The ITAT Delhi has delivered a decisive ruling affirming that an assessment order passed by an Assessing Officer who lacks lawful jurisdiction due to the absence of a formal transfer order under Section 127 of the Income-tax Act is void ab initio. This holding reinforces the foundational principle that procedural compliance in tax administration is not a mere technicality but a jurisdictional prerequisite.
Background & Facts
The Dispute
The assessee, Sunita Rao, challenged the assessment order dated 14.12.2018 issued by the ITO, Ward-30(5), New Delhi, on the ground that the officer had no lawful jurisdiction to conduct the assessment. The assessee contended that no order under Section 127 of the Income-tax Act, 1961, had been passed to transfer jurisdiction from the ITO, Ward-29(3), New Delhi, to ITO, Ward-30(5), New Delhi. The Assessing Officer had proceeded to issue the assessment order despite this jurisdictional gap.
Key Facts
- The original jurisdiction for assessment of the assessee resided with ITO, Ward-29(3), New Delhi.
- The assessment proceedings were initiated and concluded by ITO, Ward-30(5), New Delhi, without any formal order of transfer.
- The assessee filed an RTI application on or before 10.01.2026 seeking a copy of the order under Section 127 transferring jurisdiction.
- The Department responded that the order was available on the e-filing portal, but no such order was produced or referenced in the assessment file.
- The assessee’s RTI application was rejected on the ground that the information was "available" online, without providing the document.
- No order under Section 127(1) was ever issued, recorded, or communicated to the assessee.
Procedural History
- 14.12.2018: ITO, Ward-30(5), New Delhi, passed the assessment order under Section 143(3) of the Act.
- 26.05.2025: First Appellate Authority (CIT(A)) dismissed the assessee’s appeal, upholding the assessment.
- 10.01.2026: Assessee filed an application before ITAT seeking to raise an additional ground challenging jurisdiction under Section 127.
- 07.04.2026: Hearing held before ITAT Delhi Bench.
- 15.04.2026: ITAT pronounced order allowing the appeal on the jurisdictional ground.
Relief Sought
The assessee sought quashing of the assessment order dated 14.12.2018 on the ground that it was passed without jurisdiction, and requested that the matter be remanded to the correct Assessing Officer for fresh assessment.
The Legal Issue
The central question was whether an assessment order passed by an Assessing Officer in the absence of a valid order under Section 127(1) of the Income-tax Act is void ab initio, even if raised at a belated stage and irrespective of the merits of the assessment.
Arguments Presented
For the Appellant/Petitioner
The assessee’s counsel argued that Section 127(1) mandates a formal, reasoned order for transfer of jurisdiction. The absence of such an order renders the subsequent assessment proceedings ultra vires and void from inception. Reliance was placed on Sanjay Kumar Singhal vs. ACIT (ITA No.3581/Del/2023, order dated 30.04.2025) and Rahul Tyagi vs. ITO [2025] 173 taxmann.com 981 (Raipur), both of which held that jurisdictional defects under Section 127 cannot be cured by delay or merits. The counsel emphasized that jurisdiction is a condition precedent to validity, and no amount of procedural regularity can substitute its absence.
For the Respondent/State
The Department’s counsel contended that Section 127 transfers are administrative in nature and do not affect substantive rights. Reliance was placed on Sanjay Gandhi Memorial Trust vs. CIT (E) (2023) 150 taxmann.com 459 (Delhi) and Abhishek Jain vs. ITO (2018) 94 taxmann.com 355 (Delhi), arguing that objections to jurisdiction raised belatedly are malicious and should be disallowed. The counsel further asserted that the assessee had previously raised frivolous grounds and was now resorting to a technicality to evade tax liability.
The Court's Analysis
The ITAT rejected the Department’s reliance on Sanjay Gandhi Memorial Trust and Abhishek Jain, distinguishing them on critical factual grounds. In both cited cases, an order under Section 127 had been issued; the dispute concerned the scope or effect of that order, not its absence. Here, no order was ever passed.
"If no order itself is issued, then, the only consequence is that there is no transfer of jurisdiction and proceedings leading to impugned assessment order gets vitiated."
The Bench held that jurisdiction under the Income-tax Act is statutorily defined and cannot be assumed by administrative convenience. The absence of a Section 127 order means the ITO, Ward-30(5), had no legal authority to assess the assessee. The court emphasized that jurisdictional defects are not subject to waiver by delay or estoppel, as they render the entire proceeding a nullity.
The Bench further noted that while Section 127 does not require a hearing to the assessee prior to transfer, it does require a written order. The Department’s failure to produce any such order - despite the RTI request and the burden of proof lying on the revenue - was fatal to its case.
The principle that "a void act cannot be validated by time" was applied. The court held that even if the assessment was substantively correct, its procedural illegitimacy could not be overlooked.
The Verdict
The appeal was allowed. The impugned assessment order dated 14.12.2018 passed by ITO, Ward-30(5), New Delhi, is quashed as void ab initio for want of jurisdiction under Section 127 of the Income-tax Act. The matter is remanded to the Commissioner of Income-tax (Appeals) for reassignment to the correct Assessing Officer, who shall pass a fresh assessment order in accordance with law within 12 weeks from the date of receipt of this order.
What This Means For Similar Cases
Jurisdictional Defects Cannot Be Overlooked
- Practitioners must verify jurisdictional transfers in every assessment notice, especially when the AO differs from the one previously assigned.
- A failure to produce a Section 127 order at any stage - even during appellate proceedings - is a ground for quashing the assessment.
- RTI responses claiming "availability on portal" without actual document production are insufficient to establish jurisdiction.
Belated Objections Are Permissible for Jurisdictional Challenges
- Objections to jurisdiction under Section 127 may be raised at any stage, including in appeal or revision, as they go to the root of validity.
- Courts will not apply the doctrine of laches or delay to jurisdictional defects, as they render proceedings void ab initio.
- Revenue authorities cannot rely on prior conduct of the assessee to estop a jurisdictional challenge.
Administrative Convenience Does Not Override Statutory Mandate
- The Department cannot assume jurisdiction based on internal reorganization or administrative convenience.
- Every transfer must be documented by a formal order under Section 127(1), with reasons recorded.
- Assessments conducted without such orders are legally non-existent and must be set aside, regardless of tax liability.
