Reopening Notice Issued by Non-Jurisdictional Assessing Officer After Section 127 Transfer Order Is Void and Quashed

By | October 10, 2026
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Reopening Notice Issued by Non-Jurisdictional Assessing Officer After Section 127 Transfer Order Is Void and Quashed

Issue

Whether a reassessment notice issued under Section 148 of the Income-tax Act, 1961 by an Assessing Officer who lost territorial jurisdiction due to a prior transfer order under Section 127 is legally valid or liable to be quashed.

Facts

  • Incorporation & Office Shift: The assessee-company was originally incorporated in Kolkata and subsequently shifted its registered office to Gujarat.
  • PAN Database Correction: The assessee’s PAN database was updated to reflect the new registered address in Ahmedabad.
  • Jurisdiction Transfer Order: On 07.12.2015, PCIT-1, Kolkata passed an order under Section 127 transferring the assessee’s jurisdiction from ITO, Ward 3(3), Kolkata to ITO, Ward 3(1)(4), Ahmedabad “with immediate effect.”
  • Original Assessment: For AY 2012-13, the assessee filed its return of income on 29.08.2012, which was processed under Section 143(1) on 22.02.2013.
  • Issuance of Reopening Notice: On 31.03.2019, ITO, Ward 3(3), Kolkata issued a notice under Section 148 via email to reopen the assessment for AY 2012-13 after obtaining satisfaction from PCIT-1, Kolkata.
  • Assessee’s Objection: The assessee objected to the notice, contending that sole jurisdiction rested with ITO, Ward 3(1)(4), Ahmedabad pursuant to the Section 127 transfer order, and requested that the proceedings be dropped.

Decision

  • Exclusive Jurisdiction: Following the Section 127 order dated 07.12.2015, ITO, Ward 3(1)(4), Ahmedabad became the sole Assessing Officer within the meaning of Section 2(7A) of the Act.
  • Lack of Authority: The ITO, Ward 3(3), Kolkata ceased to possess any jurisdiction over the assessee after the immediate transfer order was given effect.
  • Notice Non-Est: Reopening notice issued under Section 148 by an officer lacking jurisdiction is inherently without jurisdiction, null, and non-est in law.
  • Relief Granted: The impugned Section 148 notice and consequential proceedings were accordingly quashed in favour of the assessee.

Key Takeaways

  • Strict Definition of Assessing Officer: Under Section 2(7A), only the designated officer possessing active jurisdiction can exercise statutory powers of assessment or reassessment.
  • Effect of Section 127 Orders: A transfer order takes effect according to its explicit terms; once transferred “with immediate effect,” the transferor officer completely loses territorial competence.
  • Jurisdictional Defect is Incurable: Issuance of a notice by an officer lacking jurisdiction is a fundamental defect that invalidates the entire reassessment proceedings from inception.
HIGH COURT OF GUJARAT
Omkareshwar Mines and Minerals (P.) Ltd.
v.
Income-tax Officer
A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.
R/SPECIAL CIVIL APPLICATION NO. 13085 of 2019 †
SEPTEMBER  16, 2026
Tushar Hemani, Sr. Adv. and Ms. Vaibhavi K. Parikh for the Petitioner. Aaditya D. Bhatt for the Respondent.
JUDGMENT
Ms. Vaibhavi D. Nanavati, J.- By way of this writ-petition under Article 226 of the Constitution of India, the petitioner has challenged the Notice dated 31.03.2019 issued by the respondent No.1, the Income Tax Officer, Ward 3(3), Kolkata, under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’), seeking to reopen the income tax assessment of the petitioner for the Assessment Year (for short ‘A.Y.’) 2012-13.
2. The facts, as they emerge from the pleadings and the documents on record, are that the petitioner is a company engaged in the business of trading in various commodities, shares and securities and mutual funds. The petitioner was originally incorporated at Kolkata. Subsequently, the petitioner altered its Memorandum of Association so as to shift its registered office from the State of West Bengal to the State of Gujarat, which alteration was confirmed by an order dated 04.02.2011 passed by the Company Law Board, Eastern Region Bench, Kolkata, whereupon a fresh Certificate of Registration dated 02.04.2011 came to be issued by the Assistant Registrar of Companies, Gujarat, Dadra and Nagar Haveli. The petitioner also applied for change of its address in the Permanent Account Number (for short ‘PAN’) database, and a corrected PAN card bearing the Ahmedabad address was issued to the petitioner by the Income Tax Department.
2.1 Thereafter, the Principal Commissioner of Income Tax-1, Kolkata (for short ‘PCIT-1, Kolkata’), in exercise of the powers conferred by subsections (1) and (2) of Section 127 of the Act, passed an order dated 07.12.2015 whereby the case of the petitioner was transferred from the Income Tax Officer, Ward 3(3), Kolkata (the respondent No.1 herein) to the Income Tax Officer, Ward 3(1)(4), Ahmedabad (the respondent No.2 herein) “with immediate effect”. A copy of the said order was marked, inter alia, to the respondent No.1, who was requested to forward a copy thereof to the petitioner and to send a certificate of service to the office of the PCIT-1, Kolkata. Pursuant to the said transfer, the assessments of the petitioner for A.Y. 2013-14 and A.Y. 2014-15 came to be framed under Section 143(3) of the Act by the Income Tax Officer, Ward 3(1)(4), Ahmedabad vide orders dated 28.03.2016 and 04.10.2016 respectively.
2.2 For the year under consideration, i.e. A.Y. 2012-13, the petitioner had filed its return of income on 29.08.2012, which was processed under Section 143(1) of the Act vide intimation dated 22.02.2013. No notice under Section 143(2) of the Act was issued and no other proceedings were taken for the said year. Straightaway, on 31.03.2019, i.e. on the last day of the period of six years from the end of the relevant assessment year, the respondent No.1, the Income Tax Officer, Ward 3(3), Kolkata, issued the impugned Notice under Section 148 of the Act, through e-mail, seeking to reopen the assessment of the petitioner for A.Y. 2012-13. The impugned Notice itself records that it was issued “after obtaining the necessary satisfaction of the PCIT 1, KOLKATA”, i.e. the very authority which had, by the order dated 07.12.2015, transferred the case of the petitioner to Ahmedabad.
2.3 The petitioner, vide letter dated 02.04.2019 sent by Registered Post A.D. and delivered to the respondent No.1 on 05.04.2019, pointed out that its jurisdiction lay with the Income Tax Officer, Ward 3(1)(4), Ahmedabad by virtue of the order dated 07.12.2015 passed under Section 127 of the Act by the PCIT-1, Kolkata, a copy whereof was enclosed, and that the impugned Notice issued by the respondent No.1 was, therefore, without jurisdiction and deserved to be dropped. Receiving no response, the petitioner sent a reminder by e-mail dated 20.05.2019. Instead of dealing with the objection, the respondent No.1 issued a communication dated 24.07.2019 calling upon the petitioner to file its e-return in response to the impugned Notice within seven days, failing which the assessment would be completed without any further reference to the petitioner. It is in these circumstances that the petitioner has approached this Court.
2.4 The respondent No.1 has filed an affidavit-in-reply dated 25.09.2019. It is not disputed therein that the order dated 07.12.2015 under Section 127 of the Act was passed by the PCIT-1, Kolkata transferring the case of the petitioner to the Income Tax Officer, Ward 3(1)(4), Ahmedabad. The stand taken is that the petition is premature and that an alternative remedy of appeal is available; that the impugned Notice was issued within the period of limitation on the correct address of the petitioner; and that, “as per the jurisdictional history of PAN database, the PAN of the petitioner was lying with the respondent no.1 at the time of issuing notice under section 148 of the Act”, and hence there was nothing amiss in the respondent No.1 assuming jurisdiction over the petitioner on the basis of its PAN record available with the central registry of the Revenue. The petitioner has filed an affidavit-in-rejoinder reiterating that the respondent No.1 had no jurisdiction on the date of the impugned Notice, and has, pursuant to the directions of this Court, filed an additional affidavit dated 24.04.2024 placing on record the acknowledgment of the return of income and the intimation under Section 143(1) of the Act for A.Y. 2012-13.
3. Learned Senior Counsel Mr.Tushar Hemani appearing for the petitioner has submitted that the impugned Notice is without jurisdiction and non-est, inasmuch as, on the date of its issuance, the respondent No.1 was not the “Assessing Officer” of the petitioner within the meaning of Section 2(7A) of the Act. He has invited the attention of this Court to the scheme of the Act, and has submitted that under Section 147 of the Act it is only the “Assessing Officer” who, on having reason to believe that income chargeable to tax has escaped assessment, may assess or reassess such income, and that under Section 148 of the Act it is only the “Assessing Officer” who can issue the notice which is the foundation of the jurisdiction to reassess. He has submitted that the expression “Assessing Officer” is defined in Section 2(7A) of the Act to mean the officer “who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act”, and that an order of transfer under Section 127 of the Act is precisely such an order under “any other provision of this Act” by which jurisdiction is divested from one Assessing Officer and vested in another.
3.1 It is submitted that, in the present case, the PCIT-1, Kolkata, being the authority competent under Section 127 of the Act, by the order dated 07.12.2015 transferred the case of the petitioner from the respondent No.1 to the respondent No.2 “with immediate effect”; that the said order has attained finality and has been acted upon by the Revenue itself, inasmuch as the assessments of the petitioner for A.Y. 2013-14 and A.Y. 2014-15 were thereafter framed by the respondent No.2 at Ahmedabad; and that, from 07.12.2015 onwards, the respondent No.1 stood divested of all jurisdiction over the petitioner and became functus officio qua the petitioner. It is, therefore, submitted that on 31.03.2019, the only “Assessing Officer” of the petitioner in the eye of law was the Income Tax Officer, Ward 3(1)(4), Ahmedabad, and the respondent No.1, not being the Assessing Officer, had no authority in law to record reasons, to obtain sanction or to issue the impugned Notice under Section 148 of the Act.
3.2 It is further submitted that the stand of the respondent No.1 that the PAN of the petitioner was “lying with” it in the PAN database is wholly untenable, since jurisdiction under the Act is conferred by orders passed under Sections 120 and 127 of the Act and not by the state of an administrative database, and that the failure of the Revenue to migrate the PAN in its own records cannot confer jurisdiction upon an officer from whom the case stands transferred by a statutory order.
4. Opposing the present petition, learned Senior Standing Counsel for the Revenue, Mr.Aaditya Bhatt has reiterated the stand taken in the affidavit-in-reply. It is submitted that the petition is premature, only a notice under Section 148 of the Act having been issued, and that the petitioner has an efficacious alternative remedy under the Act. It is submitted that the impugned Notice was issued within the period of limitation prescribed under Section 149 of the Act, at the correct address of the petitioner and after obtaining the approval of the competent authority; that, as per the jurisdictional history of the PAN database, the PAN of the petitioner was lying with the respondent No.1 at the relevant time; and that, therefore, there was no infirmity in the respondent No.1 assuming jurisdiction over the petitioner on the basis of its PAN record. Thus, it is urged that the writ-petition may not be entertained.
5. We have heard the learned advocates for the respective parties and have perused the material on record.
6. The controversy in the present petition lies in a narrow compass, namely, whether the respondent No.1, the Income Tax Officer, Ward 3(3), Kolkata, was the “Assessing Officer” of the petitioner on 31.03.2019, the date on which the impugned Notice under Section 148 of the Act came to be issued. The relevant statutory provisions may be noticed. Section 147 of the Act, as it stood at the relevant time, provides that “if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income”. Section 148(1) of the Act provides that “before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish” a return of income, and sub-section (2) thereof requires that “the Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so”. The expression “Assessing Officer” is defined in Section 2(7A) of the Act to mean, so far as is relevant, the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer “who is vested with the relevant jurisdiction by virtue of directions or orders issued under subsection (1) or sub-section (2) of section 120 or any other provision of this Act”. Section 127 of the Act empowers the Principal Commissioner or Commissioner, after giving the assessee a reasonable opportunity of being heard and after recording reasons, to “transfer any case from one or more Assessing Officers subordinate to him . to any other Assessing Officer or Assessing Officers”; and the Explanation to the said Section provides that the word “case”, in relation to any person whose name is specified in the order of transfer, “means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year”.
7. A conjoint reading of the aforesaid provisions makes the scheme of the Act clear. The power to reopen an assessment under Section 147 of the Act, and the power to issue the jurisdictional notice under Section 148 of the Act which is the sine qua non for the exercise of that power, are conferred upon the “Assessing Officer” and upon no one else. The “Assessing Officer”, by definition, is not any officer of the Income Tax Department, but only that officer who is vested with the relevant jurisdiction over the assessee by an order or direction under Section 120 of the Act “or any other provision of this Act”. An order of transfer under Section 127 of the Act is one such provision. Once a case is transferred under Section 127 of the Act from one Assessing Officer to another, the transferee officer alone becomes the “Assessing Officer” of that assessee in respect of all proceedings, pending, completed or to be commenced in future, for any year, and the transferor officer stands divested of jurisdiction over that assessee in respect of all such proceedings. That is the plain consequence of the definition of “case” in the Explanation to Section 127 of the Act.
8. Applying the aforesaid to the facts of the present case, it is not in dispute that the PCIT-1, Kolkata, being the competent authority, passed the order dated 07.12.2015 under Section 127 of the Act transferring the case of the petitioner from the respondent No.1 to the respondent No.2 “with immediate effect”. The said order was communicated to the respondent No.1, who was himself charged with the duty of forwarding a copy thereof to the petitioner. The order has not been recalled, modified or set aside, and no subsequent order under Section 127 of the Act retransferring the case to Kolkata has been placed on record. On the contrary, the Revenue has acted upon the said order, inasmuch as the scrutiny assessments of the petitioner for A.Y. 2013-14 and A.Y. 2014-15 were framed under Section 143(3) of the Act by the respondent No.2 at Ahmedabad on 28.03.2016 and 04.10.2016 respectively. Thus, on and from 07.12.2015, it was the Income Tax Officer, Ward 3(1)(4), Ahmedabad, and he alone, who was the “Assessing Officer” of the petitioner within the meaning of Section 2(7A) of the Act. On 31.03.2019, when the impugned Notice came to be issued, the respondent No.1 was not the Assessing Officer of the petitioner, and had no jurisdiction to record reasons, to seek sanction, or to issue a notice under Section 148 of the Act in respect of the petitioner for any assessment year, including A.Y. 2012-13.
9. The only answer offered by the Revenue is that, as per the “jurisdictional history of PAN database”, the PAN of the petitioner was “lying with” the respondent No.1 on the date of the impugned Notice. The submission has only to be stated to be rejected. Jurisdiction of an Assessing Officer under the Act is conferred by statute and by orders passed under the statute, namely under Sections 120 and 127 of the Act; it is neither conferred nor retained by the entries in an administrative database maintained by the Department for its own convenience. The PAN database is required to reflect the jurisdiction as it exists in law; the law does not take its shape from the database. If, notwithstanding the order dated 07.12.2015, the PAN of the petitioner was not migrated to the Ahmedabad charge, that is a lapse on the part of the Revenue in giving effect to its own statutory order, and such a lapse can neither confer jurisdiction upon the respondent No.1, from whom the case stood transferred, nor take away the jurisdiction of the respondent No.2, in whom it stood vested. It is also significant that the impugned Notice records that it was issued after obtaining the satisfaction of the PCIT-1, Kolkata, i.e. the very authority which had, more than three years earlier, transferred the case of the petitioner out of its own charge, and that the petitioner, by the letter dated 02.04.2019, promptly brought the order under Section 127 of the Act to the notice of the respondent No.1, who chose not to deal with the objection at all and instead pressed on with the proceedings by the communication dated 24.07.2019.
10. The issuance of a valid notice under Section 148 of the Act by the Assessing Officer having jurisdiction over the assessee is a condition precedent to the assumption of jurisdiction under Section 147 of the Act, and is not a mere procedural formality. A notice under Section 148 of the Act issued by an officer who is not the Assessing Officer of the assessee is a notice issued without authority of law; it is non-est, and no valid reassessment can be founded upon it. This Court, in the case of Hynoup Food & Oil Industries Ltd. v. Asstt. CIT 307 ITR 115 (Gujarat) has held that where the notice under Section 148 of the Act is issued by an officer who did not have jurisdiction over the assessee, the notice and the consequent proceedings are without jurisdiction and cannot be sustained. We are in respectful agreement with the said view, which, in any case, follows from the plain language of Sections 2(7A), 127, 147 and 148 of the Act.
11. In the result, we hold that on 31.03.2019, the respondent No.1, the Income Tax Officer, Ward 3(3), Kolkata, was not the “Assessing Officer” of the petitioner within the meaning of Section 2(7A) of the Act, the jurisdiction over the petitioner having stood transferred to the Income Tax Officer, Ward 3(1)(4), Ahmedabad by the order dated 07.12.2015 passed under Section 127 of the Act, and that the impugned Notice under Section 148 of the Act issued by the respondent No.1 is, therefore, without jurisdiction and cannot be sustained. In view of this conclusion, it is not necessary for us to examine any other contention raised on behalf of the petitioner, and the same are kept open.
12. For the foregoing reasons, the writ-petition stands allowed. The impugned Notice dated 31.03.2019 issued by the respondent No.1 under Section 148 of the Act for the Assessment Year 2012-13, and all consequential proceedings pursuant thereto are hereby quashed and set aside. Rule is made absolute. There shall be no order as to costs.