If the Notice u/s 143(2) issued by Income tax Officer was having no Jurisdiction at the ‎time of issue of the notice then this is not a valid notice as it suffers from an inherent ‎lacuna affecting his / its jurisdiction. It is not a curable defect u/s 292BB. The consequent ‎order passed u/s 143(3) dated 29.12.2017 was legally unsustainable and therefore is null ‎in the eyes of law and therefore quashed. ITO vs Mr.P N Krishnamurthy ITAT ‎Bangalore on 27 April, 2020‎.

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143(2), 144, 147, 148, AY 2013-14, Bangalore Tribunal, In Favour of Assessee

Conclusion:

If the Notice u/s 143(2) issued by Income tax Officer was having no Jurisdiction at the time of issue of the notice then this is not a valid notice as it suffers from an inherent lacuna affecting his / its jurisdiction. It is not a curable defect u/s 292BB. The consequent order passed u/s 143(3) dated 29.12.2017 was legally unsustainable and therefore is null in the eyes of law and therefore quashed. ITO vs Mr.P N Krishnamurthy ITAT Bangalore on 27 April, 2020

Kindly see para 35 and 36

“35. Coming back to the admitted facts in the present case, we hold that the ACIT, Central Circle-3(1), Kolkata framed the assessment order dated 29.12.2017 pursuant to transfer of case ordered by PCIT, Central Patna dated 03.11.2017 u/s. 127 of the Act, without there being valid issuance of notice u/s 143(2) of the Act. In our opinion such an order is bad in law as held by the Hon’ble Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (S.C) wherein the Hon’ble Supreme Court has held that issue of a legally valid notice u/s. 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s. 143(3) of the Act and absence of a valid notice u/s 143(2) is not a curable defect. This view was reiterated by the Hon’ble Apex Court in the case of CIT Vs Laxman Das Khandelwal(108 taxmann.com 183). ….”

“9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section 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.

Since the facts on record are clear that no notice under Section 143(2)of the Act was ever issued by the Department, the findings rendered. by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter.”

“36. For the reasons set out above therefore, we uphold the objections raised by the appellant against the validity of the impugned order u/s 143(3) for AY 2015-16. We accordingly hold that since in the present case no valid notice u/s 143(2) was issued by the AO who held jurisdiction over the case of the appellant, the consequent order passed u/s 143(3) dated 29.12.2017 was legally unsustainable and therefore is null in the eyes of law and therefore quashed. The assessee accordingly succeeds on the preliminary legal issue raised before us.

In the result, appeal of assessee is allowed.”

Income Tax Officer Ward-6(2)(3), … vs Mr.P N Krishnamurthy , Bangalore on 27 April, 2020

IN THE INCOME TAX APPELLATE TRIBUNAL

BANGALORE BENCHES “B”, BANGALORE

Before Shri N.V.Vasudevan, Vice-President

Shri Chandra Poojari, Accountant Member

ITA No.1590/Bang/2018: Asst.Year 2013-2014

The Income Tax Officer Sri.P.N.Krishnamurthy

Ward 6(2)(3) Vs. Prop: Sri Krishnachandra

Bengaluru. Convention Hall, No.26,

S.M.Road, Jalahalli West

Bangalore – 560 058.

PAN: ACOPN3645C.

(Appellant) (Respondent)

CO No.41/Bang/2019: Asst.Year 2013-2014

Sri.P.N.Krishnamurthy The Income Tax Officer

Prop: Sri Krishnachandra Vs. Ward 6(2)(3)

Convention Hall, No.26, S.M.Road, Bengaluru.

Jalahalli West

Bangalore – 560 058.

(Cross Objector) (Respondent)

Revenue by: Sri.Priyadarshi Mishra, JCIT-DR

Assessee by: Sri.B.S.Balachandran, Advocate

Date of

Date of Hearing: 24.02.2020 Pronouncement: 27.04.2020

ORDER

Per Chandra Poojari, AM:

This appeal by the Revenue and the cross objection by the assessee arise out of the order of the CIT(A), Bangalore-6, dated 08.01.2018, and they relate to the assessment year 2013-2014.

The Revenue has raised the following grounds: –

“1. The order of the CIT(Appeals) is opposed to law and the facts and circumstances of the case.

On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the disallowance of expenses of Rs.22,24,241 when it was established from discrete enquiry that assessee is showing fifty thousand rupees as net receipt in the P&L account and at the same time claiming expenditure against the net receipts.

On the facts and in the circumstances of the case, whether the learned CIT(A) is justified in deleting the addition of suppressed value of Rs.54,00,000 and rejecting the estimation of the AO when it was gathered from the discrete enquiry that the assessee was collecting receipts from customers amounting to two lakhs fifty thousand rupees whereas receipt is issued of fifty thousand rupees only.

On the facts and circumstances of the case, whether the CIT(A) is justified in deleting the disallowance of Rs.8,75,000 towards unsecured loan and deciding the matter based on additional evidences submitted by the assessee in spite of the fact that the assessee could not produce any documents during the assessment proceedings which is contravened to the provision of Rule 46A(3).

On the facts and circumstances of the case, whether the CIT(A) is justified in deleting the addition of Rs.1,81,83,759 towards increase in capital and deciding the matter based on return of income for the AY 2012-13, when the AO has submitted that return of income for the AY 2012-13 is invalid as per system and the CIT(A) has allowed assessee’s appeal on this issue without verifying this aspect and without giving opportunity to the AO for verification.

The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal.”

The grounds raised by the assessee in the cross objection read as under: –

“1. The appeal of the Revenue is devoid of any merit and liable to be dismissed as not maintainable.

No Notice u/s 143(2).

2.1 The learned CIT(A) failed to appreciate that the Notice u/s 142(1) r.w.s. 129 dated 06.10.2015 was without jurisdiction as there was no valid notice u/s 143(2) issued and served on the Appellant-assessee.

2.2 The learned CIT(A) failed to appreciate that the impugned assessment order completed without issue of a valid notice u/s 143(2) is void ab initio.

No Estimation u/s 143(3)

The learned CIT(A) failed to appreciate that it is not permissible to estimate the income of an assessee without rejecting the books of account and framing the assessment u/s 144 of the Act.

On the appeal of the Revenue 4.1 The Ground No.4 taken by the appellant-

revenue is not maintainable as no new evidence was adduced before the learned CIT(A) and there was no contravention of the provisions of Rule 46A(3).

4.2 The Appeal of the revenue is devoid of any merit since the finding of fact recorded by the learned CIT(A) on various issues is not shown to the perverse and therefore, liable to be dismissed.

4.3 The appeal of the Appellant-Revenue is liable to be dismissed as none of the grounds taken by the appellant is maintainable on facts and in law.

For these and other Grounds of Cross Objection that may be taken at the time of hearing, it is most respectfully prayed that the Hon’ble ITAT may be pleased to dismiss the Appeal of the Revenue and allow the Cross Objections of the Respondent.”

There was a delay of 134 days filing this Cross Objection by the assessee before the Tribunal. The assessee has filed a petition for condonation of delay and also an Affidavit of Sri.Girish J.S., Chartered Accountant of the assessee stating therein the reasons for belated filing of the C.O., which reads as follow: –

“I, Girish J.S., s/o Late Srinivasa Murthy J, aged 48 years, resident of No.454, II A Block, 5th Main, Rajajinagar, Bangalore and Chartered Accountant (CA) by profession do hereby solemnly affirm on oath and state as under:

That I am a Chartered Accountant (CA) by profession and extended my professional services to Sri.P.N.Krishnamurthy, resident of No.32, Mathai Building, Officers Model Colony, Prashanth Nagara, T Dasarahalli, Bangalore, who is assessed to Income Tax under PAN ACOPN3645C.

That the professional services provided to the said Sri.P.N.Krishnamurthy included filing of Income- tax return, appearance before the assessing officer, etc.

That the Notice of the Hon’ble Income Tax Appellate Tribunal (the Tribunal), Bengaluru, intimating the date of hearing on 26.12.2018 in respect of the appeal filed by the revenue in ITA No.1590/Bang/2018 was handed over to me by the said, Sri.P.N.Krishnamurthy, for guidance and necessary action in the matter.

Since an appeal was not filed against the order of the learned Commissioner of Income Tax (Appeals) by the said Sri.P.N.Krishnamurthy, I was under the bona fide impression that the respondent is required to appear before the Hon’ble Tribunal in response to the said Notice of the Hon’ble Tribunal and defend the order of the learned Commissioner of Income Tax (Appeals), insofar it is in favour of the said P.N.Krishnamurthy, and was not aware of the concept of filing Cross Objection (CO) under section 253(4)of the Income Tax Act, 1961.

I do affirm that whatever stated above is true to the best of my knowledge and belief.”

We have perused the reasons stated in the affidavit for the belated filing of the Cross Objection. We find that there is sufficient cause for the delayed filing of the C.O. and no latches can be attributed to the assessee. Hence, we condone the delay and proceed to dispose of the C.O. on merits.

First of all, we will take up the Cross Objection filed by the assessee, which goes to the root of the matter.

C.O. No.4/Bang/2019 – by Assessee

The facts of the case are that the assessee has filed the return of income on 29.11.2014 for the assessment year 2013- 2014. The return was processed u/s 143(1) of the I.T.Act. Subsequently, notice u/s 143(2) of the Act was issued and served on the assessee on 28.08.2015 by the Assessing Officer, i.e. ITO Ward 6(2)(2), Bangalore. In view of the change of jurisdiction, notice u/s 142(1) r.w.s. 129 of the Act dated 06.10.2015 was issued and the same was served on the assessee on 09.10.2015 by the Assessing Officer, i.e., ITO Ward 6(2)(3) Bangalore, requiring the assessee to produce the details of profit and loss account, balance sheet, business activities, books of account, ledger extract and details of bills / vouchers, additions made to fixed deposits for the financial year 2012-2013 relevant to the assessment year 2013-2014. Thereafter, the assessment was completed u/s 143(3) of the Act on 10.03.2016. The assessee went in appeal before the CIT(A) challenging that there was no proper notice issued u/s 143(2) of the Act. The CIT(A) observed that, perusal of records shows notice u/s 143(2) was issued by ITO Ward 6(2)(2) on 28.8.2015. It is noted that although assessment order was passed by ITO Ward 6(2)(3) due to transfer of cash u/s 129, original notice u/s 143(2) was to be treated as valid notice and the assessment was valid. Against this appeal, the assessee is in appeal before us.

Before us, the learned AR relied on the order of the Tribunal in ITA No.1163/Chd/2018 in the case of M/s.H.P.Singh & Ors. v. ITO– order dated 01st August, 2019, wherein it was held as follows: –

“12. I have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the assessee efiled the return of income on 14/09/2015 mentioning the address at Mohali, in the earlier years also, the returns of income were filed at the same address. Therefore the A.O. Ward-6(4) Mohali was having the jurisdiction upon the case of the assessee. In the present case the ACIT, Circle-1, Amritsar who was not having the jurisdiction over the assessee’s case issued the notice under section 143(2) dt. 12/08/2016 therefore the said notice was beyond the jurisdiction.

To resolve the present controversy it is necessary to discuss the provisions contained in Section 143(2) of the Act which reads as under:

(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return:

Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.

From the proviso to sub section 2 of Section 143 of the Act, it is clear that no notice under section 143(2) of the Act shall be served on the assessee after the expiry of six months from the end of the Financial Year in which the return was furnished. In the present case the assessee filed the return on 14/09/2015 and the Financial Year ended on 31/03/2016. Therefore the time available to issue the notice under section 143(2) was upto 30/09/2016 but the A.O. who was having the jurisdiction i.e; the ITO, Ward 6(4) Mohali issued the notice under section 143(2) alongwith the questionnaire under section 142(1) of the Act to the assessee on 22/05/2017.

On a similar issue, the Hon’ble Supreme Court in the case of ACIT And Another Vs. Hotel Blue Moon (2010) 321 ITR 362 (supra) held as under:

” If the Assessing Officer, for any reason, repudiates the return filed by an assessee in response to notice under section 158BC(a) of the Income Tax Act, 1961 relating to a block assessment, the Assessing Officer must necessarily issue notice under section 143(2) of the Act within the time prescribed in the proviso to section 143(2).”

It has further been held as under:

“Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and is not curable. Therefore, the requirement of notice under section 143(2) cannot be dispensed with.”

As regards to curing the defect under section 292B of the Act the Hon’ble Jurisdictional High Court in the case of CIT Vs. Norton Motors (supra) held as under:

“A reading of section 292B of the Income-tax Act, 1961, makes it clear that mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding in substance and effect is in conformity with or according to the provisions of the Act. To put it differently, section 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other 5 words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his / its jurisdiction, the same cannot be cured by having resort to section 292B.”

In the present case as I have already pointed out in the former part of this order that the notice under section 143(2)of the Act was not issued in prescribed time limit as per the proviso to section 143(2)of the Act by the A.O. having the jurisdiction upon the case of the assessee and the notice issued by the ACIT, Amritsar suffered from an inherent lacuna affecting his jurisdiction so the same could not be cured by having resort to the provisions of section 292B of the Act. Therefore, the assessment framed under section 143(3) of the Act, by the A.O. without issuing the notice u/s 143(2) of the Act within the time limit prescribed in the proviso to section 143(2) of the Act was invalid and accordingly quashed.”

On the other hand, the learned Departmental Representative, relied on the order of the CIT(A) and also the provisions of section 292BBof the Act.

We have heard the rival submissions and perused the material on record.In the present case, the original jurisdiction of the Assessing Officer is ITO Wad 6(2)(2), Bangalore, who issued notice u/s 143(2) of the Act dated 28.08.2015 fixing the case for hearing on 15th September, 2015. However, the assessment records were transferred vide order u/s 129 of the Act, to the ITO Ward 6(2)(3), Bangalore, and thereafter notice u/s 142(1) r.w.s. 129 of the Act dated 06.10.2015 was issued and served on the assessee. Thus, it is an admitted fact that the ITOWard 6(2)(3) Bangalore has never issued any notice u/s 143(2) of the Act to the assessee. Since there was no notice u/s 143(2) of the Act issued by the Assessing Officer, Ward 6(2)(3), the assessment framed consequently is bad in law. In our opinion, the assessment framed by the ITO Ward 6(2)(3), Bangalore is not in order on the simple reason that this was framed without giving notice u/s 143(2) of the Act. Before framing any assessment, there should be valid notice u/s 143(2) of the Act, as has been held by the Hon’ble Supreme Court in the case of ACIT And Another Vs. Hotel Blue Moon (2010) 321 ITR 362 (SC). The reliance placed by the learned DR on section 292BBof the Act is totally misconceived, as it is stated in the assessment order that the assessee has not cooperated with the A.O. and the A.O. sent hearing notices dated 02.01.2015, 16.01.2015 requesting the assessee to appear for hearing on 13.11.2015 and 26.11.2015. Since no response from the assessee, again one more notice dated 27.11.2015 was issued by the Assessing Officer by posting the case on 04.12.2015, but none appeared on behalf of the assessee. It is also intimated to the assessee that the order will be passed ex parte u/s 144 of the Act. Again, there was no response from the assessee. However, one Chartered Accountant, namely, Sri.J.S.Girish appeared before the Assessing Officer on 07.12.2015 and submitted a Power of Attorney and copy of Profit and Loss Account and Balance Sheet and sought time for hearing. Further during the course of hearing, the AR was requested to submit the details vide notice dated 06.10.2015 for which the AR has agreed to submit the same on 14.12.2015. Accordingly, the case was adjourned to 14.12.2015. However, on that date none appeared on behalf of the assessee nor filed any adjournment application. Further, the A.O. Ward 6(2)(3) sent one more letter on 14.12.2015 posting the case for hearing on 23.12.2015 requesting to appear before him with all details as has been called for earlier, stating therein that failure to comply with the same, the assessment will be completed u/s 144 of the Act. However, on this occasion also the assessee has neither appeared nor filed any submission. Reading of the above shows that there was no cooperation by the assessee before the Assessing Officer, however, the assessee is challenging invalid notice u/s 143(2) of the Act, before the CIT(A). According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section 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. Being so, section 292BB of the Act cannot be applied in the present circumstances. We also rely on the decision of the ITAT Kolkata Benches in the case of M/s.Rungta Irrigation Limited v. ACIT in ITA No.1224/Kol/ 2019. The Tribunal vide its order dated 06.09.2019, held as under: –

“11. We have heard both the sides and perused the records. Before us the Ld. AR of the assessee has raised the jurisdiction of the AO at Kolkata who passed the assessment order without issue of notice u/s. 143(2) of the Act, which according to Ld. AR, is mandatory to assume jurisdiction to frame assessment u/s. 143(3)/144 of the Act. According to ld. AR, non-issue of legally valid notice u/s 143(2) is not a curable defect, as held by the Hon’ble Supreme Court in Hotel Blue Moon (supra). However, the main contention of the Ld. CIT, DR opposing this legal issue raised by the assessee is that, the assessee’s principal office continues to be situated at 26 Rajendra Place, New Delhi,which falls under the territorial jurisdiction of the ACIT, Circle-21, New Delhi, and thushe had concurrent jurisdiction over the assessee’s case, as envisaged for the purposes of Section 120 and 124 of the Act. According to the Ld. CIT, DR, even as per section 127 of the Act, which deals with the transfer of jurisdiction of a case, sub-section (4) of section 127 stipulates that there is no necessity to re-issue of any statutory notices already issued by the AO or AO from whom the case is transferred.

According to ld. CIT, DR therefore, since the admitted position is that ACIT, Circle-21, New Delhi was having territorial jurisdiction over the assessee’s principal office situated at Rajendra Place, New Delhi, by virtue of jurisdiction bestowed u/s. 120 and 124 of the Act, he had rightly issued notice u/s. 143(2) of the Act within the stipulated time for assessment of AY 2015-16. In the circumstances therefore when the case was transferred to the ACIT, Central Circle-3(1), Kolkata, the AO at Kolkata was not required to re-issue notice u/s. 143(2) of the Act which had been already been issued by AO at Delhi. According to Ld. CIT, DR therefore, there is no merit in the contention of the assessee. For objectively adjudicating this issue, it is therefore necessary to look at the facts, for which a bird’s eye view of the undisputed facts which are noted from the documents placed on record, aretabulated in the following chart. These facts are important to decide the legal issue before us.

Sl. No.	Date	Events
1	Upto 08.10.2008	DCIT, Circle 15(1), New Delhi was the AO of assessee on the basis of territorial jurisdiction.
2	On 08.10.2008	CIT-V Delhi transferred the jurisdiction over the assessee’s case u/s 127 to DCIT, Central Circle-1, Ranchi.
3	From 09.10.2008 to 03.11.2017	DCIT, Central Circle-1, Ranchi was the AO of assessee for all proceedings under the Act.
4	28.07.2016	ACIT, Circle 21(1), New Delhi issued notice u/s 143(2) to the assessee.
5	30.06.2017	ACIT, Circle 21(1), New Delhi issued notice u/s 142(1) to the assessee.
6	17.07.2017	Assessee objected to jurisdiction of ACIT, Circle 21(1), New Delhi.
7	07.08.2017	Show Cause Notice / proposal for centralization of assessee’s case at Kolkata issued by Pro.CIT-7, Delhi.
8	16.08.2017	Assessee objected to the jurisdiction of Pr.CIT-7, New Delhi.
9	24.10.2017	Pr.CIT, Central Patna issued Show Cause Notice for centralization of assessee’s case under the charge of Pr.CIT, Central Circle 2, Kolkata.
10	03.11.2017	Pr.CIT, Central Patna passed order u/s 127 centralizing the assessee’s case with ACIT, Central Circle 3(1), Kolkata under the charge of Pr.CIT, Central 2, Kolkata.
11	09.11.2017	ACIT, Central Circle 3(1), Kolkata intimates the assessee u/s 129 being the succeeding AO for A.Y. 2015-16.
12	05.12.2017	Notice u/s 142(1) issued by ACIT, Central Circle 3(1), Kolkata for AY 2015-16.
13	29.12.2017	Assessment order framed u/s 143(3) of the Act by ACIT, Central Circle 3(1), Kolkata for AY 2015-

In view of the aforesaid dates and sequence of events the first legal question to be adjudicated is, whether the ACIT, Circle-21(1), New Delhi can be said to have had concurrent jurisdiction (territorial jurisdiction) over the assessee merely because its principal office was situated at Rajendra Place, New Delhi and in that view of the matter he was competent to issue a valid notice u/s. 143(2) of the Act for AY 2015-16. This question needs to be answered in the light of the fact remains that, by an earlier order dated 08.10.2008 passed u/s 127(1) of the Act, the then CIT-V, New Delhi had transferred the jurisdiction over the assessee’s case from the DCIT, Circle- 15(1), New Delhi to the charge of DCIT, Central Circle-1, Ranchi. If the answer to the preceding question is in the affirmative, then the next question to be adjudicated is whether the assessment order u/s. 143(3) of the Act dated 29.12.2017 by the ACIT, Central Circle 3(1), Kolkata was legally valid even though no valid notice u/s. 143(2) of the Act was issued.
For understanding the legal position with regard to the jurisdiction of Income tax authorities, it is pertinent to make reference to provisions of Section 120, 124, 127and 129 of the Act which are reproduced herein below:

Jurisdiction of income- tax authorities

(1) Income- tax authorities shall exercise all or any of the powers and perform all or any of the functions Conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities.

(2) The directions of the Board under sub- section (1) may authorise any other income- tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income- tax authorities who are subordinate to it.

(3) In issuing the directions or orders referred to in sub- sections (1) and (2), the Board or other income- tax authority authorized by it may have regard to any one or more of the following criteria, namely: –

(a) territorial area;

(b) persons or classes of persons;

(d) cases or classes of cases.

(4) Without prejudice to the provisions of sub- sections (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein, –

(a) authorize any Director General or Director to perform such functions of any other income- tax authority as may be assigned to him by the Board;

(b) empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of

(5) The directions and orders referred to in sub- sections (1) and (2) may, wherever considered necessary or appropriate for the proper management of the work, require two or more Assessing Officers (whether or not of the same class) to exercise and perform, concurrently, the powers and functions in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply.

(6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, the Board may, by notification in the Official Gazette,, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income- tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.

Jurisdiction of Assessing Officers

(1) Where by virtue of any direction or order issued under sub- section (1) or sub- section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction-

(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and

(b) in respect of any other person residing within the area.

(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or where the question is one relating to areas within the jurisdiction of different Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify.

(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer-

(a) where he has made a return under sub- section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub- section (1) of section 142 or subsection (2) of section 143 or after the completion of the assessment, whichever is earlier;

(b) where he has made no such return, after the expiry of the time allowed by the notice under sub- section (1) of section 142 or under section 148 for the Making of the return or by the notice 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.

(c) where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.)

(4) Subject to the provisions of sub- section (3), where an assessee calls in question the jurisdiction of an- Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub- section (2) before the assessment is made.

(5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub- section (1) or sub- section (2) of section 120.]

Power to transfer cases

(1) The Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.

(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner,–

(a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order;

(b) where the Directors General or Chief Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf.

(3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.

(4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.

Explanation:

In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.

Change of incumbent of an office

Whenever in respect of any proceeding under this Act an income- tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income- tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor:

Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard.”

A bare reading of the foregoing provisions reveal that an Assessing Officer (AO) has been vested with the jurisdiction by virtue of the directions or orders issued by the Board under sub-section (1) or sub-section (2) of section 120of the Act. The direction u/s. 120(1) is given by the Board, for the exercise of the powers and performance of the functions by all or any of the Income Tax Authorities, as specified u/s. 116 of the Act. As per sub-section (2) of Section 120 of the Act, the Board may delegate its powers to Income tax authorities as specified in Section 116, for issuing the orders in writing, for the exercise of the powers and performance of the functions by all or any of the other Income Tax Authorities who are subordinate to that authority. We also note that the concurrent jurisdiction can be vested in more than one AO, which is discernible by a conjoint reading of Section 120(5) with Section 120(2) of the Act. Section 124(1) of the Act confers jurisdiction on an AO, by virtue of jurisdiction vested by any direction or order issued by CBDT under sub-section (1) and / or (2) of section 120 of the Act. The AO is vested with the jurisdiction u/s. 124 of the Act, over any area within the limits of such area, he shall have jurisdiction over any person (assessee) carrying on a business or profession and if the place at which he (assessee) carries on his business or profession is situated within the area ear-marked for him (AO); or if that person’s (assessee’s) business or profession is carried on in more places than one, then if the principal place of his business or profession is situated within the jurisdictional territorial area, the AO gets jurisdiction. Other than the assessees who are not in Business or Profession, in their cases, the AO will be vested with the jurisdiction if the person (assessee) is residing within the territorial area ear-marked by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120 of the Act speaks about. However, when there is a question to be determined as to whether an AO has jurisdiction to assess any person then it would be decided by the authorities as stipulated in sub-section (2) of section 124 of the Act by Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned, as the case may be). In case, if the question is one relating to areas within the jurisdiction of different Income tax authorities(Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners as stipulated therein) then if the other Income-tax authority also agrees then the question will be resolved mutually or else it will be referred to the CBDT. So, once the AO of an assessee is vested with the jurisdiction u/s. 124 read with sec. 120(1) & (2) of the Act and issues statutory notices against an assessee, no person (assessee) shall be entitled to call in question the jurisdiction of an AO within the period prescribed under clauses (a), (b) and (c) of section 124(3) of the Act. We also note that sec. 124(5) saves the action of the AO who has territorial jurisdiction over the assessee in respect of the income earned by the assessee from the territorial jurisdiction vested in him by virtue of any directions or orders issued u/s. 120(1) or (2) of the Act. So, this saving provision which saves the action of an AO is limited to the income accruing or arising or received within the limits of his territorial area as conferred to him (AO) by order under sub-sec. (1) or (2) of sec. 120 of the Act and not otherwise. So, this saving provision will come into play only in the first place the AO is vested with the jurisdiction by an order/direction issued under sub-sec. (1) or (2) of sec. 120 of the Act. Thus, as per the scheme of the Act, it can be seen that sections 120 and 124 vest jurisdiction on Income Tax Authorities and on AO respectively and, therefore, both sections i.e. sections 120 and 124 of the Act must be read in conjunction and harmoniously to decide the territorial jurisdiction which is prescribed by the direction or orders by the CBDT under sub-sec. (1) or (2) of sec. 120 of the Act.

Having taken note of the provisions of Section 120& 124, we however find that Section 127is a separate code of its own. Section 127(1) empowers, the Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner, as stipulated therein, to transfer any case from one or more AO subordinate to him. In other words, under Section 127(1) the Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner, as stipulated therein, can transfer the case records of an assessee from one AO to another functioning under his own charge. On the contrary, Section 127(2) empowers the foregoing authorities to transfer of cases from the AOs from his jurisdiction to the AOs who are not functioning under his jurisdiction and therefore who are not subordinate to such authority. In the cases covered u/s 127(2) therefore, if the Pr. Director General or Director General or Pr. Chief Commissioner or Chief Commissioner or Pr. Commissioner or Commissioner, of the AO to whom the case of an assessee is proposed to be transferred, agrees for the transfer, then the transfer can made u/s. 127(2)(a) of the Act. In case however there is any disagreement between such stipulated authorities, the matter is required to be referred to the Board which in turn decides the issue of transfer or the Board can then authorize an Income Tax authority by a notification as stipulated in clause (b) of sub-sec.(2) of section 127 of the Act. Sub-section(4) of Section 127 of the Act provides that upon the transfer of case by the authorities specified in sub-section (1) or (2) of section 127 of the Act, any stage of the proceedings shall not render the re-issue of any notice already issued by the AO or AOs from whom the case is transferred. In other words, Section 127(4) saves the actions of the AO from whom the case is transferred and allows the AO to whom the case of an assessee is transferred to take forward the proceedings from the point where the earlier jurisdictional AO had left. Here, it would be important to note the Explanation to section 127 defines the expression ‘case’. A reading of the said Explanation shows that the expression ‘case’ in relation to any person, whose name is specified in the transfer order passed u/s. 127 of the Act, means all proceedings under the Act in respect of any year which may be pending on the date of such order or direction or it may have been completed on or before such date, and includes also all proceedings under the Income-tax Act which may be commenced after the date of such order or direction of any year. This definition of the expression ‘case’ implies that, once a transfer is made by the authority specified in subsection (1) or (2) of section 127 of the Act who had the jurisdiction over an AO who in turn had jurisdiction over the assessee/person/entity, by virtue of direction/order issued under section 120(1) or (2) of the Act, then the entire assessment of the person i.e. pre-transfer and post-transfer as on date of transfer will stand transferred and thereafter for all purposes of the Income Tax Act, the AO of the assessee to whom the case is transferred, will be the Assessing Officer in respect of the said the assessee for pre and post proceedings from the date of transfer. In other words, once transfer order of a case of an assessee is issued u/s. 127 of the Act the effect will be that (i) all the proceedings of the assessee under the Act in respect of any year which may be pending on the date of such order will stand transferred, (ii) all the completed assessment order of the assessee on or before the date of transfer will stand transferred and (iii) all proceedings under the Act in respect of the assessee which may be commenced after the date of such transfer order have to be undertaken by the transferred new AO.
In the light of the above discussion, we now examine the facts involved in the appellant’s case and ascertain whether the ACIT, Circle 21(1), New Delhi enjoyed concurrent jurisdiction over the appellant’s case so as to enable him to issue a valid notice u/s 143(2) for the AY 2015-16. As noted, the jurisdiction over the appellant’s case initially vested with the ACIT, Circle 15(1), New Delhi since the territorial jurisdiction over area or limits of area, where assessee’s principal office was situated. The vesting of jurisdiction with the said officer was in terms of the order/ direction of the CBDT u/s. 120(1) of the Act or by Income Tax Authorities (sec. 116) who were delegated the powers to issue orders/directions vesting the jurisdiction of assessment over the authorities subordinate to it. The said Assessing Officer at New Delhi enjoyed exclusive jurisdiction over the appellant upto 08.10.2008. Thereafter, by virtue of order u/s 127(2) passed by the ld. CIT-V, Delhi dated 08.10.2008, the said AO at New Delhi was divested of his jurisdiction over the appellant and the jurisdiction stood transferred in favour of ACIT, Central Circle-1, Ranchi. From the plain reading of the order u/s 127(2) dated 08.10.2008, we find that the transfer of jurisdiction over the appellant’s case from the charge of ACIT, 15(1), New Delhi to ACIT, Central Circle-1, Ranchi was absolute and without reserving any right of concurrent jurisdiction over the appellant at New Delhi.
Before us the Ld. CIT, DR vehemently contented that since the present assessee’s principal office is at New Delhi, the AO, Delhi continued to have jurisdiction as per sec. 124 read with sec. 120(1) or (2) of the Act and the ACIT, Circle 21(1), Delhi’s action of issuing the statutory notice u/s. 143(2) of the Act was saved by sub-sec. (5) of section 124of the Act read with sub-section (4) of sec. 127 of the Act. We are however unable to accept such contention for the following reasons. For adjudicating this contention, let us first examine the relevant provisions of sub-section (5) of sec. 124 of the Act and sub-sec. (4) of sec. 127 of the Act, which read as follows:

Sec. 124(5):-

Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub- section (1) or sub- section (2) of section 120.

Sec. 127(4):- The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.

Explanation: In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.

From a plain reading of sub-sec. (5) of sec. 124 of the Act, it is noted that though it is an over-riding provision yet it has inherent limitation as prescribed in law. If one carefully reads sub-section (5) of sec. 124 of the Act, then it will be noted that it starts with the words “Notwithstanding anything contained in this section or in any direction or order issued under section 120of the Act”. The express language employed by the Legislature clearly shows that provisions of sub- sec. (5) of section 124 overrides only the other provisions of Section 124 of the Act and any orders/directions issued u/s. 120 of the Act, which necessarily means that nonobstante clause is limited to operation of sub-section (1) to (4) of sec. 124 or direction/order issued under section 120 of the Act and not with regard to any order of transfer of case of an assessee made u/s. 127 of the Act. In the circumstances when one reads the definition of “case” as set out in the Explanation to Section 127 of the Act, then it means that when a Chief Commissioner or Commissioner makes an order for transfer of jurisdiction in exercise of the powers conferred by Section 127 of the Act, from an AO who is vested with jurisdiction by virtue of direction/order issued under sub-section (1) or (2) of section 120 of the Act to another AO who is not vested with such jurisdiction as per direction/order issued u/s. 120(1) and (2) of the Act; then by virtue of such transfer order u/s. 127 of the Act, the jurisdiction of an AO u/s. 124 vested by virtue of an order/direction vested on an AO as per sec. 120(1) or (2) of the Act is taken away and thus the original AO is divested of the jurisdiction enjoyed u/s. 124 read with sub-sec. (1) or (2) of section 120 of the Act. We therefore hold that contention put forth by the ld. CIT, DR that provisions of Section 124(5) being overriding in nature, the ACIT Circle 21(1), New Delhi simultaneously held concurrent jurisdiction is devoid of any merit. Such interpretation is not in accord with the extant provisions of Section 124(5) read with Section 127 of the Act. In our opinion once an order u/s 127(2) was passed on 08.10.2008 by the ld. CIT-V, Delhi unconditionally transferring the jurisdiction over the appellant’s case to the charge of ACIT, Central Circle 1, Ranchi; then by virtue of such an order, the jurisdiction enjoyed by ACIT at New Delhi in terms of Section 124 read with Section 120(1) & (2) stood abrogated. Accordingly after 08.10.2008, the ACIT 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 this regard we find that by virtue of the transfer order passed by theld. CITV, Delhi u/s. 127 dated 08.10.2008, the ‘case’ of the assessee was transferred with immediate effect. Pursuant to such an order, the DCIT, Central Circle Ranchi became the AO who alone had valid jurisdiction over the appellant’s ‘case’ till even he was divested of such jurisdiction by virtue of an order passed u/s. 127(2)by the Pr.CIT, Central, Patna dated 03.11.2017 as per which the jurisdiction stood transferred to the ACIT, Central Circle 3(1) Kolkata. We are therefore of the firm opinion that in June 2016 when the notice u/s 143(2) was issued, it was the ACIT, Central Circle 1, Ranchi alone enjoyed sole jurisdiction over the appellant’s ‘case’ and in that view of the matter it was only this AO who could have issued a valid notice u/s 143(2) for the relevant AY 2015-16. We therefore have no quarrel with the proposition put forth by the ld. CIT, DR that when the ACIT, Central Circle 3(1), Kolkata received the ‘case’ records in terms of the order u/s 127(2) dated 03.11.2017, he had no obligation to issue a fresh notice u/s 143(2) because he could have continued with the assessment proceedings from the stage at which his predecessor would have left. However this legal proposition pre-supposes that the original notice u/s 143(2) was issued by an officer who held valid jurisdiction over the ‘case’ of the assessee. We however find that although in June 2016, the jurisdiction over the assessee’s case was vested in ACIT, Central Circle 1, Ranchi, he never issued notice u/s 143(2). On the contrary the notice was issued by the ACIT, Circle 21(1), Delhi who, as held earlier, ceased to have jurisdiction over the appellant’s case after 08.10.2008. Since no notice u/s. 143(2) was issued by the AO, Ranchi within the stipulated time, sub-section (4) of sec. 127 of the Act does not come to the rescue of the department. As noted earlier, the AO, Delhi ceased to be AO of assessee after the transfer order was passed by CIT-V, Delhi on 08.10.2008, so after such order by the competent authority (which fact is not disputed before us), then the CIT, Delhi became functus officio and by virtue of it even his subordinate authority i.e. AO, Delhi was also divested of the jurisdiction. For the reasons as discussed in the foregoing therefore we hold that in the given facts of the case, the appellant’s case was not saved by the provisions of Section 124(5)as also by Section 127(4) of the Act. Accordingly, the contentions of the Ld. CIT, DR are rejected being devoid of any merit in law as well as on facts.

Coming to the next argument of the Ld. CIT, DR that jurisdiction is an administrative issue and not a ‘subject matter’ open for judicial intervention, we note that the Hon’ble Calcutta High Court in M/s. Ramshila Enterprises Pvt. Ltd. (infra) clearly held that, “The jurisdiction over the subject-matter has to be conferred by law. The jurisdiction in this case had been transferred by the order dated 3rd September, 2012 by no other than the CIT Kolkata- II, Kolkata himself. Once that was done CIT Kolkata – II, Kolkata lost the seisin over the matter. He became ‘functus officio’.” [Emphasis given by us]Thus, the contention of the Ld. CIT, DR that the jurisdiction is an administrative issue and not a subject matter stands negated in the light of the jurisdictional High Court’s specific observations (supra).

Coming to the next contention of the Ld. CIT, DR that since the assessee did not question the territorial jurisdiction of the AO at Delhi after it received statutory notice from him and therefore the assessee is estopped/shut-out from doing so as stipulated by sub-section (3) of sec. 124 of the Act. We however note that sub-section (3) of section 124of the Act will come into play only when a question arises as to whether an AO has jurisdiction to assess any person u/s. 124 of the Act and the AO derives his powers from the direction or order issued by CBDT and/or authorities under sub-section (1) or (2) of sec. 120 of the Act respectively. It is true that when a question of jurisdiction arises in the event an AO assumes jurisdiction u/s. 124 of the Act by virtue of the jurisdiction vested by direction or order issued by CBDT and/or other authorities under sub-section (1) or (2) of sec. 120 of the Act respectively, then assessee is estopped from raising an objection to the jurisdiction, after the time period prescribed under sub-section (3) of sec. 124 of the Act lapses. This however is not the fact of the appellant’s case. Admittedly the AO at Delhi who had enjoyed jurisdiction u/s. 124 of the Act by virtue of direction or order issued by CBDT and/or authorities under sub- section (1) or (2) of section 120 of the Act was legally divested of his jurisdiction over the appellant’s case by virtue of the order u/s. 127 of the Act dated 08.10.2008, and thereafter AO at Delhi could not have suo moto assumed jurisdiction u/s. 124 of the Act. In our opinion therefore in the appellant’s case, the provision of section 124(3) does not come into play since the case of the assessee was legally transferred by the competent authority u/s. 127 of the Act as far back as in 2008. There is a reason for saying so when the transfer of an assessee’s case as envisaged u/s. 127 occurs, the competent authority gives reasonable opportunity of being heard [except if the AO to whom case is transferred are situated in the same city, locality or place (see sub-section (3) of section 127 of the Act)] and at this juncture, we would like to remind that in the present case at hand, the assessee was given an opportunity to be heard by Commissioner at Delhi before he proposed the transfer of assessee’s case to AO at Ranchi and the assessee had objected to the transfer which is found available in the paper book. After considering the assessee’s objections, the Commissioner at Delhi transferred the case of assessee from AO at Delhi to AO at Ranchi. In the circumstances therefore, as discussed above, once transfer of the case of the assessee is ordered u/s. 127 of the Act, the AO who was vested with the jurisdiction by virtue of the direction or order issued under subsection (1) or (2) of sec. 120 and section 124 of the Act stood divested of the same. As held by the Hon’ble jurisdictional High Court in M/s. Ramshila Enterprises Pvt. Ltd. (infra),since the jurisdiction was divested of the earlier AO by virtue of transfer order u/s. 127 of the Act, the earlier AO, which in this case is AO at Delhi (DCIT. Circle – 15, New Delhi) ceased to be Assessing Officer after the date of transfer i.e. 08.10.2008 and therefore he (i.e. AO at New Delhi) ought not to have issued statutory notices upon the assessee unless he had been re-empowered or vested by a fresh transfer order u/s. 127 of the Act (i.e. from AO, Ranchi to AO, Delhi), which is not the case of the Revenue. In the circumstances therefore, the AO at Delhi (ACIT, Circle-21 (1), New Delhi) could not have usurped the jurisdiction when his predecessor i.e. DCIT, Circle-15(1), New Delhi was divested of it, by order dated 23 ITA No. 1224/Kol/2019 M/s. Rungta Irrigation Limited, AY- 2015-16 08.10.2008 by CIT-V, New Delhi u/s. 127 of the Act. Subsequent to the order u/s. 127 of the Act i.e., w.e.f. from 08.10.2008, the DCIT, Central Circle-1, Ranchi succeeded to the jurisdiction of the assessee and the jurisdiction continued to vest in him (AO Ranchi) till it was legally taken away by order u/s. 127 dated 03.11.2017 by Pr. CIT, Central Patna and transferred to ACIT, Central Circle-3(l), Kolkata. Therefore, as per the discussions (supra) there was no necessity for the assessee to have questioned the jurisdiction of AO at Delhi, as envisaged under sub-sec. (3) of sec. 124 of the Act since in the first place AO at Delhi legally enjoyed jurisdiction u/s. 124 of the Act over the assessee’s case. In our considered opinion Section 124(3) of the Act 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. So the challenge raised by the Ld CIT, DR fails. Therefore, we do not find any merit in the contention of the Ld. CIT, DR on this score.

During the course of hearing before us, the Ld. CIT, DR took pains to convince us that there are overlapping/concurrent jurisdiction in respect to the territorial and pecuniary jurisdiction of the AO and, therefore, the AO having territorial jurisdiction over the assessee’s principal office at Rajendra Place, New Delhi having issued the notice u/s. 143(2) of the Act was empowered to do so since the ACIT, Circle-21(1), Delhi enjoyed the concurrent jurisdiction conferred u/s. 120/124 of the Act and, therefore on subsequent transfer of the case by the Pr. CIT, Central Patna by order dated 24.10.2017 to ACIT, Central Circle-3(1), Kolkata, there was no need to re- issue the notice u/s. 143(2) of the Act in terms of Sec. 127(4) of the Act. For this he relied on various judicial decisions. We however note that the case laws relied on by the Ld. CIT, DR were factually distinguishable. In these decisions the Courts were called upon to examine the implications arising from the provisions of Section 120and 124 of the Act and the facts of these cases did not involve orders under Section 127 of the Act in terms of which the AO holding territorial jurisdiction in terms of Section 124 read with Section 120(1) & (2) was specifically divested of his jurisdiction by the competent authority and the jurisdiction was conferred on some other officer after complying with the procedure prescribed in Section 127 of the Act. Instead we find that a similar issue came up before this Tribunal in the case of M/s. Ramshila Enterprises Pvt. Ltd. Vs. Pr. CIT wherein the factual matrix governing the issue of jurisdiction was similar. In that case the question was whether the Commissioner who usurped the revisional jurisdiction u/s. 263 of the Act could have validly done so, once he himself had passed an order u/s 127 of the Act in terms of which assessee’s case stood transferred. The facts of the said case M/s. Ramshila Enterprises Pvt. Ltd. Vs. Pr. CIT can be summarized as follows:-

Sl. No.	Date	Events
1	21st May, 2010	Assessment u/s 147/143(3) by ITO, Wd.4(1), Kolkata (for AY 2008-09)
2	3rd September, 2012	CIT, Kolkata-II transferred the jurisdiction over the assessee to ACIT/DCIT, Central Circle-XIX, Kolkata for better co-ordination, effective investigation and meaningful assessment, consequent to a search conducted on 17th November, 2011 upon M/s.Atha Mines (AY 2012-13).
3	18th March, 2013	ACIT/DCIT, Central Circle-XIX, Kolkata issued sec.143(2) notice to assessee.
4	29th July, 2013	Actual transfer of files took place from ITO, Wd.4(1), Kolkata to ACIT/DCIT, Central Circle XIX, Kolkata.
5	18th March, 2013	Notice u/s 263 issued by CIT, Kolkata-II proposing to interfere in the assessment order passed by ITO, Wd.4(1), Kolkata dated 21st May, 2010 (AY 2008-09)
6	26th March, 2013	CIT-II, Kolkata passed the order u/s 263 setting aside the order of ITO, Wd.4(1) dated 21st May, 2010 for A.Y. 2008-09.

The aforesaid order of CIT-II, Kolkata was challenged by the assessee [M/s Ramshila,]objecting to the jurisdiction of CIT-II, Kolkata who had issued Show Cause Notice u/s. 263 and thereafter passed order u/s. 263 dated 26th March, 2013 for AY 2008- 09. The validity of the said revision order was upheld by this Tribunal in favour of the department, by observing as under:

“The definition of ‘case’ for the purpose of sec.127 of the Act as given in the Explanation below sec.127 does not debar the Commissioner from transferring only a particular case, more so when the request for transfer was made in specific circumstances, such as proper co-ordination of search cases. The Commissioner transferring jurisdiction has power to transfer all proceedings under the Act, which are pending, completed or which may be commenced after the date of transfer, but that does not mean that he does not have powers to restrict his order of transfer only to a particular case for which request was made, thereby, leaving the jurisdiction in respect of other cases pertaining to an assessee to be exercised by the AO/CIT who already had it. The power to do a particular act also includes a power to restrict the exercise of power partly. It cannot be said that the power should be exercised either as a whole or not at all. Such an argument is fallacious and defeats the very purpose of conferring a larger power. As the actual transfer of the files from the incumbent AO to the new AO had taken place only on 29.7.2013 and further the order sought to be revised by the ld.CIT u/s 263 was passed much prior to the even making of request for transfer of jurisdiction in respect of search matters, we have absolutely no doubt in our mind that only the CIT Kolkata II, Kolkata had the jurisdiction to revise the assessment order passed u/s147 as has been done in this case. The contention of the learned AR in this regard is held to be without substance and not unacceptable.”

Aggrieved by the aforesaid order of the Tribunal, the assessee M/s.Ramshila Enterprises Pvt. Ltd. preferred an appeal before the Hon’ble jurisdictional High Court, Calcutta wherein the following question of law raising the jurisdictional issue similar to that raised by the assessee before us, was framed as under:- “Whether the Tribunal was justified in holding that the Commissioner of Income Tax, Kolkata-II, had jurisdiction over the appellant at the time of issue of the Show Cause notice on 18th March, 2013 and passing of the order on 26th March, 2013 under section 263of the Income Tax Act, 1961 in spite of transfer of jurisdiction to the Commissioner of Income Tax, Central Circle, Kolkata vide an order dated 3rd September, 2012 under section 127 (2)(a) of the said Act and its purported findings in that behalf are arbitrary, unreasonable and perverse?.”

In this case which is reported as M/s.Ramshila Enterprises Pvt. Ltd. Vs. Pr. CIT (2016) 383 ITR 546 (Cal), we note that the gist of department’s contention was taken note by the Hon’ble High Court, which is as under:

“Mr. Ghosal, learned senior advocate appearing for the Revenue submitted that the transfer order itself indicates that jurisdiction of the Income-tax Officer, Wd-4(1), Kolkata was transferred to ACIT/DCIT, Central Circle- XIX, Kolkata, which is at page 584. The jurisdiction of the Commissioner of Income-tax remained unchanged. In other words, it is the jurisdiction of the trial court, which was changed. The jurisdiction of the appellate authority remained unchanged. Therefore, the order under challenge was validly passed by the Commissioner of Income-tax.”

Per contra; in that case, the assessee contended that as per the Explanation appended to section 127of the Act that the expression ‘transfer of a case’ would mean all pending and future proceedings and in that case it was pointed out that Tribunal also agreed that only CIT, Central, Kolkata had jurisdiction over the pending cases as well as future cases.The Ld. AR of the assessee pleaded before the Hon’ble High Court as under:

“Mr.Poddar, learned senior advocate, drew our attention to an order dated 3rd September, 2012 appearing at page 584 of the additional papers filed by him, which is an order passed under section 127 of the Income Tax Act by no other than the CIT, Kolkata-II, Kolkata, who passed the impugned order under Section 263, transferring the jurisdiction over five assessees including the appellant before us to the ACIT/DCIT, Central Circle XIX, Kolkata in the interest of revenue for better coordination, effective investigation and meaningful assessment consequent to a search conducted on 17th November, 2011 against the business concern of Atha Mines. Mr.Poddar contended that the appellant before us is not in any way connected with Atha Mines Group. But the point of substance is that the impugned order under section 263 was passed by the CIT, Kolkata-II, Kolkata in spite of the fact that the jurisdiction had already been transferred by his predecessor-in-office by his order dated 3rd September, 2012 with immediate effect. Mr.Podder contended that CIT, Kolkata-II, Kolkata thereafter had no longer any jurisdiction left with him to be exercised in respect of the return or returns filed by the assessee or assessments made. He submitted that the exercise of power was not only ex parte, without notice, but was also without jurisdiction. He drew our attention to the letter dated 18th March, 2013 received by his client from the Deputy Commissioner of Income-tax, which is a notice under section 143(2) pertaining to the assessment year 2012-2013. He submitted that the order dated 3rd September, 2012 transferring jurisdiction to a ACIT/DCIT, Central Circle-XIX, Kolkata had already become operative and was also acted upon.Therefore, CIT, Kolkata-II, Kolkata could not have exercised jurisdiction.The impugned order passed by him is altogether without jurisdiction and is, therefore, a nullity.

He drew our attention to a judgment of the Apex Court in the case of Pandurang and Others versus State of Maharashtra reported in (1986) 4 SCC436for the proposition that even a right order by a wrong forum is a nullity. In the aforesaid judgment their Lordship held as follows:

“4.When a matter required to be decided by a Division Bench of the High Court is decided by a learned Single Judge, the judgment would be a nullity, the matter having been heard by a court which had no competence to hear the matter, it being a matter of total lack of jurisdiction. The accused was entitled to be heard by at least two learned Judges constituting a Division Bench and had a right to claim a verdict as regards his guilt or innocence at the hands of the two learned Judges. This right cannot be taken away except by amending the rules.So long as the rules are in operation it would be arbitrary and discriminatory to deny him this right regardless of whether it is done by reason of negligence or otherwise. Deliberately, it cannot be done. Negligence can neither be invoked as an alibi, nor can cure the infirmity or illegality, so as to rob the accused of his right under the rules. What can be done only by at least two learned Judges cannot be done by one learned Judge. Even if the decision is right on merits, it is by a forum which is lacking in competence with regard to the subject matter. Even a ‘right’ decision by a ‘wrong’ forum is no decision.It is non-existent in the eye of law. And hence a nullity. The judgment under appeal is therefore no judgment in the eye of law. This Court in State of Madhya Pradsh v. Dewadas (1982) 1 SCC 552 has taken a view which reinforces our view. We, therefore, allow the appeal, set aside the order passed by the learned Single Judge, and send the matter back to the High Court for being placed before a Division Bench of the High Court, which will afford reasonable opportunity of hearing to both the sides and dispose it of in accordance with law, expeditiously.”

He also relied upon a Division Bench judgement of this Court in the case of ITO Vs/. Ashoke Glass Works reported in (1980) 125 ITR491(Cal) wherein the following view was expressed (page 505):

“So when the jurisdiction is validly removed by a competent authority under the provisions of a statute, the original court or any Tribunal or authority in such event will be incompetent, as having ceased to have jurisdiction, to proceed further with the pending proceeding or proceeding which may be instituted after such removal of jurisdiction.”

After hearing both the parties the Hon’ble High Court has held as under:

“We have considered the rival submissions. It is not necessary for us to consider whether the Commissioner had jurisdiction to restrict the order of transfer, for the simple reason that the order of transfer in this case was not a restricted one. Reading the order dated 3rd September, 2012 as a whole, it does not appear that any restricted transfer was sought to be made for any particular year or years or otherwise. The order of transfer, as we have already indicated, was passed in the interest of revenue for better coordination, effective investigative and meaningful assessment.

The actual transfer of files may have taken place on 29th July, 2013 but admitted position is that a notice under Section 143(2) by the transferee assessing officer was issued on 18th March, 2013. The existence of files does not confer the jurisdiction when the same has validly been transferred and also acted upon. The jurisdiction over the subject-matter has to be conferred by law. The jurisdiction in this case had been transferred by the order dated 3rd September, 2012 by no other than the CIT Kolkata- II, Kolkata himself. Once that was done CIT Kolkata – II, Kolkata lost the seisin over the matter. He became ‘functus officio’.

Reference in this regard may be made to the Stroud’s Judicial Dictionary of Words and Phrases, 7th Edition, Page 1085 wherein the following meaning has been expressed:

“FUNCTUS OFFICIO. An arbitrator or referee cannot be said to be functus officio when he has given a decision which is held to be no decision at all (Davies v Howe Spinning Co LTD.27 B.W.C.C.207).

Where a judge has made an order for a stay of execution which has been passed and entered, he is functus officio, and neither he nor any other judge of equal jurisdiction has jurisdiction to vary the terms of such stay (Re V.G.M.Holding Ltd [1941].3 All E.R.417).

An arbitrator or umpire who has made his award is functus officio, and could not by common law alter it in any way whatsoever; he could not even correct an obvious clerical mistake. See Mordue v Palmer, 6 Ch. App.22; Henfree v Bromley, 6 East, 309; Brooke v Mitchell, 6 M.& W.473. See now Arbitration Act 1950 (c.27).s.17.”

Reference may also be made to the judgement in the case of Re V.G.M.Holdings, Ltd. 1941 (3) All England Law Reports, 417 wherein the following views were expressed:

“I think that it would be a strange position if a judge were at liberty to reconsider his decision and grant a stay of execution after he had made an order refusing it. I think that, when a judge has made an order such as that in the present case, the only remedy for the respondent, if he is dissatisfied with the order, is to go to the Court of Appeal…”

A special bench in the case of Komal Chand -versus The State of Madhya Pradesh, reported in AIR 1966 Madhya Pradesh 20 opined in this regard as follows:

“Section 35 of the Stamp Act, inter alia, says that no instrument chargeable with duty shall be registered by any public officer unless such instrument is duly stamped. This provision thus casts a duty on the registering officer to examine whether an instrument presented for registration is duly stamped. If, as section 36 says, an instrument chargeable with duty shall not be registered unless such instrument is duly stamped, then it follows that the registering officer must perform the duty of seeing whether an instrument presented for registration is or is not duly stamped before admitting it to registration and not afterwards. If he finds that the document is not duly stamped, then he must impound it under Section 33 of the Act. Neither in the Registration Act nor in the Stamp Act is there any provision giving to the registering officer any power to examine whether an instrument already registered was or was not duly stamped and to impound it. As soon as the registering officer registers a document presented to him for registration, the function in the performance of which the document was produced before him is over and thereafter becomes functus officio having no power under section 33 to impound the instrument.

The matter is really concluded by the decision of the Supreme Court in Govt. of Uttar Pradesh v. Mohammad Amir Ahmad Khan, AIR1961SC787 That was a case where the question arose whether the Collector has any power to impound an instrument sent to him for adjudication under section 31 of the Stamp Act. The Supreme Court held that under that section the Collector had no such power, as the provision gave him the power only to give his opinion as regards the duty with which in his judgment the instrument was chargeable and when that function was performed by the Collector he became functus officio.

It was observed by the Supreme Court that the power to impound only exists when an instrument is produced before judicial officers or other officers performing judicial functions as evidence of any fact to be proved, or before other public officers who have to perform any function in regard to those instruments as, for example, registration. The Supreme Court also approved the decisions in Collector, Ahmednagar v. Rambhau, AIR 1930 Bom 392 (FB). Paiku v. Gaya, ILR (1948) Nag 950 : (AIR1949Nag 214) and Panakala Rao v. Kumaraswami, AIR 1937Mad 763 where the doctrine of functus officio was applied and it was held that the Court had no power to recall and impound a certificate of sale after executing it and delivering it to the purchaser, or to reopen a case and impound documents proved after signing the decree, or to impound an instrument admitted in evidence after delivery of judgment. Here, when the Sub-

In the present case, the Sub-Registrar purported to act under paragraph 232 of the Registration Manual when he made a report to the Collector that the ‘Takseemnama’ was not duly stamped. But on reading paragraphs 231 and 232 it is clear that they do not say that after a document is admitted to registration, the registering officer can make a report to the Collector that it was not sufficiently stamped on the other hand, paragraph 231 expressly lays down a direction that before taking any further action, that is to say, in the matter of registration, the registering officer must see that the document is duly stamped. The words “after registering the document” occurring in paragraph 232 obviously refer to the entry of the document in the Register maintained of documents presented for registration. They do not mean that the registering officer can make a report about insufficiency of stamp after the document has been admitted to registration.”

In the case of SBI -versus S.N.Goyal reported in 2009 (8) SCC92the following views were expressed:

“It is true that once an authority exercising quasi-judicial power takes a final decision, it cannot review its decision unless the relevant statute or rules permit such review.But the question is as to at what stage an authority becomes functus officio in regard to an order made by him.P.Ramanatha Aiyar’s Advanced Law LexiCo.(3rd Edn., Vol.2, pp.1946-47) gives the following illustrative definition of the term “functus officio”:

Thus a judge, when he has decided a question brought before him, is functus officio, and cannot review his own decision.”

Black’s Law Dictionary (6th Edn., p.673) gives its meaning as follows:

“Having fulfilled the function, discharged the office, or accomplished the purpose, and therefore of no further force or authority.”

We may first refer to the position with reference to civil courts. Order 20 of the Code of Civil Procedure deals with judgment and decree. Rule 1 explains when a judgment is pronounced. Sub-rule (1) provides that the court, after the case has been heard, shall pronounce judgment in an open court either at once, or as soon thereafter as may be practicable, and when the judgment is to be pronounced on some future day, the court shall fix a day for that purpose of which due notice shall be given to the parties or their pleaders. Subrule (3) provides that the judgment may be pronounced by dictation in an open court to a shorthand writer [if the Judge is specially empowered (sic by the High Court) in this behalf].The proviso thereto provides that where the judgment is pronounced by dictation in open court, the transcript of the judgment so pronounced shall, after making such corrections as may be necessary, be signed by the Judge, bear the date on which it was pronounced and form a part of the record. Rule 3 provides that the judgment shall be dated and signed by the Judge in open court at the time of pronouncing it and when once signed, shall not afterwards be altered or added to save as provided by Section 152 or on review. Thus, where a judgment is reserved, mere dictation does not amount to pronouncement, but where the judgment is dictated in open court, that itself amounts to pronouncement. But even after such pronouncement by open court dictation, the Judge can make corrections before signing and dating the judgment. Therefore, a Judge becomes functus officio when he pronounces, signs and dates the judgment (subject to Section 152 and power of review). The position is different with reference to quasi-judicial authorities. While some quasi- judicial tribunals fix a day for pronouncement and pronounce their orders on the day fixed, many quasi-judicial authorities do not pronounce their orders. Some publish or notify their orders. Some prepare and sign the orders and communicate the same to the party concerned. A quasi-judicial authority will become functus officio only when its order is pronounced, or published/notified or communicated (put in the course of transmission) to the party concerned. When an order is made in an office noting in a file but is not pronounced, published or communicated, nothing prevents the authority from correcting it or altering it for valid reasons. But once the order is pronounced or published or notified or communicated, the authority will become functus officio. The order dated 18-1-1995 made on an office note, was neither pronounced, nor published/notified nor communicated. Therefore, it cannot be said that the appointing authority became functus officio when it signed the note dated 18-1-1995.”

Applying the law laid down in S.N.Goyal’s (supra) case we are reinforced, in our opinion that the CIT Kolkata – II, Kolkata had become functus officio prior to 18th March, 2013 because the transferee – assessing officer had assumed jurisdiction without which the notice dated 18th March, 2013 under Section 143(2) could not have been issued. Therefore, the order of transfer was duly published/ notified and/or communicated and thereafter acted upon by the transferee- assessing officer.

We are, as such of the opinion that the issuance of the notice dated 18th March, 2013 under Section 263 and the consequent order dated 26th March, 2013 passed under Section 263 of the Income Tax Act were acts without jurisdiction and therefore a nullity.

For the aforesaid reasons the question No.(a) is answered in the negative.

The point is, thus decided in favour of the assessee. The appeal stands allowed.” (Emphasis given by us)

From the aforesaid order of the Hon’ble High Court at Calcutta, we understand that in this case after the order u/s. 127 of the Act dated 03.09.2012 was passed by the CIT-2, Kolkata, he became functus officio and therefore the Hon’ble High Court held that he could not have exercised jurisdiction over the assessee’s case u/s. 263 of the Act and consequently therefore he erred in passing an order dated 26.03 2013 u/s 263 setting aside the order of the ITO, Ward-4(1), Kolkata dated 21.05.2010.

Coming back to the case in hand, and having taken note of the ratio laid down by the Hon’ble jurisdictional High Court (supra), we note that in the present case, after the order of the CIT-V, New Delhi dated 08.10.2008 transferring the jurisdiction of the assessee’s case to DCIT, Central Circle, Ranchi, the CIT, Delhi became functus officio and thereby his subordinate officers viz., ACIT, Circle 21(1), New Delhi, could not have issued notice u/s. 143(2) dated 28.07.2016 and in that view of the matter the notice issued by the ACIT, Circle-21(1), New Delhi u/s 143(2)was without jurisdiction and, therefore, non-est in the eyes of law.

Our above finding also finds support from the decision of this Tribunal in the case of Chankya Finvest Pvt Ltd Vs ITO (34 taxmann.com 206). In that case the CIT Delhi had passed an order u/s 127 dated 04.01.2010 transferring jurisdiction over the assessee’s case from ITO, Delhi to ITO Kolkata. After the order u/s 127 was passed on 04.01.2010, the ITO at Delhi initiated reassessment proceedings after recording reasons and issued notice u/s 148 dated 25.03.2010 for AY 2003-04. Thereafter, without their being fresh order u/s 124/ 127; the ITO, Delhi transferred the case records pertaining to reassessment for the AY 2003-04 to the charge of ITO, Kolkata. Taking recourse to provisions of Section 124(5), ITO Kolkata continued with the reassessment proceedings from the stage at which the case records were transferred from Delhi and thereafter passed the order u/s 147/143(3).Before this Tribunal, the assessee challenged validity of the proceedings and consequent order u/s 143(3)/147 on the ground that the notice u/s 148 was issued by an officer who did not hold valid jurisdiction over the assessee’s case. The Tribunal upholding the assessee’s objection, observed as under:

“3. Briefly stated facts are that the assessee filed its return of income at Delhi in the office of ITO, Ward-3(3) Delhi on 02-12- 2003. Subsequently, notice u/s. 148 of the Act was issued on 25-03- 2010 with the permission of Addl. CIT, Range-3, New Delhi. But, in the meantime, CIT-1, Delhi passed an order u/s. 127(2) transferring the jurisdiction of this case vide its order No.CIT- 1/Cent/09-10/1874 dated 04-01-2010 from ITO, Ward-3(3), New Delhi to ITO, Ward-6(1), Kolkata. The assessee claimed before the AO as well as before CIT(A) that ITO, Ward-3(3), New Delhi did not have jurisdiction to issue notice u/s. 148 of the Act on 25-03- 2010 as the case was transferred u/s. 127(2) of the Act from New Delhi to Kolkata on 04-01-2010. The assessee before CIT(A) filed written submissions as under:

“This appeal is against the reopening of assessment u/s. 147 of the I. T. Act 1961. The assessee has challenged the reopening by the ITO Ward 3(3) Delhi. The notice u/s. 148 of the I.T. Act 1961 was issued by the ITO Delhi after receipt of approval from Additional CIT Delhi on 25-03-2010.

However the CIT Delhi had passed an order u/s. 127 transferring the file to Kolkata on 4-1- 2010 as such on 25-3-2010 the AO in Delhi did not have jurisdiction over the case, hence the reopening it without jurisdiction as it is based on the notice u/s. 148 of the I. T. Act, 1961 issued by the ITO Delhi. We have requested the AO at Kolkata to issue the copy of the order of 127 and 151 of the I.T. Act, 1961 but the same has not been issued yet.

We therefore request you to either, call for the records and adjudicate the validity of reopening or grant an adjournment of 15 days to obtain certified copies of all related records so that we can represent the matter properly.”

The CIT(A) sent this written submission to ITO, Ward-6(1), Kolkata vide letter No. CIT(A)- VI/Kol/Remand/2011-12/368 dated 20-02-2010 and the AO sent its remand report vide letter No. Wd6(1)/Kol/ChanakyaFinvest/11-12/826 dated 23-04-2010, which is as under:

“Kindly refer to your letter No. CIT(A)-VI/Kol/Remand Report/2011-12/368 dated 20.02.2012.

In this connection following information as available from the record are chronologically appended below:

Date Happening

04-01-10 Order u/s l27 passed by the Ld. CIT, Delhi-I, New Delhi.
23-03-10 Proposal to re-open the case was sent to Ld. Addl. CIT, Range-3 Delhi.
25-03-10 Delhi. Ld. Addl. CIT, Range-3, accorded the approval for re-open the case.
25-03-10 Notice u/s 148 issued and served by ITO, Ward-3(3), New Delhi.
30-11-10 Record received by the under signed from ITO, Ward-3(3), New Delhi.
03-12-10 The assessee complied to the notice u/s 148 vide petition dated 03.12.10.
03-12-10 Notice u/s 143(2) and 142(1) both were issued and served.
29-12-10 Assessment completed u/s 147/144 as there were non-compliance Though the order u/s 127 was passed by Ld. CIT, Delhi-I, on 04-01-10, but till the time the records are not transferred to the transferee AO, the jurisdiction lies with the Assessing Officer holding the charge over the case and all action as per the law is required to be initiated or taken by that jurisdictional AO only. Hence the jurisdictional AO at Delhi has rightly re- opened the case on approval from higher authority and issued notice u/s 148.

On receiving the records on 30-11-10 the undersigned disposed off the case u/s. 147/144 as per the law after offering reasonable opportunities of being heard to the assessee.”

During the appellate proceedings on 16-02-2010, CIT(A) recorded following order sheet entry:

“Mr. Miraj D. Shah, Advocate attended the proceedings & filed written submission of one paper along with the copy of reasons recorded, order sheet of 147 proceedings given. The appellant has submitted that file was transferred to Kolkata on 4-1-10 by order u/s 127. Copies of order u/s 127 and section 151 approved by Addl. CIT to be submitted tomorrow. The issue of jurisdiction of Delhi A.O. was not taken before the A.O. who completed the assessment. Adj. to 20-2-12.”

4.CIT(A) discussed the issue and observed in paras 8 and 9 as under:

“8. The appellant submitted during the appellate proceedings that he does not submit any additional evidences, books of account or other documents either before the appellate authority or Assessing Officer since these are not available with appellant. The appellant has never taken objection regarding the jurisdiction of issuance of notice u/s 148 by the Assessing Officer of New Delhi or initiation/continuation of assessment proceedings by the Income-tax Officer, Ward 6(1), Kolkata before the Assessing Officer during the assessment proceedings even when the authorised representative attended the proceedings on 08-12-2010 and 16-12-2010. The authorised representative asked for the extension of time from Assessing Officer on 20-12-2010 but did not file any objection regarding the jurisdiction of the Assessing Officer and did not attend the proceedings thereafter. The assessment has been completed on 29-12-2010.

The Income-tax Officer, Ward (1) has submitted that the case records were not transferred to him and was still lying with ITO Ward 3(3), New Delhi on the date of issuance of notice u/s 148. In the absence of the transfer of case records, the jurisdiction is not transferred automatically since the ITO Ward 6(1), Kolkata did not know about the order passed u/s 127 by the Commissioner of Income-tax1, New Delhi.”

And further, he decided the issue by dismissing the assessee’s issue of reopening u/s. 148 of the Act, vide ground Nos. 17 to 20 as under:

“17. The assessee had never questioned the jurisdiction of the Assessing Officer in the course of assessment proceedings. Section 124(3) of the Income-tax Act makes it clear that the jurisdiction of the Assessing Officer cannot be challenged after the expiry of one month from the date of service of notice on the assessee under section 143(2)/148. The Hon’ble Allahabad High Court in the case of Hindustan Transport Co. v. IAC [1991] 189 ITR 326 (All.)has held that when there is a time-limit prescribed in the Act to which the plea of the jurisdiction may be raised, it cannot be challenged before the appellate authorities. This judgment of the Hon’ble Allahabad High Court has been upheld by the Hon’ble Supreme Court reported at [1991] 188 ITR (St.) 84. The Hon’ble Calcutta High Court in the case of Grindlays Bank Ltd. v. CIT [1992] 193 ITR 457 (Cal.) has held that the assessee who had not raised the objection at the time of hearing of the case by the Assessing Officer or within the period of one month as is prescribed under section 124, the same could not be challenged subsequently.

The order u/s 127 was passed by Ld. CIT, Delhi-l, on 04-01-10, but before the time the records were not transferred to the transferee Assessing Officer, the jurisdiction lies with the Assessing Officer holding the charge over the case and all action as per the law is required to be initiated or taken by that jurisdictional Assessing Officer only as per the submissions of current Assessing Officer i.e. Income-tax Officer, Ward 6(1), Kolkata and he further submitted that the jurisdictional Assessing Officer at Delhi has rightly re- opened the case after due approval from his jurisdictional Joint commissioner of Income- tax and issued notice u/s 148 before actually transferring the case.

The appellant never raised the question of jurisdiction before the Assessing Officer either at New Delhi when the notice u/s 148 was issued or at the time of assessment with the Assessing officer at Kolkata. There was a possibility to the Assessing Officer at New Delhi to get the records transferred immediately to Kolkata and a fresh notice may have been issued during the time-limitation by Assessing Officer at Kolkata.

Following the law laid down and upheld by the Hon’ble appellate authorities as discussed above, the legal provisions of section 124(3)on this issue and in the facts and circumstances of the case, it is held that the assessment order passed u/s 147/144 of the I.T. Act1961 is not without jurisdiction and is as per law and hence the assessment order passed by the Assessing Officer is held to be a valid order. In the facts and circumstances of the case the proceedings u/s 148 of the I T Act 1961 is upheld to be valid in absence of any objection being raised before the Assessing Officer issuing the notice u/s 148 and/or completing the assessment. In the facts and circumstances of the case it is also held that appellant was given proper opportunity after serving the notice u/s 148 and during assessment by the Assessing Officer. Hence, these three grounds of appeal are dismissed.”

Aggrieved, assessee is in appeal before us.

We have heard rival submissions and gone through facts and circumstances of the case. First of all, it is to be seen that what is the chronology of events, as recorded by the AO in his remand report given, during course of appellate proceedings before CIT(A). The chronology of events is as under:

Date Happening

04-01-10 Order u/s l27 passed by the Ld. CIT, Delhi-I, New Delhi.
23-03-10 Proposal to re-open the case was sent to Ld. Addl. CIT, Range-3, Delhi.
25-03-10 Ld. Addl. CIT, Range-3, accorded the approval for re-open the case.
25-03-10 Notice u/s 148 issued and served by ITO, Ward-3(3), New Delhi.
30-11-10 Record received by the under signed from ITO, Ward-3(3), New Delhi.
03-12-10 The assessee complied to the notice u/s 148 vide petition dated 03-12-10.
03-12-10 Notice u/s 143(2) and 142(1) both were issued and served.
29-12-10 Assessment completed u/s 147/144 as there were non-compliance

We find that the AO in his remand proceedings noted that although the order u/s. 127 of the Act was passed by CIT, Del-1 on 04-01-2010, reasons were recorded for reopening on 23-03-2010 for issuance of notice u/s. 148 of the Act on 25-03-2010 because till the time the records are not transferred to the transferee AO, according to him, the jurisdiction lies with the AO holding the charge over the case and all action as per law are required to be initiated or taken by that jurisdiction AO only. Even the CIT(A) noted that the assessee has never objected regarding the jurisdiction of issuance of notice u/s. 148 of the Act by the AO of New Delhi or initiation/continuation of assessment proceedings by the ITO, Ward-6(1), Kolkata before the AO during the assessment proceedings. Whether such a plea can be accepted or not? Before us, Ld. Sr. DR heavily relied on the decision of Hon’ble Punjab & Haryana High Court in the case of Subhash Chander v. CIT[2008] 166 Taxman wherein the non-objection as per section 124(2)read with section 124(4) of the Act, the jurisdiction assumed by AO was held to be valid. Further, there was reliance by Sr. DR on the case law of Hon’ble Allahabad High Court in the case of CIT v. British India Corpn. Ltd. [2011] 337 ITR 64 [2012] 20 taxmann.com 446, wherein assumption of jurisdiction, by AO for assessment, u/s. 124 of the Act that when the ITO had jurisdiction when assessment proceedings commenced and a draft assessment order was submitted to IAC but due to subsequent change in jurisdiction, unless the same brought to the notice of the authority concerned, the assessment would not be vitiated. We are with the argument of Ld. Sr. DR in respect to this argument that where the jurisdiction assumed by the AO, assessee has to object to the same u/s. 124 of the Act in case hr us aggrieved. But, what will be the effect of the order of Commissioner of Income-tax transferring the jurisdiction u/s. 127 of the Act. We are of the view, that when any case of a particular assessee which is transferred from one AO to another AO, whether within the state or without it, all proceedings which are pending against the assessee under the Act in respect of the same year as also previous years are meant to be transferred simultaneously and all proceedings under the Act which may be commenced after the date of such transfer in respect of any year whatever are also included therein, so that the AO to whom such case is transferred would be in a position to continue the pending proceedings and also institute further proceedings against the assessee in respect of any year. The proceedings pending at the date of transfer can be thus continued but in the case of such proceedings the provisions in regard to issuance of notices contained in the main body of section 127(2) of the Act would apply and it would not be necessary to reissue any notice already issued by AO from whom the case is transferred. For this, assessee has relied on the decision of Hon’ble P&H High Court in the case of Lt. Col. Paramjit Singh v. CIT [1996] 89 Taxman 536.

After going through the provisions of sections 120, 124and 127of the Act, the plenary powers regarding conferment of jurisdiction has been vested, by delegation by the statute, on the Commissioner having jurisdiction in respect of assessment of the case. This power, in the absence of any prohibition or restriction, empowers the Commissioner of Income-tax to effect realignment of jurisdiction. The Commissioner of Income-tax by order or direction, while divesting these authorities of the power in respect of performance of their duties under the Act conferred earlier, may confer such jurisdiction to other authorities under the Act, as he may direct. As soon as such order or direction is made completely divesting the jurisdiction of the authorities so long so empowered, all proceedings including those which might arise thereafter, before them as also proceedings pending before them, come within the jurisdiction of the newly conferred authorities unless any specific provision is made in respect of any pending proceedings. Such consequence is inevitable when there is withdrawal of jurisdiction, which means automatic extinction of jurisdiction of one authority with simultaneous conferment of jurisdiction on another authority under the Act in respect of all pending and future proceedings. Explanation to section 127 of the Act makes it clear that the word “case” in relation to any person whose name is specified in the order of transfer means all proceedings under the Act in respect of any year which may be pending on the date of the transfer, and also includes all proceedings under the Act which may be commenced after the date of transfer in respect of any year. The word “case” is thus used in a comprehensive sense of including both pending proceedings and proceedings to be instituted in the future. Consequently, an order of transfer can be validly made even if there be no proceedings pending for assessment of tax and the purpose of the transfer may simply be that all future proceedings are to take place before the officer to whom the case of the assessee is transferred.

In view of the above principle regarding jurisdiction and facts of the present case, the order passed by CIT-1, Delhi, transferring jurisdiction from ITO, Ward-3(3), New Delhi on 04-01-2010, subsequent action of the AO i.e. ITO, Ward-3(3), New Delhi issuing notice u/s. 148 of the Act dated 25-03-2010 is invalid because the jurisdiction from ITO, Ward-3(3), New Delhi by CIT-1, Delhi to ITO, Ward-6(1), Kolkata. At the time of passing of order by CIT-1, Delhi transferring jurisdiction from ITO, Ward3(3), New Delhi dated 04-01-2010 to ITO, Ward-6(1), Kolkata, there is no proceedings pending before the ITO, Delhi and the transfer order for jurisdiction was passed on that date. The CIT, Delhi-1 passed order u/s. 127 of the Act on 01-01-2010 transferring the jurisdiction of the assessee to ITO, Wd-6(1), Kolkata and the jurisdiction in respect to every action for all assessment years lies with the ITO, Wd-6(1), Kolkata and only he is competent to issue notice u/s. 148 of the Act. In such circumstances, the notice issued u/s. 148 of the Act by the ITO, Ward-3(3), New Delhi is bad and illegal in view of the clear provisions of the Act because an order for transfer of case was validly made by CIT and the purpose for transfer was simply that all future proceedings are to be taken by ITO, Ward-6(1), Kolkata w.e.f. 04-01-2010. Hence, the notice issued u/s. 148 of the Act dated 25.03.2010 is quashed.

In the result, appeal of assessee is allowed.”

We further find that the decision of the Hon’ble Bombay High Court in the case of Fiat India Automobiles Ltd Vs Vijender Singh (211 Taxman 570) support the legal ground canvassed by the appellant before us. The relevant facts and findings of the said case were as follows:

“3. The basic argument of the Petitioner is that once the CIT-10 Mumbai in exercise of the powers vested in him under Section 127(2) of the Act has transferred the power to assess the Petitioner on 22.11.2011 from ACIT-10(1) Mumbai to DCIT, Circle-1(2) Pune, then the ACIT-10(1) would have no jurisdiction to issue the impugned notice dated 30.03.2012 and therefore, the said notice dated 30.03.2012 is liable to be quashed and set aside.

The relevant facts are that on shifting the registered office of the Petitioner from Mumbai to Pune, the Petitioner in June-July, 2009 had applied for transfer of assessment records from Mumbai to Pune. After, exchange of several letters, the CIT-10 Mumbai by his order dated 22.11.2011 transferred the powers to assess the petitioner from ACIT- 10(1) Mumbai to DCIT, Circle-1(2) Pune. Thus, from 22.11.2011 ACIT-10(1) Mumbai did not have any power to assess or reassess the petitioner.

It is not in dispute that on transfer of the jurisdiction from Mumbai to Pune, the Additional CIT, (TP) Pune has assumed jurisdiction and accordingly issued a notice dated 29.03.2012 to the Petitioner under Section 92CAof the Act relating to Assessment year 2009-2010.

However, the ACIT-10(1) Mumbai has issued the impugned notice on 30.03.2012 under Section 14 8of the Act with a view to reopen the assessment for A.Y. 2005-06. The assessee by its letter dated 24.04.2012 objected to the impugned notice by specifically stating that pursuant to the order of CIT dated 22.11.2011, the ACIT-10(1) would have no locus standi or jurisdiction to issue the impugned notice dated 30.03.2012. As there was no reply, the present writ petition is filed inter alia on the ground that once the jurisdiction to assess/reassess the petitioner vested in the ACIT-10(1) is divested by the order of the CIT-10 Mumbai dated 22.11.2011, the ACIT-10(1) Mumbai would cease to have power to assess or reassess the petitioner and hence, the impugned notice issued by ACIT-10(1) Mumbai being without jurisdiction is liable to be quashed and set aside.

In the affidavit-in-reply filed by the DCIT-10(1) Mumbai dated 8.10.2012 it is stated that by a corrigendum order dated 27.03.2012, the CIT-10 Mumbai has temporarily withdrawn/cancelled the earlier transfer order dated 22.11.2011 for the sake of administrative convenience and therefore, the notice dated 30.03.2012 would be valid. It is the case of the petitioner that neither any notice to pass a corrigendum order was issued to the petitioner nor the alleged corrigendum order dated 27.03.2012 has been served upon the petitioner till date.

Mr. Pinto, learned Counsel for the Revenue on instruction from CIT-10 Mumbai informs us that there is no proof of serving the corrigendum order dated 27.03.2012 upon the petitioner. It is neither the case of the revenue that before passing the corrigendum any notice was issued to the petitioner nor it is the case of the revenue that the corrigendum order was passed after hearing the petitioner.

Although in the affidavit in reply the revenue claims to have annexed a copy of the corrigendum order dated 27.03.2012 no such order was in fact annexed to the affidavit- in-reply. It is only during the course of hearing the Counsel for the revenue admitted the lapse and tendered a copy of the letter dated 20.03.2012 addressed by ACIT-10(1) Mumbai to CIT-10 Mumbai as well as the corrigendum order dated 27.03.2012 to the Court as also to the Counsel for the Petitioner.

…..

The corrigendum order dated 27/3/2012 passed by CIT-10 Mumbai reads thus:-

……

The question therefore to be considered is, when the CIT-10 Mumbai has transferred the jurisdiction to assess/reassess the petitioner from ACIT-10(1) Mumbai to DCIT Circle-1(2) Pune under Section 127of the Act after hearing the petitioner on 22.11.2011, whether the CIT-10 Mumbai at the instance of ACIT-10(1) Mumbai is justified in issuing a corrigendum order on 27.03.2012 behind the back of the petitioner & whether the ACIT-10(1) Mumbai is justified in issuing the impugned notice under Section 148of the Act dated 30.03.2012 on the basis of the said corrigendum order dated 27.03.2012 which is passed without issuing a notice to the petitioner, without hearing the petitioner and which is uncommunicated to the petitioner.

Mr. Pinto, learned Counsel for the Revenue does not dispute that the corrigendum order was passed without issuing notice and without hearing the petitioner and further admits that the said corrigendum order was not served upon the petitioner till date and that he has tendered a copy of the said corrigendum order upon the counsel for the petitioner today in Court. However, he submits that once the corrigendum order was passed by the CIT-10 Mumbai on 27.03.2012 the ACIT-10(1) Mumbai was justified in issuing the impugned notice dated 30.03.2012.

In our opinion, the conduct of ACIT-10(1) Mumbai as well as CIT-10 Mumbai is highly deplorable. Once the jurisdiction to assess the petitioner was transferred by the CIT-10 Mumbai from ACIT-10(1) Mumbai to DCIT Circle-1(2) Pune by order dated 22.11.2011 it was totally improper on the part of ACIT-10(1) Mumbai to request the CIT- 10, Mumbai to pass a corrigendum order with a view to circumvent the jurisdictional issue. Making such a request on the part of ACIT-10(1) Mumbai to the CIT-10 Mumbai in our opinion, was in gross abuse of the process of law. If there was any time barring issue, the ACIT-10(1) Mumbai ought to have asked his counterpart at Pune to whom the jurisdiction was transferred to take appropriate steps in the matter instead of taking steps to circumvent the jurisdictional issue. It does not befit ACIT-10(1) Mumbai to indulge in circumventing the provisions of law and we strongly condemn the conduct of ACIT-10(1) Mumbai in that behalf. Instead of bringing to book the persons who circumvent the provisions of law, the ACIT-10(1) Mumbai has himself indulged in circumventing the provisions of law which is totally disgraceful.

In any event, the CIT-10 Mumbai ought not to have succumbed to the unjust demands of ACIT10(1) and instead ought to have admonished the ACIT-10(1) for making such unjust request. The CIT10 Mumbai ought to have known that there is no provision under the Act which empowers the CIT to temporarily withdraw the order passed by him under Section 127(2)of the Act for the sake of administrative convenience or otherwise. If the CIT-10 Mumbai was honestly of the opinion that the order passed under Section 127(2)of the Act was required to be recalled for any valid reasons, then, the CIT-10 Mumbai ought to have issued notice to that effect to the petitioner and after hearing the petitioner ought to have passed any order as he deemed fit and serve the same to the petitioner.

In the present case, admittedly, the CIT-10 Mumbai has not issued any notice and has not heard the petitioner before passing the Corrigendum order and in fact the said corrigendum order has not been communicated to the petitioner before issuing the impugned notice dated 30.03.2012 and admittedly the alleged corrigendum order is served upon the petitioner for the first time today in Court.

In these circumstances, we quash and set aside the impugned notice dated 30.03.2012 issued by the ACIT-10(1) Mumbai based on the corrigendum order dated 27.03.2012 passed allegedly by the CIT-10 Mumbai at the behest of ACIT-10(1) Mumbai and in gross abuse of the process of law. Apart from the fact that the CIT-10 Mumbai had no jurisdiction to temporarily suspend an order passed under Section 127(2)of the Act, in the fact of the preent case, the impugned corrigendum order passed behind the back of the petitioner without issuing any notice to the petitioner, without hearing the petitioner and admittedly uncommunicated to the petitioner till date, would have no legal existence and therefore the impugned notice dated 30.03.2012 based on the legally non-existent corrigendum order dated 27.03.2012 cannot be sustained.”

Before us the ld. CIT, DR supported the AO’s order by placing strong reliance on the decisions of the Hon’ble Delhi High Court in the cases of Abhishek Jain Vs ITO (supra) and SS Ahluwalia (supra). As observed earlier, these decisions were rendered in totally different factual context and therefore the proposition laid down in these decisions cannot be applied. In the case of Abhishek Jain (supra), the AO at Noida had issued notice u/s 148 on the basis of cash deposits made in ICICI Bank, Noida. In that case the fact that the assessee was regularly assessed in Delhi was not intimated to the AO at Noida nor did the assessee mention his PAN with the ICICI Bank. Even the assessee’s address available with the bank was that of Noida. In this case it was not brought on record by the assessee that his case was transferred to Delhi by virtue of an order u/s 127 passed by the competent authority under whom the AO at Noida was functioning. The Court further found that it was only after the period of limitation prescribed in Section 149expired on 31st March, 2016, that the assessee intimated the AO at Noida that he had been regularly assessed in Delhi. On these facts, the Hon’ble Delhi High Court held that it was mala fide on the part of the assessee not to intimate the AO at Noida prior to 31.03.2016 and that the assessee waited for the period of limitation to expire before raising this objection. In absence of any order u/s 127 and having noted that with reference to address made available by the assessee to ICICI Bank in which cash deposits were found, the Hon’ble High Court held that assessee was debarred from raising the objection to AO’s jurisdiction in terms of section 124(3)(b). In the instant case, however, the appellant had mentioned its PAN in the return of income filed for AY 2015- 16. By virtue of the order u/s 127 dated 08.10.2008,it was within the knowledge of the AO at Delhi that the jurisdiction over the case of the assessee solely vested with AO at Ranchi in the month of June 2016. On these facts we therefore find that the ratio laid down in the judgment of the Hon’ble Delhi High Court (supra) is not applicable because the factual context in which it was rendered was vastly different.

Similarly, in the case of S.S. Ahluwalia (supra), the assessee was assessed at Delhi from 1980-81 to 1983-84. From the assessment year 1984-85 to 1987-88, filed his returns at Dimapur. The case of the assessee was reopened u/s 148 by the ACIT, Investigation, Delhi, on the basis of CBI search. When the question of jurisdiction came before the Hon’ble High Court, it was held that where the assessee shifts his residence etc., the AO of the place where the assessee has shifted or otherwise will have jurisdiction and it is not necessary that in such case an order u/s 127 is required to be passed. While going through the decision, we note that there was also an order u/s 127 of the Act and the case was transferred to ITO, Ward 20, New Delhi. Thus, the case of S.S. Ahluwalia (supra) cannot be of any assistance to the Revenue.

We note that in support of contentions raised the ld. CIT, DR relied on the certain observations in the above decisions (supra). As noted, the facts of both the cases were materially different from the facts involved in the appellant’s case. One has to bear in mind that the text of any decision is rendered in the context of the facts which are before the Court. It is therefore settled legal proposition that the observations of the Hon’ble Court must be read in the context of the facts and the issues before the Hon’ble Court for consideration. The Hon’ble Supreme Court in the case of CIT Vs Sun Engineering Works (P) Ltd (198 ITR 297) has observed as follows:

“It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of the Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by the Court, to support their proceedings.”

Coming back to the admitted facts in the present case, we hold that the ACIT, Central Circle-3(1), Kolkata framed the assessment order dated 29.12.2017 pursuant to transfer of case ordered by PCIT, Central Patna dated 03.11.2017 u/s. 127 of the Act, without there being valid issuance of notice u/s 143(2) of the Act. In our opinion such an order is bad in law as held by the Hon’ble Supreme Court in CIT V Hotel Blue Moon (2010) 321 ITR 362 (S.C) wherein the Hon’ble Supreme Court has held that issue of a legally valid notice u/s. 143(2) is mandatory for usurping jurisdiction to frame scrutiny assessment u/s. 143(3) of the Act and absence of a valid notice u/s 143(2) is not a curable defect. This view was reiterated by the Hon’ble Apex Court in the case of CIT Vs Laxman Das Khandelwal(108 taxmann.com 183). The relevant observations are as follows:

“5. At the outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon’s case2 the first question was whether notice under Section 143(2) would be mandatory for the purpose of making the assessment under Section 143(3) of the Act. It was observed:-

“3. The Appellate Tribunal held, while affirming the decision of CIT (A) that non-issue of notice under Section 143(2) is only a procedural irregularity and the same is curable. In the appeal filed by the assessee before the Gauhati High Court, the following two questions of law were raised for consideration and decision of the High Court, they were:

“(1) Whether on the facts and in circumstances of the case the issuance of notice under Section 143(3) of the Income Tax Act, 1961 within the prescribed time-limit for the purpose of making the assessment under Section 143(3) of the Income Tax Act, 1961 is mandatory? And (2) Whether, on the facts and in the circumstances of the case and in view of the undisputed findings arrived at by the Commissioner of Income Tax (Appeals), the additions made under Section 68 of the Income Tax Act, 1961 should be deleted or set aside?”

The High Court, disagreeing with the Tribunal, held, that the provisions of Section 142and sub-sections (2) and (3) of Section 143will have mandatory application in a case where the assessing officer in repudiation of return filed in response to a notice issued under Section 158-BC(a) proceeds to make an inquiry. Accordingly, the High Court answered the question of law framed in affirmative and in favour of the appellant and against the Revenue. The Revenue thereafter applied to this Court for special leave under Article 136, and the same was granted, and hence this appeal.

The only question that arises for our consideration in this batch of appeals is: whether service of notice on the assessee under Section 143(2)within the prescribed period of time is a prerequisite for framing the block assessment under Chapter XIV-B of the Income Tax Act, 1961?

The case of the Revenue is that the expression “so far as may be, apply” indicates that it is not expected to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression “so far as may be, apply”. In our view, where the assessing officer in repudiation of the return filed under Section 158-BC(a)proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143.”

The question, however, remains whether Section 292BBwhich came into effect on and from 01.04.2008 has effected any change. Said Section 292BBis to the following effect:-

“292BB. Notice deemed to be valid in certain circumstances.–Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was –

(a) Not served upon him; or

(b) Not served upon him in time; or

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”

A closer look at Section 292BBshows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BBwould be a complete answer.

On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid.

The law on the point as regards applicability of the requirement of notice under Section 143(2)of the Act is quite clear from the decision in Blue Moon’s case2. The issue that however needs to be considered is the impact of Section 292BBof the Act.

According to Section 292BBof the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BBto 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.

Since the facts on record are clear that no notice under Section 143(2)of the Act was ever issued by the Department, the findings rendered. by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter.”

For the reasons set out above therefore, we uphold the objections raised by the appellant against the validity of the impugned order u/s 143(3) for AY 2015-16. We accordingly hold that since in the present case no valid notice u/s 143(2) was issued by the AO who held jurisdiction over the case of the appellant, the consequent order passed u/s 143(3) dated 29.12.2017 was legally unsustainable and therefore is null in the eyes of law and therefore quashed. The assessee accordingly succeeds on the preliminary legal issue raised before us.

In the result, appeal of assessee is allowed.”

In view of the above, and respectfully following the order of the ITAT Kolkata Benches (supra), we quash the assessment and allow the Cross Objection filed by the assessee.

Since we have quashed the assessment on the legal grounds, we are refrain from adjudicating the grounds raised by the Revenue in its appeal.

In the result, the appeal filed by the Revenue is dismissed and the Cross Objection filed by the assessee is allowed.

Order pronounced on this 27th day of April, 2020.

Sd/- Sd/-

(N.V.Vasudevan) (Chandra Poojari)

VICE-PRESIDENT ACCOUNTANT MEMBER

Bangalore; Dated: 27th April, 2020.

Devadas G*

Copy to:

The Appellant.
The Respondent.
The CIT(A)-6, Bengaluru.
The Pr.CIT-6, Bengaluru.
The DR, ITAT, Bengaluru.
Guard File.

Asst.Registrar/ITAT, Bangalore

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