Order u/s 127 quashed as PCIT having jurisdiction over non corporate assesee could not have transferred case of a corporate assessee to another AO
In a recent judgment ITAT has quashed assessment as PCIT having jurisdiction over non corporate assesee could not have assumes jurisdiction to transfer a corporate assessee from one AO to another AO
ABCAUS Case Law Citation:
5006 (2026) (01) abcaus.in ITAT
Before the Tribunal the assessee raised an additional ground challenging the jurisdiction of PCIT in transferring the case of the assessee from one range to another range by passing 127 order and consequential assessment order passed by the AO, since the PCIT who transferred the case of the assessee, had no jurisdiction to do so.
The assessee submitted that the assessment in the present case was framed without jurisdiction as the order passed u/s 127 of the Act was passed by a non-jurisdictional income tax authority. Thefore, when the order conferring the jurisdiction upon the AO was itself invalid, vold-ab-initio and without jurisdiction then all the subsequent orders passed in pursuance of the aforesaid non-est order u/s 127 of the Act were also invalid, void-ab-initio and without jurisdiction.
The Tribunal observed that the PCIT who transferred the case had charge on non-corporate assessee’s. The assessee being a company and corporate assessee with alphabet–k, the other PCIT held charge over corporate assessee’s which established the fact that there was an inherent lack of jurisdiction and the same cannot be cured under any provision of law as held by the Hon’ble Bombay High Court.
The Tribunal observed that settled legal position is that bar of section 124(3) is applicable only when territorial jurisdiction of the AO is challenged and the said section 124(3) does not apply when there is inherent lack of jurisdiction on the part of the PCIT, u/s.127 of the Act.
The Tribunal further observed that recently the Raipur Bench of the Tribunal held that sub section (3) of section 124 places an obligation upon assessee to call in question jurisdiction of AO within time period therein stipulated only in a case where objection pertains to territorial jurisdiction and not otherwise. It was further held that when assessee had not called in question jurisdiction assumed by the AO based on territorial area, persons or classes of persons; income or classes of income; or cases or classes of cases, but had rather assailed validity of assessment order passed by Assessing Officer in absence of an order of transfer that was statutorily required to have been passed by CIT u/s.127, it would be circumscribed by restriction contemplated under sub-section (3) of section 124 of the IT Act.
The Tribunal further noted that in this case since the PCIT was holding charge of non corporate assessee lacked inherent jurisdiction to transfer a corporate assessee from one range to another range and in such circumstances the question of assessee objecting to the jurisdiction of the AO under section 124(3) will not arise especially when the revenue failed to communicate the order passed u/s.127 of the Act to the assessee until the proceedings commenced before the Tribunal, and on direction of the Tribunal the said order u/s.127 was communicated to the Assessee.
The Tribunal noted that Hon’ble Supreme Court has held that non- communication of the reasons in the order passed under section 127(1) is a serious infirmity in the order for which the same is invalid.
In view of the above the Tribunal held that the PCIT concerned had no jurisdiction over the assessee who was a corporate entity to transfer the case of the assessee from one AO to another AO as the said PCIT lacked inherent jurisdiction making the order u/s.127 as bad in law, void ab initio and consequentially all other proceedings including the final assessment order passed u/s.143(3) r.w.s. 144C (13) pursuant to the order passed u/s.127 by the PCIT were without jurisdiction bad in law and are a nullity in the eyes of law
Accordingly, the impugned order(s) were quashed and the additional ground raised by the assessee was allowed.
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