Tribunal Holds AO Cannot Transfer Case Without Competent Authority’s Approval Under Section 127:

Tribunal Holds AO Cannot Transfer Case Without Competent Authority’s Approval Under Section 127 Hiradai Pal filed the present appeal against the Income Tax Officer, challenging an order passed by CIT(A) dated May 28, 2025.

Background of the case

The present case began after the tax department received information from the Annual Information Wing that the assessee had sold a house in Panchkula for Rs.1,20,20,000 but had not filed a return of income or disclosed any capital gains.

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Based on these findings, the ITO, Ward-5, Panchkula, issued a notice under Section 148 of the Income Tax Act on March 28, 2018. During the proceedings, the case was transferred between multiple officers: first to Chandigarh, then back to Panchkula, and finally to Mohali. Eventually, the assessment order was passed by the ITO, Ward 6(5), Mohali. The assessee then challenged the assessment. The assessee argued that the PAN record showed a Chandigarh address, and therefore, jurisdiction did not lie with Panchkula or Mohali. Further, the assessee said that even if the original notice was assumed to be valid, the case could not have been transferred to the Mohali officer without a proper order under Section 127. On the other hand, the Revenue argued that since the assessee had not filed a return, the notice was issued at the last known address mentioned in the sale deed. It was also claimed that the transfer to Mohali was made at the request of the assessee. After reviewing all the facts, the Tribunal stated that an AO does not have the power to transfer a case on his own. Such transfer can only be made by a competent authority under Section 127 of the Income Tax Act. The Tribunal also referred to an earlier Gujarat High Court judgment that held that jurisdiction cannot be conferred by consent.

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The Tribunal stated, "The assessment is without jurisdiction because no notice u/s 148 was being issued by ITO, Ward 6(5) Mohali well within the time limit contemplated in Section 149." Accordingly, the Tribunal quashed the assessment order and deleted all additions made to the assessee’s income. As a result, it allowed the assessee's appeal.