AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 290
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..... In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only. 5. The legal issue that has been raised by the Ld. Counsel for the assessee is that though the case of the assessee was transferred from ITO- 1(1), Bhilai to ITO, Ward-Kawardha, however, there is no order of transfer u/s. 127 of the Act which is mandatory. In this regard, the Ld. Sr. DR was directed to file a report from the concerned A.O and she has placed on record the same. The report is absolutely silent and does not state anything whether there is any mandatory order of transfer u/s. 127 of the Act in the case of the assessee. Rather, the said report spells out that the concerned A.O i.e. the ITO-1(1), Bhilai had himself transferred the case to ITO, Ward-Kawardha. The said report of the A.O dated 14.07.2025 is extracted as follows: 6. Therefore, as evident from the aforesaid report filed by the department, there is no order of transfer u/s. 127 of the Act in the case of the assessee and the f....
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....mbency 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 made no such return, after the expiry of the time allowed by the notice under sub-section (2) of Section 115WD or sub- section (1) of Section 142 or under sub-section (1) of Section 115WH or under section 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. ....
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.... 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 is accepted that the actual jurisdiction of the officer regarding the assessee was the ITO, Ward-3(1), Raipur which is likely so since the e-filed return is admittedly taken by the designation of the A.O as per the address of the assessee to be ITO, Ward-3(1) appearing in the acknowledgment of the ITR filed on 22.02.2017 in the said assessment year, Page 8-9 of APB. Now if that be so, then the initiation 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 wh....
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.... 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 certain legal issues have been arisen and the assessee has failed to raise such legal issues before the sub-ordinate authorities, then he should not be prevented from raising the same before any other appellate authority. Therefore, taking guidance from the aforesaid judicial pronouncement of the Hon'ble Apex Court, the contention regarding the issue of jurisdiction is held to be valid as had been raised by the 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 pr....
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....ients 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 ambiguity there denied the right of the assessee for fair and judicious proceedings. The adequacy of notice is a relative term and must be decided with reference to each case." 7. Rebutting the facts of the present case, it is noted as per the documents on record that the first notice u/s. 143(2) of the Act, dated 18.09.2017 was issued by the ITO, Ward- 4(5), Raipur and thereafter, another notice u/s. 142(1) 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 suffer....
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....; 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.143(3) of the Act, dated 26.10.2018 in absence of an order of transfer u/s.127 of the Act having been passed by the Ld. Pr.CIT and without any issuance of notice by him u/s. 143(2) o....
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....ment has been framed u/s.143(3) of the Act by the ITO-2(1), Raipur and there was no order of transfer u/s.127 of the Act from the competent authority which is mandatory, therefore, in absence of any such order of transfer, the assessment order is void ab initito and liable to be quashed. 4. 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. 5. In this regard, the Bench had directed the Ld. Sr. DR to furnish a report from the A.O which has been placed on record. That in the said report it has been only highlighted placing reliance 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 evidenc....
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....r. 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- 1(1), Raipur or ITO, Ward-2(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. 8. Reverting to the facts of the present case, it is noted that notice u/s. 143(2) of the Act has been issued by the ITO- 1(1), Raipur and thereafter, assessment was completed by the ITO-2(1), Raipur without any order of transfer as mandated u/s.127 of the Act by the competent authority. Therefore, such framing of assessment by the ITO-2(1), Raipur in absence of valid order of transfer u/s.127 of the Act is held to be without inherent va....
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....ction 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 jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under Section 142(1). 4. I have carefully considered the submissions of both the parties, considered the material available on record and facts and circumstances involved in the present case. In so far the legal issue is concerned, it is apparent from record as annexed in the paper book that the first notice u/s.143(2) of the Act, dated 18.09.2017 has been issued by the ITO, Ward-....
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....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 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. 6. Derived from the Latin word "notitia", which means being known, notice is the starting of any hearing. Unless a person knows the issues of the case in which he is involved, he cannot defend himself. For a notice to be adequate ....
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.... 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 authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and without jurisdiction. For the sake of clarity, the observations of the Hon'ble Apex Court are culled out as under: "xxxx &nb....
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....7 of the Act having been passed by the Ld. Pr.CIT and without any issuance of notice by him u/s. 143(2) of the Act to the assessee, is held to be without jurisdiction, invalid and bad in law and thus, the same is quashed. 10. Needless to say, once the assessment has been quashed for want of valid assumption of jurisdiction then 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. Respectfully following the aforesaid decision on the same parity of reasoning, I hold that the assessment framed by ITO-2(1), Raipur vide his order passed u/s.143(3) of the Act, dated 28.12.2019 in absence of an order of transfer u/s.127 of the Act and without any issuance of notice by him u/s. 143(2) of the Act to the assessee, is held to be without valid jurisdiction, bad in law hence quashed." 11. Respectfully following the aforesaid decisions on the same parity of reasoning, we....
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....RPR/2025 qua the penalty u/s 271(1)(c) is also allowed in favour of the assessee, since the substantive addition is vacated as per the decision in ITA No. 141/RPR/2025. 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 have my own reasonings to arrive at the identical conclusion, expressed in the ensuing paras. 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 Ld. JM Brother referred to the decision of ITAT, Raipur in the case of Shri Gunjan Kumar Bihani vs. The ITO, Ward-3(4), ITA No. 1....
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..... 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 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 necessa....
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....the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under section 142(1). 2. In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority to issue appropriate notice. 3. It is clarified, therefore, that 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....
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....(3)(a) which is explained by Hon'ble Apex Court in its subsequent order in the case of "KIIT", granting an categorically finding to put a bar on the assessee stating that if "the assessee had participated pursuant to the notice issued under section 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income-tax Act precludes the assessee from questioning the jurisdiction of the assessing 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 th....
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....ppeal filed by the assessee in ITA No.141/RPR/2025 for A.Y.2011-12 is with regard to the substantive addition and the appeal filed by the assessee in ITA No.142/RPR/2025 for A.Y.2011-12 is with regard to penalty in respect of the substantive addition. 8. In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only. 9. The legal issue that has been raised by the Ld. Counsel for the assessee is that though the case of the assessee was transferred from ITO- 1(1), Bhilai to ITO, Ward-Kawardha, however, there is no order of transfer u/s. 127 of the Act which is mandatory. In this regard, the Ld. Sr. DR was directed to file a report from the concerned A.O and she has placed on record the same. The report is absolutely silent and does not state anything whether there is any mandatory order of transfer u/s. 127 of the Act in the case of the assessee. Rather, the said report spells out that the concerned A.O i.e. the ITO-1(1), Bhilai had himself transferred the case to....
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.... 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 of the Act passed by the Pr. CIT, Kolkata? 18. Before proceeding any further for adjudicating the aforesaid issue, i.e. sustainability of the order passed by the ITO-4(1), Raipur u/s.143(3) of the Act, dated 31.03.2015 in absence of any order of transfer u/s.127 of the Act of the Pr. CIT, Kolkata, we deem it fit to briefly cull out the facts involved in the present case. Xxxxxx Xxxxxx xxxxxx 30. Also, support is drawn from the Judgment of the Hon'ble Supreme Court in the case of Noorul Islam Educational Trust Vs. Commissione....
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....d/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 jurisdiction; (ii) the jurisdiction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar was after filing of the return of income changed and got vested with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar; (iii) it was the assessee's case that as the jurisdiction to issue notice u/s.143(2) of the Act in its case was with Jt.CIT(OSD)(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT, C....
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....ndate 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 Director General, Chief Commissioner or Commissioner as the case may be, of the two jurisdictions is necessary. 48. We, thus, in terms of our aforesaid observations are of a firm conviction that as the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but ....
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....2025 stands allowed in terms of our aforesaid observations. ITA No. 142/RPR/2025 (AY 2011-12) 16. Since the assessment framed u/s 143(3) / 147 dated 21.12.2018 is quashed and therefore, substantive additions are vacated as per my decision in ITA No. 141/RPR/2025 for AY 2011- 12, the imposition of penalty u/s 271(1)(c) therefore, becomes infructuous. Accordingly, the appeal of assessee in ITA 142/RPR/2025 stands allowed. 17. In combined result, both the captioned appeals filed by the assessee are allowed, in terms of the aforesaid observations. Order pronounced in the open court on 04^th/08/2025. The appeals of the assessee are disposed of accordingly. Order pronounced in the open court on 06^th day of August, 2025. ============= Document 1 Government of India Ministry of Finance: Department of Revenue Office of the Income Tax Officer-1(3), Aayakar Bhawan, Near Atmanand English Medium School, Krishna Talkies road, Risall, Bhilal, Distt: Durg-49000G(C.G) Email- bhilai,[email protected] Dtd. 14.07.2025 E.No .: ITO-1(3)/BHI/ITAT-report/25-26 To, The Joint Commissioner of Income Tax(Sr.DR) ITAT, Raipur Madam, Sub: Calling for report in the ....