Case Law Details
Sunita Rao Vs ITO (ITAT Delhi)
Summary: The Tribunal allowed the assessee’s appeal and quashed the assessment order on the ground of lack of jurisdiction. The assessee raised an additional legal ground contending that no transfer order under Section 127 of the Income-tax Act, 1961 was passed to shift jurisdiction from one Assessing Officer to another. The Department failed to produce any such order and merely argued that transfer powers are administrative and the objection was belated. The Tribunal held that a jurisdictional defect strikes at the root of the assessment and can be raised at any stage, even if delayed. It emphasized that Section 127 mandates a formal order for transfer of jurisdiction; absence of such an order means no valid transfer occurred. Consequently, the Assessing Officer lacked authority to pass the assessment order, rendering it void ab initio. Accordingly, the Tribunal admitted the additional ground and quashed the impugned assessment order.
Issue:-The core issue involved in the present case was whether an assessment framed under section 143(3) of the Income-tax Act, 1961 by an Assessing Officer who did not possess valid jurisdiction, in the absence of an order passed under section 127 for transfer of jurisdiction, could be sustained in law. The question specifically examined was whether non-passing of a transfer order vitiates the entire assessment proceedings.
Facts:-The assessee was originally assessed under the jurisdiction of ITO, Ward 29(3), New Delhi. However, the assessment under section 143(3) dated 14.12.2018 was completed by ITO, Ward 30(5), New Delhi. During the appellate proceedings before the Tribunal, the assessee raised an additional legal ground contending that no order under section 127 of the Act had been passed transferring jurisdiction from Ward 29(3) to Ward 30(5), and therefore, the Assessing Officer who completed the assessment lacked jurisdiction. To substantiate this claim, the assessee had sought information under the Right to Information Act requesting a copy of the transfer order, but the department failed to provide any such order and merely responded that the information was available on the e-filing portal. Even during the course of hearing before the Tribunal, the Department could not produce any evidence to demonstrate that a valid order under section 127 had been passed.
AO Finding:-The Assessing Officer proceeded to complete the assessment under section 143(3) without addressing or verifying the issue of jurisdiction. The assessment order assumed jurisdiction in Ward 30(5), New Delhi, without any reference to or production of a valid transfer order under section 127, thereby implicitly proceeding on an assumption of jurisdiction.
CIT(A) Findings:-The Commissioner of Income Tax (Appeals), NFAC, upheld the assessment order without adjudicating upon the jurisdictional defect. The issue regarding absence of a valid transfer of jurisdiction under section 127 was not examined, and the appellate authority confirmed the action of the Assessing Officer without dealing with this fundamental legal aspect.
ITAT Findings:-The Tribunal, after considering the rival submissions, held that a jurisdictional defect strikes at the very root of the assessment and such an issue can be raised at any stage of the proceedings, even for the first time before the Tribunal, if it involves a pure question of law based on admitted facts. The Tribunal observed that section 127 explicitly mandates the passing of a reasoned order for transfer of jurisdiction from one Assessing Officer to another. While the power under section 127 may be administrative in nature in terms of affording opportunity of hearing, the existence of the order itself is a sine qua non for a valid transfer of jurisdiction. The Tribunal categorically held that in the absence of any order under section 127, there is no valid transfer of jurisdiction and consequently, the Assessing Officer who framed the assessment lacked inherent jurisdiction. It was further held that an order passed without jurisdiction is void ab initio and cannot be sustained merely on the ground that the objection was raised belatedly. The Tribunal distinguished the judgments relied upon by the Department by observing that those were cases where transfer orders did exist and were challenged on procedural grounds, whereas in the present case, there was a complete absence of any transfer order. Accordingly, the Tribunal allowed the additional ground and quashed the entire assessment.
Cases Relied Upon
The Tribunal placed reliance on the decisions in Sanjay Kumar Singhal vs ACIT ITAT Delhi 2025 and Rahul Tyagi vs ITO ITAT Raipur 2025, wherein it was held that an assessment framed in the absence of a valid order under section 127 transferring jurisdiction is invalid and liable to be quashed. The Tribunal also examined and distinguished the decisions relied upon by the Department, namely Sanjay Gandhi Memorial Trust vs CIT E Delhi High Court 2023 and Abhishek Jain vs ITO Delhi High Court 2018, on the ground that those cases did not deal with a situation involving complete absence of a transfer order under section 127.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 26.05.2025 of the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeal No.CIT(A), Delhi-10/10212/2018-19, filed before him against the order dated 14.12.2018 passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ITO, Ward-30(5), Delhi (hereinafter referred to as the Ld. AO, for short).
2. On hearing both the sides, we find that the assessee has raised an additional ground, vide application dated 10.01.2026 by which the assessee has pleaded that in the absence of any order under Section 127 of the Act for transfer of jurisdiction from ITO, Ward 29(3), New Delhi to ITO, Ward- 30(5), New Delhi, the ITO, Ward 30(5), New Delhi wrongly assumed the jurisdiction. Consequently, the impugned assessment is without jurisdiction.
3. During the course of hearing, the Ld. Counsel for the assessee has relied the information sought under the Right to Information Act from the Department wherein the assessee had requested to supply copy of the order passed under Section 127 of the Act and the Department has responded by submitting that the information is available on the e-filing portal and the application was rejected.
4. Then on behalf of the Department, the Ld. DR has not put up anything across factually to claim that in fact an order under Section 127 of the Act was passed. The Ld. DR has defended the issue by relying the decision of the Hon’ble Delhi High Court in Sanjay Gandhi Memorial Trust vs. CIT (E) (2023) 150 taxmann.com 459 (Delhi) and in Abhishek Jain vs. ITO, Ward 55(1), New Delhi (2018) 94 taxmann.com 355 (Delhi) to contend that the powers of transfer under Section 127 of the Act are administrative in nature and does not affect any fundamental or legal rights of the assessee. It was also contended by the Ld. DR that raising such an objection at a belated stage is malicious. The Ld. DR pointed out that in fact, the assessee on earlier occasions had raised two other legal grounds which were factually found to be incorrect and, yet again, a technical ground has been raised while the assessee has no case on merits.
5. We have considered the rival contentions and, at the outset, we are of the considered view that when the assessee raises jurisdictional issue which goes to the root of assumption of jurisdiction for assessment or conclusion of the assessment, then, whatsoever be the merits of the case, do not help the Department and howsoever the technical ground raised be and whatsoever at belated stage, if it is a pure question of law which can be decided on the basis of the admitted facts, the ground deserves to be considered as an order or an exercise of power which is void ab initio cannot be upheld for mere delay or latches. Accordingly ground is admitted.
6. In the case of the assessee, admittedly, no order under Section 127 of the Act was passed. Section 127(1) of the Act categorically mandates that the order shall be passed giving reasons for transfer. The order under Section 127(1) of the Act transfers the jurisdiction from one AO to another and, therefore, it could be administrative so far as right of hearing of the assessee is involved and no notice of hearing is required for a transfer of jurisdiction under Section 127(1) of the Act. However, if no order itself is issued, then, the only consequence is that there is no transfer of jurisdiction and proceedings leading to impugned assessment order gets vitiated.
7. Reliance in this regard is rightly placed by the Ld. AR on the decision of the coordinate bench in the case of Sanjay Kumar Singhal vs. ACIT in ITA No.3581/Del/2023, order dated 30.04.2025 and Raipur Bench decision in the case of Rahul Tyagi vs. ITO [2025] 173 com 981 (Raipur-Trib.) wherein the coordinate Benches have held that an order passed by an AO in the absence of an order of transfer under Section 127 having been passed by the competent authority is invalid and the same deserves to be quashed.
8. The decisions which the Ld. DR has relied are quite distinguishable as the decision in Sanjay Gandhi Memorial Trust (supra) was in regard to the Writ jurisdiction invoked by the assessee and the issue there was not of non-issuance of an order under Section 127 of the Act altogether, but, the order under Section 127 of the Act was passed whereby the jurisdiction of the Petitioners was transferred from Exemption Circle to ACIT Circle. In those circumstances the Hon’ble Delhi High Court has considered the issue. Then, in the case of Abhishek Jain (supra), again, the issue was not of issuing order under Section 127 of the Act in regard to transfer of jurisdiction which is referred in the assessment order, which did not actually exist. In Abhishek Jain (supra), the issue was not with regard to transfer of a case under Section 127 of the Act from an Assessing Officer having jurisdiction to an Assessing Officer who otherwise was not having jurisdiction. It is not the case of the Department here that the two Assessing Officers had held the concurrent jurisdiction but the ITO, Ward 30(5), New Delhi had no jurisdiction what so ever at all.
9. In sequel to the aforesaid, we are inclined to sustain the additional ground and allow the appeal. The impugned assessment is quashed.
Order pronounced in the open court on 15.04.2026.
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