Assessment framed without valid transfer under Section 127 and no fresh notice under Section 148 is invalid

The ITAT Raipur held that the assessment framed by ITO Ward-2(2), Bhilai was without jurisdiction as there was no valid transfer order under section 127 of the Act from ITO Ward-1(3), Bhilai who issued the original notice under section 148. The assessment completed by ITO Ward-2(2) without such transfer and without issuing a fresh notice under section 148 was invalid and bad in law. Consequently, the assessment order passed under section 147 read with section 143(3) was quashed, and the assessee's appeal was allowed.

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ISSUES:

Whether an assessment framed by an Assessing Officer different from the one who issued the notice under section 148 of the Income Tax Act, 1961, without a valid order of transfer under section 127, is valid.Whether the absence of a valid order of transfer under section 127 of the Act renders the assessment order void ab initio and without jurisdiction.Whether the assessee's failure to challenge jurisdiction within 30 days of receipt of notice under section 142(1) precludes raising jurisdictional objections at later stages.Whether ambiguity in issuance of notices by different Assessing Officers, without clarity on jurisdiction, violates principles of natural justice and renders proceedings invalid.The scope and effect of statutory requirements relating to jurisdiction and transfer of cases under the Income Tax Act, including the impact of Supreme Court precedents on jurisdictional challenges.

RULINGS / HOLDINGS:

The assessment framed by an Assessing Officer who did not issue the notice under section 148 and without a valid order of transfer under section 127 is held to be "without inherent valid jurisdiction" and "void ab initio."Absence of an order of transfer under section 127 by the competent authority is a fundamental jurisdictional defect that cannot be waived or cured by subsequent proceedings.The principle established by the Supreme Court in DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023) regarding the assessee's participation and failure to challenge jurisdiction within 30 days does not preclude raising jurisdictional objections before appellate authorities, especially where jurisdiction goes to the root of the matter.Ambiguity in the issuance of notices by different Assessing Officers without clear jurisdictional authority violates the principle of natural justice, as the assessee is denied a proper opportunity to prepare and defend, rendering such notices and subsequent proceedings "arbitrary" and "bad in law."Following the binding precedent of the Supreme Court in National Thermal Power Company Ltd. Vs. CIT and Union of India Vs. Rajeev Bansal (2024), any order passed without jurisdiction is a "nullity," and any consequential order or action is invalid and without jurisdiction.

RATIONALE:

The Court applied statutory provisions of the Income Tax Act, 1961, specifically sections 127 (transfer of cases), 142(1) (notice to assessee), 143(2), 143(3) (assessment orders), 147 (reassessment), and 148 (notice for reassessment), emphasizing the mandatory nature of jurisdictional requirements.The Court relied on Supreme Court precedents including DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023), National Thermal Power Company Ltd. Vs. CIT (1998), and Union of India Vs. Rajeev Bansal (2024) to interpret jurisdictional principles and the non-waiver of jurisdictional defects.The Court distinguished between procedural compliance and fundamental jurisdictional defects, holding that participation in proceedings cannot be construed as waiver of jurisdictional objections that go to the root of the matter.The Court underscored the principle of natural justice requiring clear, unambiguous, and specific notices to enable the assessee to prepare an effective defense, citing Supreme Court rulings on adequacy and clarity of notice (Umanath Pandey v. State of UP; Biecco Lawrie Ltd v. State of West Bengal).The Court reaffirmed that jurisdictional defects, such as absence of a valid order of transfer under section 127, render all subsequent proceedings and assessment orders invalid and non-est in the eyes of law.

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