Income tax assessment by wrong ITO without s.127 transfer order, leading to s.143(3) assessment quashed as void

The dominant issue was whether the assessment order was a valid assumption of jurisdiction where it was framed by one ITO without any transfer order under s. 127. Applying the settled position that jurisdiction cannot be assumed by a different AO in the absence of a lawful s. 127 transfer, the ITAT held that the assessment made under s. 143(3) by the ITO concerned lacked jurisdiction and was void ab initio. Consequently, the impugned assessment order was quashed as invalid and bad in law.

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1. ISSUES PRESENTED AND CONSIDERED

1. Whether the assessment framed by an Assessing Officer other than the officer who initially issued the scrutiny notice is without jurisdiction and liable to be quashed in the absence of any order of transfer under section 127 of the Income-tax Act, 1961.

2. Consequence of quashing the assessment on jurisdictional grounds: whether other grounds on merits and other legal objections survive or become academic.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of assessment in absence of transfer order under section 127

Legal framework (as applied by the Tribunal): The Tribunal proceeded on the requirement that transfer of jurisdiction from one Assessing Officer to another must be supported by a valid order under section 127, and that exercise of statutory power must conform to the manner prescribed by the statute; an order passed without jurisdiction is a nullity.

Interpretation and reasoning: The Tribunal found, on the record, that the first statutory notice under section 143(2) was issued by one officer, while a subsequent notice under section 143(2) and the final assessment were completed by another officer. The assessee's challenge was that there was no mandatory transfer order under section 127 evidencing lawful transfer of jurisdiction from the first officer to the second. The departmental report produced before the Tribunal confirmed that no order under section 127 existed and that the Assessing Officer could not trace any such order. On these facts, and following the Tribunal's earlier decision on the same parity of reasoning, the Tribunal held that the assessment completed by the later officer, without an order under section 127, suffered from lack of jurisdiction.

Conclusion: In the absence of any order of transfer under section 127, the assessment framed under section 143(3) by the later Assessing Officer was held to be without jurisdiction, invalid and bad in law, and was quashed.

Issue 2: Effect of quashing the assessment-whether remaining grounds become academic

Interpretation and reasoning: Having held that the assessment itself was void for want of valid assumption of jurisdiction, the Tribunal concluded that all proceedings consequent to such assessment are non-est in law. Since the jurisdictional ground was decided in favour of the assessee, the Tribunal treated all remaining grounds as not requiring adjudication.

Conclusion: Upon quashing of the assessment on jurisdictional grounds, all other grounds (other than the ground earlier dismissed as not pressed) were held to be academic, and the appeal was partly allowed on this basis.

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