TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 26
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....partment electronically, it was not checked within time by the assessee which resulted in delay in filing of the appeal before the Tribunal. On going through the entire petition, we are of the view that the said delay cannot be attributed to any malafide or intentional conduct of the assessee. Considering the fact that the delay has been occurred due to bonafide reasons, we condone the same relying on the judgments of the Hon'ble Supreme Court in the cases of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos................./2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025 and Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No............/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025. That further, the Ld. Counsel for the assessee raising a legal ground submitted that the assessment was completed by the ITO-3(4), Raipur whereas the notice u/s.143(2) of the Act has been issued by the ITO-1(1), Raipur without any order of transfer u/s.127 of the Act. In this regard, the Ld. Sr. DR is directed to provide copy of the notice u/s.143(2) of the Act to the assessee and also submit a report from the A.O wh....
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.... 148 for the making of the return or by notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier." In view of the above fact, the assessee has no right to call in question on the juris, of the AO for issuance of the notice u/s 142(1) for change of incumbency for completion of assessment proceeding u/s 143(3) of the Act. Therefore, from the said report, it is evident that there is no order of transfer u/s. 127 of the Act in the case of the assessee. 7. Further, the Ld. Sr. DR raised a point relying on the judgment of the Hon'ble Supreme Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023) 151 taxmann.com 434 (SC), wherein it has been held that once the assessee had participated in the proceedings and if the assessee does not question jurisdiction of the A.O within 30 days of receipt of notice u/s.142(1) of the Act, then the assessee could not question such jurisdiction subsequently. However, the said report is absolutely silent and there is no iota of evidence on record r....
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....of the proceedings of limited scrutiny i.e. with regard to the first notice u/s.143(2) of the Act issued by the ITO, Ward-4(5), Raipur suffers from valid jurisdiction, resultantly then subsequent assessment framed by the ITO, Ward-3(1), Raipur becomes invalid and non-est in the eyes of law. 3. Per contra, the Ld. Sr. Departmental Representative (for short 'DR') vehemently submitted that as per Section 124(3)(a) of the Act, if the assessee had any objection regarding the jurisdiction of the Assessing Officer, then the same could have been raised within one month from the date on which he was served with the notice u/s. 142(1) and 143(2) of the Act. However, in the present case, the assessee had failed to do so. The Ld. Sr. DR relied on the judgment of the Hon'ble Supreme Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023) 151 taxmann.com 434 (SC), wherein the Hon'ble Apex Court has ruled that where the assessee had participated pursuant to the notice issued under Section 142(1) and had not questioned the jurisdiction of the assessing officer, then Section 124(3)(a) of the Income Tax Act precludes the assessee from questioning the juri....
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....he assessee first time before the Tribunal. The decision of the Hon'ble Supreme Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra) as has been relied on by the Ld. Sr. DR is clearly focused on the parameter of compliance. However, in the present case as demonstrated in the record, it is not that of compliance and rather, it is ambiguity in issuance of notice and denying an opportunity to the assessee as to whether he should respond to the ITO, Ward-4(5), Raipur or ITO, Ward-3(1), Raipur. There are plethora of judicial pronouncements wherein it had been held that the tax payer should be provided opportunity to prepare for his defence in timely and appropriate manner and if there is any ambiguity/confusion arising in the said hearing notice which prevents the assessee to defend himself, then such hearing notices and subsequent proceedings have to be struck down holding them to be arbitrary, bad in law. If this kind of ambiguity in issuance of notice by the appropriate authority is allowed then it would highly effect smooth running of business activities or for that matter generating income to the assessee tax payer. If the assessee tax....
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....) of the Act, dated 09.06.2018 was issued by the ITO, Ward-3(1), Raipur who had framed the assessment without any order of transfer as required u/s.127 of the Act by the Ld. Pr. CIT. Similarly, if it is to be accepted that the actual jurisdiction is with the ITO, Ward-3(1), Raipur then first notice u/s. 143(2) of the Act, dated 18.09.2017 which had been issued for initiating the scrutiny proceedings by the ITO, Ward-4(5), Raipur is definitely without a valid jurisdiction over the assessee. When the issuance of notice and framing of assessment order suffers from lack of jurisdiction as enshrined in the statute then all subsequent proceedings becomes non-est in the eyes of law. 8. I find that the Hon'ble Supreme Court in its recent order passed in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Elaborating further, the Hon'ble Apex Court had observed that any exercise of power by statutory au....
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.... all the other proceedings subsequent thereto becomes non-est in the eyes of law. As the legal issue has been answered in favour of the assessee then the grounds on merits becomes academic. 11. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed. 12. In the result, appeal of the assessee is allowed." 9. The fact of the matter in the case of the assessee before us is that there is no valid order of transfer u/s.127 of the Act which is mandatory for transferring a case from one A.O to another A.O. In so far the legal ground which goes to the root of the matter is concerned, the decision of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) provides that any legal issue which goes to the root of the matter can be assailed at any point of time before the appellate forum and such right as contemplated in the said decision is still prevalent and valid and has not been invalidated by the referred decision of the Ld. Sr. DR in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra). As already examined since in the present case order of transfer u/s. 127....
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....aipur to ITO-2(1), Raipur. 6. I have given thoughtful consideration to the submissions by the parties herein and judicial pronouncements placed on record. At this juncture, it is most appropriate to refer to the decision of this Bench in the case of Rahul Tyagi Vs. Income Tax Officer (supra), where this Bench had dealt with both the issues as emanating from the arguments put forth by the Ld. Counsel for the assessee as well as argument of the Ld. Sr. DR regarding report of the A.O placing reliance on the decision of the Hon'ble Apex Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra). This Bench has observed that in so far the reliance placed by the Ld. Sr. DR on the judgment of the Hon'ble Apex Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra), wherein, the conduct of the assessee was determined while accepting or non-accepting the jurisdiction by way of participation in the proceedings, the word "participating" in this present context should not be construed in any manner given the text of the said decision to prevent the right of the assessee for challenging any legal issue includ....
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....would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits becomes academic. The Ld. Counsel for the assessee submitted that first notice u/s. 143(2) of the Act for A.Y.2016-17 for initiating limited scrutiny had been issued by the ITO, Ward-4(5), Raipur, dated 18.09.2017. Thereafter, another notice u/s. 142(1) of the Act for the same A.Y. dated 09.06.2018 was issued by the ITO, Ward-3(1), Raipur. That further, the Ld. Counsel has annexed the return of income and acknowledgement given by the department for the assessment year under consideration where the designation of the A.O (Ward-Circle) is appearing as Ward- 3(1), Raipur. In this background, the Ld. Counsel submitted that firstly, if the original jurisdiction of the assessee is with ITO, Ward-4(5), Raipur who had initiated the proceedings for limited scrutiny and later on, transferred to the ITO, Ward-3(1), then as per the mandatory requirement of the Act, order of transfer u/s. 127 of the Act is required. However, no such order has been placed by the department and nothing is there on record that such order of transfer u/s. 127 of the Act was acquired; secondly, if it ....
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....se of the assessee. It is also noted from the e-filed return and the acknowledgement of the department that the designation of the jurisdictional Assessing Officer is mentioned as ITO, Ward-3(1), Raipur. If that is so, then also, the first notice i.e. notice issued u/s. 143(2) of the Act, dated 18.09.2017 by the ITO, Ward-4(5), Raipur is without jurisdiction, invalid and bad in law. 5. In so far the reliance placed by the Ld. Sr. DR on the judgment of the Hon'ble Apex Court in the case of DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (supra), wherein, the conduct of the assessee was determined while accepting or non-accepting the jurisdiction by way of participation in the proceedings, the word "participating" in this present context should not be construed in any manner given the text of the said decision to prevent the right of the assessee for challenging any legal issue including the issue of jurisdiction before any appellate forum as had been held by the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). Rightfully so mentioned in the said judgment, the Hon'ble Apex Court held that when cert....
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..... This pre-requires issuance of a proper notice. The authority has to issue Show Cause to the party/assessee to explain and produce evidence before an adverse inference may be drawn against him. The notice should be specific and unambiguous so that proper compliance can be made by the assessee. The importance of a show cause notice has been reiterated by Supreme Court in the case of Umanath Pandey v. State of UP (2009) 12 SCC 40-43 wherein the Hon'ble Apex Court has held that "Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated". In the case of Biecco Lawrie Ltd v. State of West Bengal (2009) 10 SCC 32, the Supreme Court observed that "One of the essential ingredients of fair hearing is that a person should be served with a proper notice, i.e. a person has a right to notice. Notice should be clear and precise so as to meet and make an effective defence. Denial of notice and any ambi....
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....manner, then that authority has to exercise its power following the prescribed manner (CIT Vs. Anjum M.H. Ghaswala; State of Uttar Pradesh Vs. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid............. xxxx xxxx xxxx xxxx xxxx 32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench). There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes Vs. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT Vs. Kelvinator of India Ltd.)" 9. With these observations, the assessment framed by the ITO-3(1) Raipur vide his order passed u/s.....
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....in absence of a transfer order u/s 127 of the Act and without any issuance of notice u/s 143(2) of the Act, by the Ld. AO, who framed the assessment, the assessment completed u/s 143(3) is bad in law hence quashed. 2. Though, I most respectfully agree and concur with the conclusion drawn by my Ld. JM Brother's in the draft order for the captioned appeal, however, I would like to give my own reasonings to arrive at on the identical conclusion. 2.1 That, while deciding the issue in hand Ld. JM Brother had concurred with the assessee's contentions regarding interpretation of the judgment of Hon'ble Apex Court in the case of DCIT (Exemption), and others vs. Kalinga Institute of Industrial Technology (2023) 151 taxmann.com 434 (SC) (in short "KIIT") and applicability of the another judgment of Hon'ble Supreme Court in the case of National Thermal Power Company Limited vs. CIT (1998) 229 ITR 383 (SC) (in short "NTPC"), however, I very respectfully express my inability to endorse / subscribe to such observations, in view of reasonings, described as under: 2.2 In the captioned matter assessee placed his reliance to the decision of ITAT, Raipur, "SMC" Bench in the case of Rahul Tyagi vs.....
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.... of judicial pronouncements wherein it had been held that the tax payer should be provided opportunity to prepare for his defence in timely and appropriate manner and if there is any ambiguity/confusion arising in the said hearing notice which prevents the assessee to defend himself, then such hearing notices and subsequent proceedings have to be struck down holding them to be arbitrary, bad in law. If this kind of ambiguity in issuance of notice by the appropriate authority is allowed then it would highly effect smooth running of business activities or for that matter generating income to the assessee tax payer. If the assessee tax payer is not able to earn income, then there is no question of paying any taxes. Therefore, the assessee should be allowed to prepare his defence as regards the proper jurisdiction before whom he shall make necessary compliances. 2.3 Apropos, the aforesaid findings in the case of Rahul Tyagi (supra) relied on by the assessee and followed by Ld. JM Brother in the present matter, I hold my own reservations which do not match with the point of view expressed and observed by Ld. JM Brother, therefore, I am unable to persuade and to concur with the aforesai....
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....the assessing officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee. 4. The special leave petition is allowed in the above terms. 5. Pending application, if any, are disposed of. The ratio of law explicated by the Hon'ble Apex Court in the case of "NTPC" (supra), reads as under: 7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal - vide, e.g., CIT v. Anand Prasad [1981] 128 ITR 388/ 5 Taxman 308 (Delhi), CIT v. Karamchand Premchand (P.) Ltd. [1969] 74 ITR 254 (Guj.) and CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499/[1984] 19 Taxman 278 (Guj.) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in....
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....officer, if he does not do so within 30 days of receipt of notice under section 142(1)", accordingly assessee would be precluded to raise a question of jurisdiction covered under the provisions of section 124(3)(a) of the Act. 3. In backdrop of the aforesaid observations, I express my inability to concur with the specific observations (extracted supra) of ITAT, Raipur, "SMC" Bench in the case of Rahul Tyagi (supra), with which the Ld. JM Brother has coincided. In sum and substance, the applicability of "KIIT" would have its enforceability to apply to the cases, where the conduct of assessee, who participated in the assessment proceedings pursuant to notice u/s 142(1) of the Act, would be precluded to raise a question of jurisdiction, falls within the ambit of section 124(3)(a) after elapse of time as stipulated in the said section, such categorical observations and the principle laid down by the Hon'ble Apex Court, cannot be watered down, taking support from an earlier general order of Hon'ble Apex Court i.e., the judgment in the case of "NTPC"(supra). Consequently, I am expressing my view in the present case by way of a separate order with the concurring outcome, but with varied ....
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....t passing of order u/s 127 of IT Act 1961. 2. That on the basis of facts and in law, assessment order passed u/s 143(3) dt. 23/11/2017 by Learned Assessing Officer, ITO, Ward-3(4), Raipur is illegal, bad in law, void-ab-initio and liable to be quashed on account of following reasons - - That Ld. AO, ITO, Ward-3(4), Raipur issued notice u/s 142(1) dtd.28/09/2017 without proper assumption of jurisdiction over the case of Appellant which is being evident from letter dtd.09/10/2017 issued by ITO, Ward-1(1) and informing the Appellant about the option for e-proceedings available to him. Which itself reveals that till that date the case of Appellant was not been transferred from ITO, Ward-1(1), Raipur to ITO, Ward-3(4), Raipur. Thus ITO, Ward-1(1), Raipur continue to hold his jurisdiction over the case of Appellant." 7. At the very outset, it is noted that the present appeal involves a delay of 101 days which has been condoned by the Tribunal vide order sheet dated 10.06.2025 observing as follows: "The Ld. Counsel for the assessee submitted that the appeal is time barred by 101 days. Elaborating the reasons leading to the said delay the Ld. Counsel filed affidavit a/w. condonation....
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....shed. 10. The Ld. Counsel for the assessee placed reliance on the decision of the ITAT, Raipur "SMC" in the case of Rahul Tyagi Vs. Income Tax Officer, ITA No.113/RPR/2024, dated 19.03.2025. 11. In this regard, the Bench had directed the Ld. Sr. DR to furnish a report from the A.O. The Ld. Sr. DR submitted a report dated 09.07.2025 which has been placed on record. For the sake of completeness, the relevant part of the said report is culled out as follows: "3. Further, it is to submit that on going through the case record of the above mentioned assessee available with this office, the order u/s.127 of the Act by the Pr. CIT is not found. Further, as per material available on record, the assessee has not raised objection over the jurisdiction before AO within one month from the date of service of notice u/s. 142(1) for change of incumbency dated 28.09.2017, therefore, the assessee is not entitled to raise objection over the jurisdiction of the AO as per provision of section 124(3) of the Act. For sake of convenience, the said section is reproduced below:- "Section: 124(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (b) where he has ....
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....tted vide report by the Ld. AO i.e., Income Tax Officer, Ward-3(1), Raipur dated 09.07.2025 that in the present matter the order u/s 127 of the Act by Pr. CIT is not found, which impliedly proves that no order of transfer u/s 127 was issued in the present case for transferring the case from ITO Ward 1(1) to ITO Ward 3(4). 14. The aforesaid issue raised by the assessee is no more res-integra, as the same have been decided by the division bench of this tribunal in the case of The Income Tax Officer-4(1) vs. M/s. Bhagyaarna Gems & Jewellery Pvt. Ltd in ITA No.12/RPR/2021 dated 31.01.2025, after considering and contemplating at length on the judgment of Hon'ble Apex Court in the case of "KIIT" (supra), while deliberating on the issue under similar facts and circumstances, the relevant observations of Division Bench of ITAT, Raipur in the aforesaid case reads, as under: 17. We, thus, based on the aforesaid facts shall proceed with and adjudicate the solitary issue for which our indulgence has been sought i.e. as to whether or not the assessment order passed by the ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 can be sustained in absence of any order of transfer u/s. 127 o....
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....t, it has been consistently and repeatedly stated in the said counter- affidavit that there is no disagreement between the two CITs. Absence of disagreement cannot tantamount to agreement as visualized under s. 127(2)(a) of the Act which contemplates a positive state of mind of the two jurisdictional CITs which is conspicuously absent. 6. In the above circumstances, we will hold that the transfer of the income-tax/assessment file of the' appellant assessee from AO, Tamil Nadu to AO, Kerala is not justified and/or authorized under s. 127(2)(a) of the Act. The order of the High Court is, therefore, interfered with and the transfer is accordingly set aside. 7. The appeal is allowed in the above terms." xxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxxx 44. Apropos the judgment of the Hon'ble Apex Court relied upon by the A.O in the case of Kalinga Institute of Industrial Technology Vs. DY. CIT (2023) 151 taxmann.com 433 (SC), it would be relevant to cull out the facts as were involved in the aforesaid case. (i) the assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without jurisdictio....
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....he same in our view cannot be brought within the meaning of questioning of the jurisdiction assumed by the A.O on the aforesaid basis, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases. As the CIT-2, Kolkata had failed to pass an order transferring the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur as was statutorily required per the mandate of Section 127 of the Act, therefore, it is the validity of the impugned assessment order passed by the A.O i.e. ITO-4(1), Raipur u/s. 143(3) of the Act, dated 31.03.2015 in absence of an order of transfer passed u/s. 127 of the Act which has been challenged by the assessee company. 47. At this stage, we may herein reiterate that the Hon'ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissioner of Income Tax, (supra), emphasizing on the statutory requirement of passing of an order u/s.127(2)(a) of the Act where the assessee's case was transferred from one A.O to another, and the said AO's were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the D....