Assessment proceedings invalid due to improper transfer between ITOs without valid section 143(2) notice

ITAT Delhi ruled in favor of the assessee regarding jurisdictional issues in assessment proceedings. The case involved improper transfer of assessment between multiple ITOs without valid notice under section 143(2). The assessee's case was transferred from Noida to various Delhi wards in a whimsical manner without proper justification. The tribunal found that jurisdictional AO failed to issue timely notice under section 143(2), and the assessment transfers lacked validity. The Revenue could not establish proper jurisdiction, making the assessment proceedings vitiated despite the assessee's initial address mention in ITR.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO)
2. Validity of the notice under Section 143(2) of the Income Tax Act, 1961
3. Transfer of case without following proper procedures under Section 127 of the Act
4. Applicability of Section 292BB and Section 124(3)(a) of the Income Tax Act, 1961

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO):
The Assessee filed his return of income for AY 2015-16 with Ward 25(1), Delhi. The assessment for AY 2014-15 was pending with ITO, Ward 70(2), Delhi. Despite this, a notice under Section 143(2) was issued by ITO, Ward 40(1), Delhi on 19-09-2016. The case was transferred to ITO, Ward 2(2), Noida, and subsequently to ITO, Ward 8(2), Delhi, where the final assessment was completed. The Assessee contested the jurisdiction of these notices, arguing that the transfers were not executed following the procedures prescribed under Section 127 of the Act. The CIT(A) dismissed these objections, stating that the Assessee had mentioned his Noida address in the ITR and requested the transfer to Delhi.

2. Validity of the Notice under Section 143(2):
The initial notice under Section 143(2) for AY 2015-16 was issued by ITO, Ward 40(1), Delhi on 19.09.2016, while the assessment for AY 2014-15 was pending with ITO, Ward 70(2), Delhi. The AO transferred the case to ITO, Ward 2(2), Noida, who issued another notice under Section 143(2) on 29.09.2016. The Assessee claimed that this notice was received on 04.10.2016, beyond the limitation period of 30.09.2016. The Tribunal found that the issuance of the notice under Section 143(2) by ITO, Ward 40(1), Delhi was questionable as the jurisdiction for AY 2014-15 was with ITO, Ward 70(2), Delhi. The Tribunal concluded that no valid notice was issued under Section 143(2) by the jurisdictional AO.

3. Transfer of Case without Following Proper Procedures under Section 127:
The Assessee argued that the transfer of his case from one AO to another was done without following the proper procedures under Section 127 of the Act. The Tribunal noted that the ITO, Ward 40(1), Delhi, had transferred the case to ITO, Ward 2(2), Noida, and then to ITO, Ward 8(2), Delhi, without a valid order under Section 127. The Tribunal found that the transfers were done in a whimsical manner and not in accordance with the provisions of the Act.

4. Applicability of Section 292BB and Section 124(3)(a) of the Income Tax Act, 1961:
The AO argued that under Section 292BB, the Assessee is precluded from raising objections regarding the service of notice if he has appeared in any proceeding or cooperated in any inquiry. The Tribunal, however, noted that the Assessee had raised objections at the earliest opportunity and had not acquiesced to the jurisdiction of the AO. The Tribunal also observed that Section 124(3)(a) does not bar the Assessee from questioning the jurisdiction of the AO if objections are raised within the stipulated time.

Conclusion:
The Tribunal quashed the assessment order, holding that the assessment was completed without a valid notice under Section 143(2) by the jurisdictional AO and that the transfer of the case was done without following proper procedures under Section 127. The Tribunal found no merit in the contention that the Assessee was barred from raising jurisdictional objections under Sections 292BB and 124(3)(a). The appeal was allowed in favor of the Assessee.

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