No Transfer Order from Delhi AO to Jaipur AO: ITAT Quashes 153C Assessment for Lack of Territorial Jurisdiction [Read Order]
ITAT quashed the 153C assessment and condoned the delay, holding that the Jaipur AO lacked territorial jurisdiction in the absence of a Section 127 transfer from the Delhi AO.
The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment framed under Section 153C of the Income Tax Act, 1961, holding that the Assessing Officer (AO) in Jaipur had no territorial jurisdiction to complete the assessment in the absence of a Section 127 transfer order from the Delhi AO who had originally initiated the proceedings and also condoned the delay in filing the appeal after finding that the Commissioner of Income Tax (Appeals) CIT(A) had ignored the High Court’s direction on deciding delay first.
The assessee, Sonu Dusad, was issued a notice under Section 153C by the Assistant Commissioner ofIncome Tax (ACIT). The notice was duly served, and the assessee’s jurisdiction at that point rested with the Delhi AO.
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However, without any order under Section 127 transferring the case from Delhi to Jaipur, the Jaipur AO proceeded to complete the assessment, making additions and finalising the order.
The assessee challenged the assessment before the CIT(A), but the CIT(A) dismissed the appeal on limitation, stating that the appeal was filed late.
The assessee then approached the Rajasthan High Court, which held that the CIT(A) was obligated to decide the condonation application first and then proceed to decide the appeal on merits. The High Court directed the CIT(A) to reconsider the matter.
Despite the High Court’s clear directions, the CIT(A) again refused to condone the delay and upheld the assessment.
Before the Tribunal, the assessee argued that the Jaipur AO had no jurisdiction to frame the assessment because the 153C notice had been issued by the Delhi AO, and no transfer order under Section 127 existed.
The assessee further submitted that without jurisdiction, the entire assessment was a nullity. The assessee also submitted that the delay was caused due to his mother’s serious illness and continuous medical complications, which had been documented.
The Bench comprising Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) observed that once the notice under Section 153C was issued by the Delhi AO, only that AO or another AO to whom the case was specifically transferred under Section 127 had the legal authority to complete the assessment. Since there was no evidence of any transfer, the Jaipur AO lacked jurisdiction.
The Tribunal further held that the CIT(A) had wrongly ignored the High Court’s binding direction requiring him to first condone the delay. The Bench accepted the assessee’s explanation for delay as reasonable and supported by evidence.
The ITAT held the entire 153C assessment void ab initio, Since the very foundation of the assessment, territorial jurisdiction, was missing,
Accordingly, the Tribunal condoned the delay, quashed the assessment, and allowed the appeal.
The assessee was represented by Mahendra Gargieya and Nitesh Agarwal, while Anita Rinesh appeared for the Revenue.
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