assessee's cross-appeal.

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Issues Involved:
1. Validity of the assessment due to jurisdictional transfer.
2. Validity of the reference made under Section 92CA of the Income Tax Act, 1961.
3. Applicability of Section 292BB of the Income Tax Act, 1961.

Summary:

1. Validity of the Assessment Due to Jurisdictional Transfer:
The assessee challenged the validity of the assessment dated 30.05.2013 on the grounds of an invalid reference under Section 92CA of the Income Tax Act, 1961. The core argument was that the ACIT, Circle-10(1), Mumbai, was not competent to make the reference to the TPO after the jurisdiction was transferred to DCIT, Circle-1(2), Pune, by the CIT-10, Mumbai's order dated 22.11.2011. The Tribunal referenced the hon'ble jurisdictional high court's decision in the assessee's writ petition no.8657/2012, which quashed a similar notice due to lack of jurisdiction, emphasizing that once the jurisdiction was transferred, the ACIT, Circle-10(1), Mumbai, had no authority to proceed further.

2. Validity of the Reference Made Under Section 92CA:
The reference made by ACIT, Circle-10(1), Mumbai, to the TPO on 24.11.2011 was deemed invalid as the jurisdiction had already been transferred to DCIT, Circle-1(2), Pune, on 22.11.2011. The Tribunal found that the subsequent proceedings, including the TPO's order and the assessment order, were void ab initio and not sustainable in law. The Tribunal cited the hon'ble jurisdictional high court's decision and the doctrine of "functus officio," which implies that the ACIT, Circle-10(1), Mumbai, could not exercise any authority after the jurisdiction transfer.

3. Applicability of Section 292BB:
The Revenue argued that the procedural irregularity of jurisdictional transfer was a curable defect under Section 292BB of the Act. However, the Tribunal clarified that Section 292BB does not apply to instances of apparent lack of jurisdiction. Therefore, the impugned assessment was quashed as it was based on an invalid Section 92CA reference and was framed beyond the statutory limitation under Section 153(4) of the Act.

Conclusion:
The Tribunal dismissed the Revenue's appeal ITA.No.1483/PUN./2015 and allowed the assessee's cross-appeal ITA.No.1497/PUN./2015, quashing the impugned assessment dated 30.05.2013. All other rival pleadings on merits in both cross-appeals were rendered academic.

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