Xavient Information Systems (India) Pvt. Ltd Vs DCIT (ITAT Delhi)
No Section 127 Transfer, No Jurisdiction: ITAT Quashes Delhi Assessment and TP Adjustment
The Delhi ITAT allowed the appeal of Xavient Information Systems (India) Pvt. Ltd., holding that the assessment order passed by the Delhi Assessing Officer was without jurisdiction since the assessee’s case continued to fall under the jurisdiction of the Mumbai Assessing Officer and no valid transfer order under section 127 had ever been passed.
The assessee had filed its return for AY 2010-11 declaring income of about ₹51.58 lakh. During scrutiny, the Delhi AO assumed jurisdiction and made a transfer pricing adjustment of ₹53.60 lakh in respect of international transactions with associated enterprises. The assessee consistently objected that its registered office was in Mumbai during the relevant year, its return had been processed by the Mumbai jurisdictional authorities, and assessments for both the preceding and succeeding years had also been completed by Mumbai officers.
Before the Tribunal, the assessee demonstrated that assessments for AYs 2009-10 and 2011-12 were completed by Mumbai authorities and that there was no order under section 127 transferring jurisdiction from Mumbai to Delhi. The Revenue argued that the assessee had not raised the jurisdictional objection within the time prescribed under section 124(3).
Rejecting the Revenue’s contention, the Tribunal drew a distinction between a dispute relating to territorial jurisdiction and a case involving inherent lack of jurisdiction. Relying on recent decisions including Baljit Singh v. ITO, Jindal Power Ltd., and the Supreme Court ruling in Kanwar Singh Saini, the Tribunal held that an officer who inherently lacks jurisdiction cannot acquire it merely because the assessee participated in proceedings or failed to object within time. Jurisdiction cannot be conferred by consent, acquiescence or waiver.
Since the Delhi AO lacked legal authority to assume jurisdiction over the assessee’s case and no statutory transfer of jurisdiction had taken place, the entire assessment was held to be void ab initio. Having quashed the assessment on this jurisdictional ground, the Tribunal did not examine the merits of the transfer pricing adjustment and left those issues open.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the assessee is against the order dated 26.10.2016 of Ld. Commissioner of Income Tax (Appeals)-38, Delhi (Hereinafter referred to as ‘the CIT(A)’) u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of 30.03.2013 passed by the Ld. Assessing Officer/DCIT, Circle 18(4), Delhi (hereinafter referred to as ‘the AO’) u/s 143(3) of the Act for Assessment Year (‘AY’) 2010 11.
