Assessment order quashed for lack of valid jurisdiction due to improper transfer without following Section 127 requirements

The ITAT Raipur quashed an assessment order under Section 147 read with Section 143(3) dated 28.10.2016 for lack of valid jurisdiction. The case was improperly transferred from ITO Ward-1(2) to DCIT Circle-1(1) without following Section 127 requirements for transfer orders. The ACIT Circle-3(1) who framed the assessment lacked jurisdiction under CBDT Instructions No.1/2011 and No.6/2011 over the assessee who had declared nil income. The transfer occurred prior to relevant notifications that would have vested jurisdiction with DCIT/ACIT-3(1). The appeal was decided in favor of the assessee.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (A.O.)
2. Applicability of Section 153C vs. Section 147/148.
3. Addition under Section 69 of the Income Tax Act, 1961.
4. Violation of principles of natural justice.

Summary:

1. Jurisdiction of the Assessing Officer (A.O.):
The appellant contended that the assessment order passed under Section 147 r.w.s. 143(3) by the ACIT-3(1), Raipur was illegal and void ab initio as the jurisdiction vested with the ITO, not the ACIT-3(1), Raipur. The appellant relied on CBDT Instruction No.1/2011 and Instruction No.6/2011, which specified that cases with income up to Rs. 15 lakhs should be handled by the ITOs. The Tribunal noted that the CBDT Instructions were binding and found that the ACIT-3(1), Raipur had wrongly assumed jurisdiction. The Tribunal quashed the assessment order for want of valid assumption of jurisdiction, referencing similar cases such as Durga Manikanta Traders Vs. ITO and judgments from various High Courts and the Supreme Court.

2. Applicability of Section 153C vs. Section 147/148:
The appellant argued that the assessment should have been framed under Section 153C, which overrides Sections 147 and 148. The Tribunal, however, did not address this issue in detail as it quashed the assessment on jurisdictional grounds.

3. Addition under Section 69 of the Income Tax Act, 1961:
The ACIT-3(1), Raipur made an addition of Rs. 29.25 lakhs under Section 69 based on cash transactions found in incriminating documents during search and seizure operations. The Tribunal did not delve into the merits of this addition due to the quashing of the assessment order on jurisdictional grounds.

4. Violation of principles of natural justice:
The appellant claimed that the CIT (Appeals) passed an ex-parte order without providing sufficient opportunity to be heard, thus violating the principles of natural justice. The Tribunal did not address this issue as it quashed the assessment on jurisdictional grounds.

Conclusion:
The Tribunal quashed the assessment order passed under Section 147 r.w.s. 143(3) by the ACIT-3(1), Raipur for want of valid assumption of jurisdiction, following the CBDT Instructions and relevant judicial precedents. The appeal was allowed on jurisdictional grounds, leaving other issues open.

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