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2025 (5) TMI 702 - AT - Income TaxValidity of notices issued u/s 142(1) and 143(2) by JCIT (Exemptions) - change in jurisdiction of the case from DCIT (Exemptions) to JCIT (Exemptions) Ghaziabad - HELD THAT - We note that Ld. CIT(A) has passed the correct order and hence given a finding that there was change in jurisdiction of the case from DCIT (Exemptions) to JCIT (Exemptions) Ghaziabad and Revenue has failed to bring/ show any evidence that any order u/s. 127 of the Act was passed for such transfer of jurisdiction. Hence he held that assumption of jurisdiction by JCIT (Exemptions) Ghaziabad is not valid. This finding of the Ld. CIT(A) remained uncontroverted. We hold the case law relied by the CIT(A) Delhi and the findings of the Ld. CIT(A) and are quite correct therefore we do not find any infirmity therein hence no interference is required on our part. Accordingly we uphold the CIT(A) s finding wherein it was held that assumption of jurisdiction by JCIT (Exemptions) Ghaziabad is not valid and deserve to be cancelled. Appeal filed by the revenue stands dismissed.
The core legal questions considered in this appeal pertain primarily to the jurisdictional validity of the assessment order passed by the Joint Commissioner of Income Tax (JCIT), Exemption Range, Ghaziabad, for the assessment year 2013-14. Specifically, the issues include:
Issue-wise Detailed Analysis 1. Jurisdiction of JCIT (Exemptions), Ghaziabad to pass assessment order Relevant legal framework and precedents: Section 127 of the Income Tax Act empowers officers of the rank of Commissioner or above to transfer cases to achieve equitable workload distribution. CBDT notifications and internal instructions delineate the powers of various officers to conduct assessments, particularly distinguishing between ITOs, DCITs, and JCITs in exemption cases. The controlling notification dated 13.11.2014 specified that only DCIT (Exemption) and ITO (Exemption) are empowered to make assessments, while JCIT/Additional CIT (Exemption) are not. Precedents relied upon include the decisions in City Garden v. Income-tax Officer and M.I. Builders (P.) Ltd., which were affirmed by the jurisdictional High Court, establishing that assessments made by officers lacking pecuniary or territorial jurisdiction are invalid. Court's interpretation and reasoning: The Tribunal noted that the assessment order was passed by JCIT (Exemptions), Ghaziabad, an officer not empowered under the CBDT notification to conduct assessments in such cases. The appellant contended that no order under section 127 was passed to transfer jurisdiction from DCIT (Exemptions) to JCIT (Exemptions). The AO failed to produce any such transfer order despite specific directions to do so. The Tribunal relied on a coordinate bench decision in Hirak Sarkar vs. ACIT, which held that in the absence of a valid transfer order under section 127, the assumption of jurisdiction by an officer not empowered is invalid. The Tribunal emphasized that the assessment framed by an officer without pecuniary jurisdiction or without proper transfer is bad in law. Key evidence and findings: The AO did not submit the remand report or any order under section 127 authorizing the transfer. The assessment order itself was silent on whether a fresh notice under section 143(2) was issued upon change of incumbent. The notices under section 142(1) were issued by JCIT (Exemptions), but the validity of these notices is contingent on jurisdiction. Application of law to facts: Since the CBDT notification restricts assessment powers to DCIT (Exemptions) and ITO (Exemptions), and no order under section 127 was produced to transfer the case to JCIT (Exemptions), the Tribunal held that JCIT's assumption of jurisdiction was invalid and the assessment order passed by him was without jurisdiction. Treatment of competing arguments: The Revenue argued that the assessment order should be upheld on merits. However, the Tribunal agreed with the assessee's contention that the jurisdictional issue was fundamental and could not be overlooked. The Tribunal declined to delve into merits as jurisdiction is a threshold issue. Conclusions: The assessment order passed by JCIT (Exemptions), Ghaziabad is without jurisdiction and is liable to be cancelled. 2. Validity of notices under sections 142(1) and 143(2) upon change of incumbent Relevant legal framework and precedents: Section 143(2) authorizes issuance of notice for scrutiny assessment, and section 142(1) empowers the AO to call for information. Upon change of AO, it is generally required to issue fresh notices to maintain procedural propriety. The Supreme Court's interpretation of section 292BB is relevant here, which validates notices if the assessee participates in proceedings despite infirmities in service. Court's interpretation and reasoning: The Tribunal observed that while notices under section 142(1) were issued by JCIT (Exemptions), the assessment order was silent on issuance of fresh notice under section 143(2) upon change of incumbent. The assessee's authorized representative appeared and participated in proceedings after change of incumbent. Key evidence and findings: The appellant stated that JCIT (Exemptions) issued notices under sections 143(2) and 142(1), but the assessment order did not mention fresh issuance of section 143(2) notice. The AO failed to clarify this on remand. Application of law to facts: The Tribunal held that absence of a fresh notice under section 143(2) upon change of incumbent is a procedural infirmity. However, since the assessee participated in the proceedings, section 292BB could potentially validate the notices if they emanated from the department. Treatment of competing arguments: The Revenue contended that participation by the assessee cures notice defects. The assessee argued that the jurisdictional defect is not curable by section 292BB. Conclusions: The Tribunal clarified that section 292BB does not cure complete absence of notice or jurisdictional defects. Since the notices emanated from an officer without jurisdiction, section 292BB cannot validate them. 3. Applicability of section 292BB to cure jurisdictional defects Relevant legal framework and precedents: Section 292BB provides that if the assessee participates in proceedings, notices are deemed valid notwithstanding certain defects in service. The Supreme Court in CIT vs. Laxman Das Khandelwal clarified that this provision does not cure complete absence of notice or jurisdictional defects. Court's interpretation and reasoning: The Tribunal applied this principle to hold that while the assessee participated after change of incumbent, the fundamental jurisdictional defect arising from absence of valid transfer order under section 127 cannot be cured by section 292BB. Application of law to facts: Since JCIT (Exemptions) had no jurisdiction to assume charge of the case, the notices issued by him were invalid, and participation by the assessee does not validate such notices. Conclusions: Section 292BB is not applicable to cure the jurisdictional defect in this case. 4. Whether the appellate authority erred in cancelling the assessment order without adjudicating merits Court's interpretation and reasoning: The Tribunal noted that the CIT(A) cancelled the assessment order solely on jurisdictional grounds without going into merits. The Revenue urged adjudication on merits, but the Tribunal held that jurisdiction is a threshold issue and must be decided first. Conclusions: The appellate authority correctly cancelled the assessment order on jurisdictional grounds, and no interference is warranted. Significant Holdings "In view of the fact that there was a change in jurisdiction of the case of the appellant from DCIT(Exemptions) to JCIT(Exemptions), Ghaziabad, and the revenue has failed to bring/show any evidence that any order u/s 127 of the Act was passed for such transfer of jurisdiction, the assumption of jurisdiction by JCIT(Exemptions), Ghaziabad is not valid." "The assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law." "Section 292BB does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself." "The order passed by JCIT(Exemption), Ghaziabad is without jurisdiction and deserves to be cancelled." Core principles established include the inviolability of jurisdictional requirements under the Income Tax Act, the necessity of valid transfer orders under section 127 for change of assessing officer, and the limited scope of section 292BB in curing procedural defects but not jurisdictional defects. Final determinations are that the assessment order passed by JCIT (Exemptions), Ghaziabad is invalid for lack of jurisdiction and is accordingly set aside. The appeal filed by the Revenue is dismissed.
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