ITAT nullifies assessment for lack of AO’s jurisdiction

Case Details: Vishan Gunna vs. ACIT - [2025] 176 taxmann.com 959 (Delhi - Trib.)

Judiciary and Counsel Details

• ANUBHAV SHARMA, Judicial Member and
• Manish Agarwal, Accountant Member
• R. Mohan Kumar, Adv. for the Appellant.
•  Abhishek Sharma, CIT DR for the Respondent.

Fact of the Case

The assessee was a non-resident Indian residing in the USA, having a permanent address in Hyderabad. The assessee’s returns of income had been regularly filed for various assessment years, including the year under appeal.
For the relevant assessment year, the assessee filed the return of income from Hyderabad. However, the Assessing Officer (AO) issued a notice under section 143(2) to the assessee in Delhi. Later, the final assessment order was also passed by another AO in Delhi, and the case was transferred to Hyderabad.
The assessee raised an additional ground challenging the jurisdiction of the AO in Delhi on the ground that no order had been passed under section 127 for the transfer of jurisdiction from one Assessing Officer to another.

Tribunal  Held

The Tribunal held that Section 127(1) provides that if a case is transferred from one Assessing Officer who is sub-ordinate to the Commissioner or Pr. Commissioner or Chief Commissioner of Income Tax to another Assessing Officer who is also subordinate to him, the assessee should be provided a reasonable opportunity of being heard and the reasons for doing so should be recorded.
In the instant case, the assessee’s jurisdiction was transferred from one AO to another AO without any order passed under section 127. Thus, the jurisdiction assumed by the other AO in Delhi was without any authority. Therefore, the order passed by him was without jurisdiction, and the same was to be quashed.

List of Cases Reviewed

• National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358/229 ITR 383 (SC) (para 6), 
• Raj Sheela Growth Fund (P).Ltd. v. ITO  (para 11) and[IT Appeal No.881(Delhi) of 2019, dated 9-08-2019]
•  Raj Sheela Growth Fund (P.) Ltd. v. ITO [2024] 165 taxmann.com 182/466 ITR 26 (Delhi) (para 13) – Followed.

List of Cases Referred to

• National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358/229 ITR 383 (SC) (para 6),
• Raj Sheela Growth Fund (P).Ltd. v. ITO [IT Appeal No.881(Delhi) of 2019, dated 9-08-2019] (para 9) and
• Raj Sheela Growth Fund (P.) Ltd. v. ITO [2024] 165 taxmann.com 182/466 ITR 26 (Delhi) (para 9).