ITAT Grants Relief in Jurisdictional Defect Assessment Challenge

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on April 15, 2026, held that an assessment order passed by an Assessing Officer without a valid transfer of jurisdiction under Section 127 of the Income-tax Act, 1961, is void ab initio and liable to be quashed. A Bench comprising Judicial Member Anubhav Sharma and Accountant Member Amitabh Shukla allowed the appeal filed by Sunita Rao and set aside the assessment framed under Section 143(3).

The dispute arose after the assessee challenged the jurisdiction of ITO, Ward-30(5), New Delhi, to pass the assessment order for AY 2016-17. The assessee raised an additional legal ground before the Tribunal, contending that no order under Section 127 of the Act had ever been passed for the transfer of jurisdiction from ITO, Ward-29(3), New Delhi, to ITO, Ward-30(5), New Delhi.

Before the Tribunal, the assessee relied upon information sought under the Right to Information Act, wherein the Department failed to provide any copy of an order passed under Section 127. The Revenue also could not place any material on record to establish that such a transfer order existed. The Tribunal observed that if no order under Section 127 is issued, “the only consequence is that there is no transfer of jurisdiction and proceedings leading to the impugned assessment order get vitiated.”

The Revenue argued that the transfer of jurisdiction under Section 127 is administrative in nature and relied upon the decisions of the Delhi High Court in Sanjay Gandhi Memorial Trust and Abhishek Jain. It was also contended that the assessee had raised the jurisdictional objection at a belated stage.

However, the Tribunal rejected the contention and held that a jurisdictional defect going to the root of the assessment can be raised at any stage. The Bench observed that an assessment order passed without a lawful assumption of jurisdiction cannot be sustained merely on the ground of delay or technicality. The ITAT further held that “an order or an exercise of power which is void ab initio cannot be upheld for mere delay or latches”.

The Tribunal distinguished the judgements relied upon by the Revenue and noted that those cases did not involve a complete absence of an order under Section 127. It further observed that the Department had not claimed concurrent jurisdiction between the two Assessing Officers.

Relying on earlier coordinate bench decisions, including Sanjay Kumar Singhal vs ACIT and Rahul Tyagi vs ITO, the Tribunal held that the absence of a valid transfer order rendered the assessment invalid in law. Thus, the ITAT allowed the appeal filed by the assessee and quashed the assessment order passed under Section 143(3) of the Act.

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