2025 (7) TMI 1503 - AT - Income Tax

Jurisdiction of the AO - Transfer u/s. 127 - Validity of notice u/s. 143(2) issued by the ITO-1(3) Raipur when the assessment has been framed u/s. 143(3) by the ITO-2(2) Raipur - as alleged no order of transfer u/s. 127 - HELD THAT - As already examined since in the present case order of transfer u/s. 127 of the Act is not there therefore this legal issue was allowed to be raised by the assessee following the decision in the case of National Thermal Power Company Ltd. Ltd. 1996 (12) TMI 7 - SUPREME COURT (LB) Further similar issue has been adjudicated in the case of Khemraj Sinha 2025 (7) TMI 1293 - ITAT RAIPUR wherein the Tribunal after relying the decision in the case of Rahul Tyagi 2025 (3) TMI 1156 - ITAT RAIPUR has quashed the assessment in absence of order of transfer u/s. 127 of the Act. Assessment framed by ITO-2(2) Raipur vide his order passed u/s. 143(3) 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. Assessee appeal allowed.

Summary

ISSUES:

Whether an assessment framed under section 143(3) of the Income Tax Act, 1961 by an Assessing Officer (A.O.) different from the one who issued the notice under section 143(2), without a valid order of transfer under section 127, is valid.Whether absence of a mandatory order of transfer under section 127 of the Act renders the assessment order void ab initio.Whether the assessee is precluded from challenging the jurisdiction of the Assessing Officer if the objection was not raised within 30 days of receipt of notice under section 142(1) or 143(2), as per section 124(3)(a) of the Act.What constitutes adequate and valid notice under principles of natural justice in the context of income tax proceedings.Whether subsequent proceedings following an assessment order without valid jurisdiction are non-est in law.

RULINGS / HOLDINGS:

The assessment framed by an Assessing Officer under section 143(3) without a valid order of transfer under section 127 from the competent authority is held to be "without jurisdiction, invalid and bad in law" and is therefore quashed.Absence of the mandatory order of transfer under section 127 "goes to the root of the jurisdiction of assessment" and such an order cannot be waived; thus, any consequential assessment order is a nullity.The assessee is not precluded from raising jurisdictional objections before an appellate forum even if not raised before subordinate authorities, following the principle in National Thermal Power Company Ltd. Ltd. Vs. CIT (1998), thereby allowing the jurisdictional issue to be raised at any stage.The judgment in DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023) is distinguished on facts, as the present case involves ambiguity in issuance of notices and lack of opportunity to the assessee, rather than mere non-compliance.A valid notice must be "precise and unambiguous," containing the "time, place and nature of hearing," the "legal authority under which hearing has to be held," and the "specific charges, grounds and proposed actions" to be met, as mandated by principles of natural justice and Supreme Court precedents.Any ambiguity or confusion in the issuance of notice that prevents the assessee from defending himself renders the notice and subsequent proceedings arbitrary and bad in law.Once the assessment is quashed for want of valid jurisdiction, all subsequent proceedings become "non-est in the eyes of law."

RATIONALE:

The Court applied statutory provisions of the Income Tax Act, 1961, specifically sections 127 (transfer of cases), 143(2) (notice for assessment), 143(3) (assessment order), 142(1) (notice for information), and 124(3)(a) (jurisdictional objections).Precedents relied upon include the Supreme Court decision in National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) affirming the right to raise legal issues affecting jurisdiction at any stage, and Union of India Vs. Rajeev Bansal (2024) emphasizing that "an order passed without jurisdiction is nullity" and statutory powers must be exercised by the authority prescribed by law.The Court distinguished the Supreme Court's ruling in DCIT (Exemption) & Ors. Vs. Kalinga Institute of Industrial Technology (2023) on the ground that it deals with waiver of jurisdictional objections by participation, whereas the present case involves fundamental ambiguity in jurisdiction and notice issuance.The Court underscored the fundamental principle of natural justice requiring clear, specific, and unambiguous notice to enable the assessee to prepare a defense, citing Supreme Court rulings in Umanath Pandey v. State of UP and Biecco Lawrie Ltd v. State of West Bengal.The Court recognized that failure to issue a valid order of transfer under section 127 is a jurisdictional defect that cannot be cured and invalidates all subsequent actions, thus quashing the assessment order and rendering further proceedings invalid.