Orders Passed by a Tax Officer After Their Authority is Stayed Are Legally Void.

By | November 7, 2025
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Orders Passed by a Tax Officer After Their Authority is Stayed Are Legally Void.

Issue

Whether appellate orders passed by a Commissioner (Appeals) are legally valid if they were issued after a superior authority (the DGIT – Investigation) had explicitly directed that officer to stop passing orders and had subsequently transferred the cases to a different Commissioner.

Facts

  • The Director General of Income Tax (Investigation) [DGIT], a superior authority, exercised their jurisdiction under Section 120 of the Income-tax Act.
  • On June 18, 2018, the DGIT issued a direction to the Commissioner (Appeals)-11, instructing them not to pass any further appellate orders until a satisfactory explanation was furnished.
  • Subsequently, on July 16, 2018, the DGIT formally transferred all appeals pending with Commissioner (Appeals)-11 to a new officer, the Commissioner (Appeals)-12.
  • Despite these clear instructions, the Commissioner (Appeals)-11 proceeded to pass orders in several cases after June 18, 2018.
  • The Income Tax Appellate Tribunal (ITAT) set aside these orders. The Revenue (tax department) challenged the ITAT’s decision.

Decision

The High Court ruled in favour of the revenue (which, in this specific case, means it upheld the ITAT’s decision to quash the orders, a decision that was technically favorable to the taxpayer but is presented here as “in favour of revenue” likely because the revenue’s original appeal to the ITAT was allowed).

The court affirmed that:

  • The orders passed by the Commissioner (Appeals)-11 after June 18, 2018, were illegal and without jurisdiction.
  • The DGIT, as a superior authority, has the power under Section 120 to control the jurisdiction of subordinate officers. The direction to stop passing orders was a valid stay on the officer’s authority.
  • The subsequent transfer of the cases on July 16, 2018, formally and definitively stripped Commissioner (Appeals)-11 of any power to act on those files.
  • Therefore, the ITAT was correct to set aside those orders (as they were void) and remand the matters to the correct jurisdictional Commissioner (Appeals) to be decided afresh.

Key Takeaways

  • Jurisdiction is Fundamental: An order passed by an officer who does not have jurisdiction over a case is a nullity in the eyes of the law. It is not a mere procedural error but a fatal defect.
  • Hierarchy of Authority: Superior tax authorities (like a DGIT) have the administrative power under Section 120 to control the functioning and jurisdiction of their subordinate officers, including Commissioners (Appeals).
  • Orders Passed Without Authority are Void: Once an officer’s authority to hear a case is stayed or the case is transferred, any subsequent orders they pass are void ab initio (void from the beginning) and will be set aside by higher courts or tribunals.
HIGH COURT OF KARNATAKA
G Lalanatha Reddy
v.
Asst Commissioner of Income-tax
D.K. Singh and VENKATESH NAIK T., JJ.
IT APPEAL NOs. 178 and 305 OF 2022 and others
OCTOBER  9, 2025
Jinita Chatterjee and S. Parthasarathi, Advs. for the Appellant. Ravi Raj Y.V. and M. Dilip, Advs. for the Respondent.
JUDGMENT
1. This batch of Income Tax Appeals are directed against the common order dated 22.02.2021 passed by the Income Tax Appellate Tribunal, “C” Bench, Bangalore.
2. The Tribunal after considering the facts and circumstances of the case has set aside the orders of the CIT(A)-11 and remanded the matter back to the respective jurisdictional CIT(A) to decide the appeals afresh in accordance with the law after due opportunity of hearing to the parties. The Additional grounds taken by the Revenue in the appeals were also allowed.
3. The Tribunal did not go into the merits of the appeals filed by the Revenue. All the appeals and cross-objections were allowed for statistical purposes.
4. In all these cases the assessment orders were finalized by the Assessing Authority after search operations were conducted under Section 132 of the Income Tax Act, 1961 (for short ‘the IT Act’). Substantial additions to the returned income were made by the Assessing Authorities while finalizing the assessment under Section 143 r/w Section 147 and Section 153C r/w Section 143(3) of the IT Act. The Director General of Income Tax (Investigation) Karnataka and Goa, Bengaluru, issued a show-cause notice to the then Commissioner of Income Tax (Appeals)-11, Bangalore 560 001, on Appellate orders passed in the case of one assessee for the assessment years 2008-2009 and 2012-2013. The Director General of Income Tax (Investigation) was of the opinion that the additions made by the assessing officers were based on the ceased material, which were confronted to the assessee, and the statement of the parties involved in the transactions were also duly recorded. Therefore, the predecessor CIT(A) in the original order under Section 250 of the IT Act dated 25.06.2016 had dismissed the assessee’s appeal based on the detailed reasons mentioned in the orders except for the assessment year 2012-2013, wherein a few of the addition was deleted in view of the substantial additions being upheld in the case of one Sri. Cheriyan Abraham. The assessee preferred appeal against the said order of predecessor CIT(Appeals) passed under Section 250 before the ITAT. The appeal was dismissed on 14.07.2017. However, the ITAT held that its order dated 14.07.2017 would not have a bearing on the Section 154 petition filed by the Assessee before the CIT (Appeals).
5. The Director General of Income Tax (Investigation), was of the opinion that CIT(A)-11 had passed an order under Section 154 r/w Section 250(1) on 29.12.2017 based on the assessee’s submissions without making any analysis of the same and without giving his own findings on the submissions, and granted complete relief to the assessee for all the assessment years. The standard reasoning given by the CIT(A)-11 was also extracted in the show-cause notice.
6. It was also mentioned in the show-cause notice that in the original order passed by the predecessor CIT (Appeals) under Section 250 of the Income Tax Act, there was no mistake apparent that was required to be rectified and the order passed by the CIT(A)-11 under Section 154 r/w Section 251 of the Income Tax Act, amounted to re-adjudication of the appeal. It was also noted that there was a considerable difference between the date of orders and the date of dispatch. The orders dated 29.12.2018 appeared to have been dispatched on 23.01.2018 and on 21.03.2018. In view of the aforesaid, the CIT(A)-11 was directed to furnish an explanation on the circumstances leading to passing of such alleged erroneous orders and also the explanation was required to be furnished for the delay in dispatch of the orders, within four days.
7. The Director General of Income Tax (Investigation) was of the opinion that there were serious lapses committed by the CIT(A)-11, while passing the appellate orders, and there was no improvement in the quality of the orders. Therefore, he directed the CIT(A)-11 not to pass any further appellate orders until the explanation sought for was given to the satisfaction of the Director General of Income Tax (Investigation). CIT(A)-11 was also directed to furnish a list of all appeals disposed of, in the month of June 2018 till date, immediately.
8. On 16.07.2018 in exercise of the powers conferred under sub-Section (2) and (3) of Section 120 of the IT Act and other enabling provisions in this behalf, the powers conferred on the Principal Chief Commissioner of Income Tax, Karnataka and Goa Region by the Notification No.66/2014/F.No.279/Misc./66/2014-SO(ITJ) dated 13.11.2014 read with Notification No.2238(E) vide notification No.69/2015, F.No.187/30/2014(ITA.I) dated 17.08.2015 transferred all appeals pending from CIT(A)-11, Bengaluru, to the CIT(A)-12, Bengaluru, in the interest of Administrative convenience.
9. Admittedly, all orders passed in these appeals by the CIT(A)-11 are after 18.06.2018 and before 16.07.2018. However, the revenue has contented that in some cases, the orders passed by the CIT(A)-11 were after 16.07.2018, but pre-dated inasmuch as these orders were dispatched after 16.07.2018.
10. The Revenue had filed the appeals against the orders passed by the CIT(A)-11 after 18.06.2018 and in some cases the orders were passed before 18.06.2018. Those appeals are not subject matter of challenge before us. These appeals are confined only to the orders passed by the CIT(A)-11 after 18.06.2018. The revenue also urged two additional grounds in all these appeals including other appeals before the ITAT. The two additional grounds would read as under :-
“1. The order passed by the Commissioner of Income Tax (Appeals)-11 dated 10.07.2018 being the order passed after the directions vide letter dated 18.06.2018 by the DGIT, (Inv.), Bengaluru, and notification u/s.120 dated 16.07.2018 issued by the PCCIT, Bengaluru, the CIT(A) order is without jurisdiction and liable to be set aside.
2. The order passed by the Commissioner of Income Tax (Appeal)-11, dated 10.07.2018 being not entered in dispatch register which was required to be entered, the order is presumed to be passed after the transfer of jurisdiction.”
11. The Tribunal after considering the facts and circumstances of the case, has been of the opinion that the orders passed by the CIT(A)-11 after 18.06.2018 were without jurisdiction and therefore, set aside all the orders passed after 18.06.2018 by the CIT(A)-11 and remitted the matter back to the respective CIT(A) for decision afresh in accordance with law, after giving opportunity of hearing to all the parties.
12. The ITAT has also noticed that the CIT(A)-11 had passed 50 orders involving different assesses and different issues between 05.07.2018 to 13.07.2018 and that would be an impossible task for any appellate authority.
13. Heard Sri A. Shankar, learned Senior Counsel assisted by Sri S. Parthasarathi, learned counsel for the appellants. It is submitted that the orders passed after 18.06.2018 but before 16.07.2018 when the Principal Chief Commissioner of Income Tax transferred the pending appeals before the CIT(A)-11 to CIT(A)-12 cannot be said to be without jurisdiction.
14. It is the Principal Chief Commissioner of the Income Tax Karnataka and Goa Region, Bengaluru, who would have the jurisdiction under Sub-Section (2) of Section 120 of the Income Tax Act, 1961 r/w Notification No.66/2014/F.No.279/Misc/66/2014-SO(ITJ) dated 13.11.2014 and Notification No.69/2015, F.No.187/30/2014(ITA.I) dated 17.08.2015 issued by the CBDT, New Delhi, to transfer the appeals from one Commissioner of Appeals to another Commissioner of Appeals and the Principal Chief Commissioner exercising such powers has transferred the appeals only on 16.07.2018 from CIT(A)-11 to CIT(A)-12 and only from 16.07.2018, the CIT (A)-11 would not have jurisdiction to hear and decide the appeals pending before him. However, before 16.07.2018 CIT(A)-11 was well within the power to decide the appeals.
15. It has been further submitted that two additional grounds urged by the Revenue could not have been entertained and the appeals sought to have been decided on merit by the ITAT instead of remanding the matter back to the respective CIT(A) to the prejudice of the assessees.
16. On the other hand, Mr. Y.V. Ravi Raj, learned Standing Counsel for the Income Tax has submitted that the Director General of Income Tax (Investigation) Karnataka and Goa, Bengaluru was well within the power to issue direction to the CIT(A)-11, not to pass orders on pending appeals till he submits explanation to the show cause notice issued to him on 18.06.2018 to the satisfaction of the Director General of Income Tax (Investigation). The submission is that after 18.06.2018 any order passed by the CIT(A)-11 would be without jurisdiction and therefore, the ITAT has rightly set aside those orders on this ground alone and remanded the matter back to the CIT(A)-11 for fresh adjudication in accordance with law. It is further submitted that the assessees are in no manner prejudiced by the remand as they would be heard and their contentions would be taken note of, while passing a fresh order as directed by the ITAT, while remanding the matters back to the CIT(A). The learned counsel for the Revenue has further submitted that when the Appellate Commissioner CIT(A)-11 conduct was in cloud and he was facing the explanation sought for, from him and in fact he was compulsorily thereafter retired, the orders passed by him, cannot be said to be the orders passed in accordance with law.
17. He has placed reliance on the Notification dated 15.11.2014 to submit that DGIT (Investigation), Bengaluru, would have jurisdiction over CIT(A)-11, Bengaluru in all matters, except the discretion of the Commissioner (Appeals) regarding the manner and method of adjudication. Similar Notification has also been issued on 09.11.2023, which would suggest that the DGIT (Investigation), Bengaluru, would have the supervisory jurisdiction over CIT(A)-11. He further submits that the Principal Commissioner of Income Tax and DGIT (Investigation) are the Officers of the same rank and same status and therefore, when the DGIT (Investigation) came to know about the erroneous orders being passed by the CIT(A)-11, he asked for his explanation by the notice dated 18.06.2018 and asked him not to pass any further orders. He therefore, submits that the orders passed by the CIT(A)-11 after 18.06.2018 were improper, illegal without jurisdiction, and the Tribunal has rightly set aside those orders and allowed the appeals and remanded the matters back to CIT(A) of the respective jurisdiction.
18. We have considered the submissions of the learned counsel for both the parties. The facts are not in dispute. The only question that arises for our consideration is that :-
“Whether the orders passed after 18.06.2018 by the CIT(A)-11 are just, proper and legal and whether the ITAT while setting aside the orders passed by the CIT(A)-11, Bengaluru, has committed any error of law or jurisdiction ?”
19. As pointed out above, the DGIT (Investigation) Karnataka and Goa Region, would have the supervisory and administrative jurisdiction over the CIT(A)-11, which is evident from the two notifications mentioned above. When the DGIT asked explanation regarding the erroneous orders being passed by the CIT (A)-11 and asked him not to proceed further in passing the orders on pending appeals, the CIT(A)-11 for the reasons best known to him, went on to decide as many as 81 appeals between 05.07.2018 to 13.07.2018. He decided 50 appeals involving different assessees and different issues, which would be a very very difficult task for any authority.
20. Therefore, in the facts and circumstances, we are of the considered view, that the orders passed by the CIT (A)-11 after 18.06.2018 are erroneous, illegal and without jurisdiction and therefore, we affirm the orders passed by the ITAT impugned in these appeals and dismiss all the above appeals.
21. We also hold that the assessees are not in any manner prejudiced by the remand of the appeals to the respective CIT(A).
Accordingly, all the above appeals stand dismissed.