INCOME TAX ACT, 1961

Section 143(2) Section 124(5) Section 127

Assessment - Validity of notice under section 143(2) - Transfer of jurisdiction of a 'case' under section 127 - Notice issued by AO having no jurisdiction over assessee

Assessee company's Headquarters was at 101, Pragati Towers, 26 Rajendra Place, New Delhi-110007. The assessee was initially assessed by Dy. CIT, Circle-15(1), New Delhi. By an Order, dated 8-10-2008 passed under section 127(1) by the CIT, Delhi 5, New Delhi, the jurisdiction over the assessee's case was transferred to the charge of DCIT, Central Circle-1, Ranchi. Pursuant to the Order, dated 8-10-2008, the income-tax assessments from assessment year 2007-08 and onwards were passed by the said DCIT, Central Circle-1, Ranchi. For the assessment year 2015-16, i.e., the year under consideration, the return of income was electronically filed by the assessee on 30-9-2015. Subsequently a notice under section 143(2) dated 28-7-2016 was issued by the ACIT, Circle-21(1), New Delhi to the assessee and this was followed by a notice under section 142(1) dated 30-6-2017 issued by the same officer. Upon receipt of the notice under section 142(1), the assessee furnished its Letter, dated 17-7-2017 objecting to the validity of the notices on the ground that the officer issuing the notices did not have jurisdiction over the assessee's case. Subsequent to issuing of the said notices, the Pr. CIT-7, New Delhi issued Show Cause Notice, dated 7-8-2017 proposing to transfer the jurisdiction over the assessee's case to DCIT/ACIT, Central Circle-3(1), Kolkata under the administrative control of Pr. CIT (Central), Kol-2, Kolkata. On receipt of the said show cause notice, the assessee furnished its objection. Appreciating the objections raised by the assessee, the Pr. CIT, Delhi-7 did not proceed any further. AR submitted that before the completion of assessment, no notice under section 143(2) was issued to the assessee by the AO who held valid jurisdiction over the assessee case and in that view of the matter the order passed under section 143(3) was without jurisdiction and is, therefore, bad in law and a nullity in the eyes of law being coram non judice.Held: From the plain reading of the order under section 127(2) dated 8-10-2008, the transfer of jurisdiction over the assessee's case from the charge of Asstt. CIT, 15(1), New Delhi to Asstt. CIT, Central Circle-1, Ranchi was absolute and without reserving any right of concurrent jurisdiction over the assessee at New Delhi. Contention put forth by the CIT, D.R. that provisions of section 124(5) being overriding in nature, the ACIT, Circle 21(1), New Delhi simultaneously held concurrent jurisdiction was devoid of any merit. Such interpretation was not in accord with the extant provisions of section 124(5) read with section 127. Once an order under section 127(2) was passed on 8-10-2008 by the CIT-V, Delhi unconditionally transferring the jurisdiction over the assessee's case to the charge of Asstt. CIT, Central Circle 1, Ranchi; then by virtue of such an order, the jurisdiction enjoyed by Asstt. CIT at New Delhi in terms of section 124 read with section 120(1) & (2) stood abrogated. Accordingly after 8-10-2008, the Asstt. CIT at New Delhi could not have exercised any powers conferred on the AO by the Act for the purposes of any proceedings against the appellant. In the given facts of the case, the assessee's case was not saved by the provisions of section 124(5) as also by section 127(4). Section 124(3) does not in any way help the department to justify the action of AO at New Delhi in issuing under section 143(2) to the assessee, which is an action without jurisdiction. After the order of the CIT-V, New Delhi dated 8-10-2008 transferring the jurisdiction of the assessee's case to Dy.CIT, Central Circle, Ranchi, the CIT, Delhi became functus officio and thereby his subordinate officers, viz., Asstt. CIT, Circle 21(1), New Delhi, could not have issued notice under section 143(2) dated 28-7-2016 and in that view of the matter the notice issued by the Asstt. CIT, Circle-21(1), New Delhi under section 143(2) was without jurisdiction and, therefore, non-est in the eyes of law. Issue of a legally valid notice under section 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment under section 143(3) and absence of a valid notice under section 143(2) is not a curable defect. The objections raised by the assessee against the validity of the impugned order under section 143(3) for assessment year 2015-16 was therefore, upheld. Since in the present case no valid notice under section 143(2) was issued by the AO who held jurisdiction over the case of the assessee, the consequent order passed under section 143(3) dated 29-12-2017 was legally unsustainable and, therefore, was null in the eyes of law and therefore, quashed.

Applied:CIT v. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC) : 1992 TaxPub(DT) 1434 (SC). Relied:Asstt. CIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) : 2010 TaxPub(DT) 1434 (SC), Ramshila Enterprises Pvt. Ltd. v. Pr. CIT (2016) 383 ITR 546 (Cal) : 2016 TaxPub(DT) 2555 (Cal-HC), Chankya Finvest Pvt. Ltd. v. ITO (2013) 34 Taxmann.com 206 (Kol) : 2013 TaxPub(DT) 1919 (Kol-Trib), Fiat India Automobiles Ltd. v. Vijender Singh (2013) 211 Taxman 570 (Bom) : 2013 TaxPub(DT) 64 (Bom-HC) and CIT v. Laxman Das Khandelwal (2019) 108 Taxmann.com 18 (SC) : 2019 TaxPub(DT) 5081 (SC). Distinguished:Wallace Brothers & Co. Ltd. v. CIT (1945) 13 ITR 39 (FC) : 1945 TaxPub(DT) 50 (Federal Court), Rai Bahadur Seth Teomal v. CIT (1959) 36 ITR 9 (SC) : 1959 TaxPub(DT) 146 (SC), Kanji Mal & Sons v. CIT (1982) 138 ITR 391 (Del) : 1982 TaxPub(DT) 1195 (Del-HC), Kanjimal & Sons v. CIT (1982) 138 ITR 391 (Del) : 1982 TaxPub(DT) 1195 (Del-HC), Abhishek Jain v. ITO (2018) 405 ITR 1 (Del) : 2018 TaxPub(DT) 3029 (Del-HC), SS Ahluwalia (2014) 225 Taxman 131 (Del) : 2014 TaxPub(DT) 1647 (Del-HC), Harshad Chiman Lal Modi v. DLF Universal Ltd. & Anr., (2005) 7 SCC 791 (SC), ITO v. NVS Builders (P) Ltd. ITA No. 3729/Del/2012, assessment year 2006-07, dated 8-3-2018 : 2018 TaxPub(DT) 1762 (Del-Trib), Lexmark International (India) Pvt. Ltd. v. Dy. CIT & Ors. ITA Nos. 268, 72, 235 & 2058/Kol/2017 passed on 28-9-2018 : 2018 TaxPub(DT) 6396 (Kol-Trib).

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