2026 Supreme(Online)(ITAT) 13807

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
XAVIENT INFORMATION SYSTEMS (I) PVT. LTD. NOIDA – Appellant
Versus
DCIT NEW DELHI – Respondent
ITA 472/DEL/2017[2010-11]

Headnote:(A) Income Tax Act, 1961 - Sections 124(3), 120, 127, and 143(3) - Jurisdiction of Assessing Officer - Transfer of case between cities - Assessment order passed by an officer without jurisdiction - The assessee objected to jurisdiction of Delhi AO, arguing that jurisdiction vested with Mumbai AO, who had assessed the assessee for preceding and subsequent years - No order u/s 127 was passed transferring the case - The assessee had filed its return and had been assessed by Mumbai AO for earlier years - The Tribunal held that where the Assessing Officer lacks inherent jurisdiction (as opposed to territorial jurisdiction), the provisions of Section 124(3) (which place a time limit on raising objections) do not apply - Reliance placed on Baljit Singh vs. ITO (ITAT Delhi) and Jindal Power Ltd. vs. JCIT (ITAT Raipur), which cited judgments of the Bombay, Gujarat, and Calcutta High Courts that waiver cannot confer jurisdiction on an officer who inherently lacks it. (Paras 9, 9.1-9.4)

(B) - Transfer Pricing - Without prejudice to jurisdictional challenge - Assessee challenged the addition of Rs. 53,60,362/- on account of TP adjustment - Issues raised included selection of comparables, risk adjustment, working capital adjustment, use of multi-year data, and non-grant of benefit of 5% tolerance proviso to Section 92C(2) - Not adjudicated on merits due to the acceptance of the jurisdictional ground. (Paras 10)

Facts of the case:
The assessee company had its registered office in Mumbai and had been regularly assessed by the AO in Mumbai for AYs 2009-10 and 2011-12. For AY 2010-11, the assessee filed its return of income electronically, which was processed u/s 143(1) in Mumbai. However, the assessment was completed by the AO, Delhi, who made an addition of Rs. 53,60,362/- on account of a Transfer Pricing adjustment. The assessee objected to the jurisdiction of the Delhi AO on the ground that no order u/s 127 of the Act had been passed to transfer the case from Mumbai to Delhi. The CIT(A) rejected the assessee’s objection, holding that the assessee had not raised the jurisdictional objection within the time limit prescribed under Section 124(3) of the Act.

Findings of Court:
The Tribunal held that the AO in Delhi lacked inherent jurisdiction to frame the assessment for AY 2010-11. It was an undisputed fact that the assessee’s case for AY 2009-10 and AY 2011-12 was with the Mumbai AO and that no order u/s 127 of the Act had been passed to transfer the case. The Tribunal, following the decision in Baljit Singh vs. ITO and the principles laid down by the High Courts, held that the requirement to raise an objection within one month under Section 124(3) applies only to objections to territorial jurisdiction, not to cases where the officer lacks inherent jurisdiction. An order passed without jurisdiction is a nullity and can be challenged at any stage. Consequently, the assessment order was set aside as void ab initio.

Issues: The main issue was whether the assessment order passed by the Deputy Commissioner of Income Tax, Delhi, was without jurisdiction, given that the assessee was assessed by the Deputy Commissioner of Income Tax, Mumbai, for the relevant assessment year and no order for transfer of jurisdiction had been passed.

Ratio Decidendi: The Tribunal ruled that the failure to raise an objection regarding jurisdiction within the time limit prescribed under Section 124(3) of the Act does not validate an assessment order passed by an officer who inherently lacks jurisdiction. The principle of waiver does not apply to confer jurisdiction on an officer who is acting without authority of law. Therefore, the assessment order passed by a non-jurisdictional Assessing Officer, in the absence of a transfer order under Section 127, is void ab initio. Result : Appeal allowed, assessment order annulled.

Table of Content
1. jurisdiction and procedural background of the case. (Para 2 , 3 , 4)
2. assessee's grounds of appeal and parties' arguments on jurisdiction. (Para 5 , 6 , 7 , 8)
3. court's analysis on jurisdiction, citing precedent and rejecting territorial jurisdiction. (Para 9)
4. conclusion: appeal allowed due to lack of jurisdiction. (Para 10 , 11)

ORDER

PER VIMAL KUMAR, JM:

The appeal filed by the assessee is against the order dated 26.10.2016 of Ld. Commissioner of Income Tax (Appeals)-38, Delhi (Hereinafter referred to as ‘the CIT(A)’) u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of 30.03.2013 passed by the Ld. Assessing Officer/DCIT, Circle 18(4), Delhi (hereinafter referred to as ‘the AO’) u/s 143(3) of the Act for Assessment Year (‘AY’) 2010-11.

2. Brief facts of the case are that the appellant/ assessee, filed return of income on 27.09.2010 declaring total income of Rs. 51,58,328/- after set off of unabsorbed depreciation of Rs. 3,10,184/- for A.Y. 2001-02. Audit report dated 23.09.2010 in Form 3-CEB was filed on 23.09.2010. For the purpose of MAT u/s 115-JB of the Act book profit was returned at Rs. 37,53,675/-. The case was selected for scrutiny.

2.1 Notice u/s 142(1) dated 11.06.2012 was issued. Notice u/s 274 r.w.s. 271(1)(b) of the Act dated 27.08.2012 was issued. Notice u/s. 143(2) dated 03.01.2013 and notices u/s 142(1) dated 05.02.2013 and 19.03.2013 were issued. Shri Indra Dev Narayan, CA filed details objection regarding jurisdiction was raised for the first time in letter dated 18.03.2013.

2.2 As per provisions of Section 124(3)(a) of the Act and the assessee can raise the issue or objection with regard to jurisdiction of Assessing Officer within one month of receipt of the notices which in the instant case expires on 01.10.2011.

2.3 Objections regarding jurisdiction were not raised in letters dated 05.09.2012 and 07.03.2013, therefore, objection with regard to jurisdiction being invalid was not resorted to within the permissible time.

3. On merits, the assessee contended that its jurisdiction lies with DCIT, Circle 8(3), Mumbai is not sustainable due to the fact of shifting of assessee’s company registered office out of Mumbai and voluntary filing of audit report in Form 3-CEB in the Office of ITO, Ward 18(4), Delhi on 30.10.2010, therefore, the objection with regard to jurisdiction was rejected.

3.1 As per auditor’s report in Form-3CEB, the assessee’s international transactions with its Associated Enterprises amounting to Rs. 4,19,66,360/- was stated to be at Arm’s Length as per TNMM (Transactional Net Margin Method). No TP Study report was filed.

3.2 As per questionnaire dated 15.03.2013 issued along with notice u/s 142(1) dated 19.03.2013 it was proposed to benchmark assessee’s international transaction with following comparables i.e. OP/TC Related Services with data of FY 2009-10:

3.3 On completion of proceedings, Ld. AO vide order dated 30.03.2013 made addition of Rs. 53,60,362/- on account of TP adjustment.

4. Against order dated 30.03.2013, assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 26.10.2016.

5. Being aggrieved, the appellant/assessee preferred present appeal on following grounds:

“ Lack of Jurisdiction of Ld. AO passing the Assessment Order for AY 2010-11

1. That on the facts and circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that the Deputy Commissioner of Income-tax, New Delhi (Ld. AO) was in grave error in assuming jurisdiction over appellant and in passing the impugned assessment order for assessment year (AY) 2010-11 u/s 143(3) of the Act.

2. That on the facts and circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that assessment order passed by the Ld. AO, for AY 2010-11 is without jurisdiction; void ab initio, nullity and non est in law and deserves to be annulled.

3. That on the facts and circumstances of the case and in law, for AY 2010-11, the appellant having its

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