2025 (3) TMI 1156 - AT - Income Tax

Validity of Notice issued u/s. 143(2) by the ITO Ward-4(5) Raipur as without jurisdiction - HELD THAT - Derived from the Latin word notitia which means being known notice is the starting of any hearing. Unless a person knows the issues of the case in which he is involved he cannot defend himself. For a notice to be adequate it must contain- (a) Time place and nature of hearing; (b) Legal authority under which hearing has to be held; and (c) The specific charges grounds and proposed actions the accused has to meet. In this case as per the documents on record that the first notice u/s. 143(2) was issued by the ITO Ward-4(5) Raipur and thereafter another notice u/s. 142(1) was issued by the ITO Ward-3(1) Raipur who had framed the assessment without any order of transfer as required u/s. 127 by the Ld. Pr. CIT. Similarly if it is to be accepted that the actual jurisdiction is with the ITO Ward-3(1) Raipur then first notice u/s. 143(2) of the Act dated 18.09.2017 which had been issued for initiating the scrutiny proceedings by the ITO Ward- 4(5) Raipur is definitely without a valid jurisdiction over the assessee. When the issuance of notice and framing of assessment order suffers from lack of jurisdiction as enshrined in the statute then all subsequent proceedings becomes non-est in the eyes of law. Thus the assessment framed by the ITO-3(1) Raipur vide his order passed u/s. 143(3) in absence of an order of transfer u/s. 127 of the Act having been passed by CIT and without any issuance of notice by him u/s. 143(2) to the assessee is held to be without jurisdiction invalid and bad in law and thus the same is quashed. Appeal of the assessee is allowed.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the notice issued under Section 143(2) by ITO, Ward-4(5), Raipur, was valid given the jurisdictional requirements.
The validity of the assessment order passed by ITO, Ward-3(1), Raipur, in the absence of a transfer order under Section 127.
The applicability of Section 124(3)(a) concerning the assesse's failure to contest jurisdiction within the prescribed timeframe.
The implications of the lack of jurisdiction on subsequent assessments and proceedings.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice under Section 143(2)

Relevant Legal Framework and Precedents: The legal framework involves Section 143(2) which mandates that the Assessing Officer must issue a notice for scrutiny, and Section 127 which requires a formal order for transferring jurisdiction from one officer to another.
Court's Interpretation and Reasoning: The Tribunal noted that the first notice under Section 143(2) was issued by ITO, Ward-4(5), Raipur, without jurisdiction. The absence of a transfer order under Section 127 rendered the notice invalid.
Key Evidence and Findings: The e-filed return and departmental acknowledgment indicated that the jurisdictional officer was ITO, Ward-3(1), Raipur, thus invalidating the notice issued by ITO, Ward-4(5).
Application of Law to Facts: The absence of a valid transfer order meant that the initial notice was without jurisdiction, making subsequent proceedings invalid.
Treatment of Competing Arguments: The Tribunal rejected the Revenue's reliance on the Supreme Court's decision in Kalinga Institute, emphasizing the need for a valid jurisdictional basis for notices.
Conclusions: The notice issued by ITO, Ward-4(5), was deemed invalid due to lack of jurisdiction, impacting the validity of subsequent assessments.

2. Validity of Assessment Order by ITO, Ward-3(1)

Relevant Legal Framework and Precedents: Section 127 governs the transfer of jurisdiction, requiring a formal order by the Principal CIT.
Court's Interpretation and Reasoning: The Tribunal found no evidence of a transfer order under Section 127, making the assessment by ITO, Ward-3(1) invalid.
Key Evidence and Findings: The absence of a transfer order was critical, as the assessment was conducted without proper jurisdiction.
Application of Law to Facts: The Tribunal applied the principle that jurisdiction must be properly conferred, and any assessment without such jurisdiction is null and void.
Treatment of Competing Arguments: The Tribunal emphasized that jurisdictional challenges could be raised at any stage, countering the Revenue's argument of waiver due to participation.
Conclusions: The assessment order was quashed due to lack of jurisdiction, as no valid transfer order was in place.

3. Applicability of Section 124(3)(a)

Relevant Legal Framework and Precedents: Section 124(3)(a) precludes jurisdictional challenges if not raised within the prescribed timeframe.
Court's Interpretation and Reasoning: The Tribunal distinguished between participation in proceedings and the right to challenge jurisdiction, citing the Supreme Court's decision in National Thermal Power Company.
Key Evidence and Findings: The Tribunal found that the assessee's failure to contest jurisdiction within the timeframe did not preclude raising the issue later.
Application of Law to Facts: The Tribunal held that jurisdictional issues could be contested at any appellate stage, provided the initial notice was without jurisdiction.
Treatment of Competing Arguments: The Tribunal rejected the Revenue's argument based on the Kalinga Institute case, emphasizing the importance of valid jurisdiction.
Conclusions: The Tribunal allowed the jurisdictional challenge despite the delay, as the initial notice was without jurisdiction.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself."
Core Principles Established: Jurisdictional validity is fundamental, and any assessment or notice issued without proper jurisdiction is null and void.
Final Determinations on Each Issue: The Tribunal quashed the assessment order due to lack of jurisdiction, emphasizing the need for compliance with statutory requirements for jurisdictional transfers.

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