ITAT Nullifies Rs. 445 Crore Tax Assessment Proceedings; Holds PCIT Lacked Jurisdiction
The ITAT Delhi allowed the assessee’s appeal, holding the case transfer itself invalid. Since the PCIT who transferred the case lacked jurisdiction, the entire assessment, making an addition of Rs. 445 crore, was declared void, and all subsequent proceedings were also left invalid.
Kunshan Q Tech Microelectronics (India) Private Limited has filed the present appeal in the Income Tax Appellate Tribunal (ITAT), Delhi, challenging a final assessment order dated October 29, 2024, passed by tax authorities under Section 143(3)/144C(13) of the Income Tax Act. The case is related to the Assessment Year 2021-22. The impugned order had made an addition amounting to Rs. 445 crore to the assessee’s income, assessing total income at Rs. 353 crore against a returned loss of about Rs. 99 crore.
Several grounds were raised by the assessee claiming the assessment was illegal, unjustified, arbitrary, and against the principles of natural justice. Key issues raised by the assessee included incorrect transfer pricing adjustments, disallowance of depreciation, stock difference addition, unexplained expenditure, wrongful application of section 115BBE, levy of interest, and initiation of penalty proceedings. Of which, one ground relating to limitation was dismissed.
During the assessment proceedings, the assessee raised another additional key ground challenging directly the jurisdiction of the authority handling its case. The assessee claimed that the order dated May 27, 2022, passed under section 127 of the Income Tax Act, which transferred its case to DCIT, Central Circle-30, was passed by PCIT Delhi-10, who allegedly had no jurisdiction over the assessee’s case because, as per the jurisdictional records, PCIT Delhi-10 handled the assessee’s case and only has jurisdiction to handle non-corporate cases, whereas the assessee, being a corporate company, falls under PCIT Delhi-5.
The tribunal, after examining the facts of the case, agreed with the additional ground raised by the assessee. The tribunal found the jurisdiction indeed invalid as per the rules. As a result, the ITAT concluded that PCIT Delhi-10 lacked inherent jurisdiction to pass the section 127 transfer order. The tribunal held the transfer order as void ab initio (invalid from the beginning).
Accordingly, all the subsequent proceedings were held invalid. The ITAT set aside the impugned assessment order dated October 29, 2024. Since the appeal was decided on jurisdictional grounds, other issues on the merits were not examined and were left open.
Citation: Kunshan Q Tech Microelectronics (India) Private Limited Vs DCIT (ITAT Delhi); ITA No.5356/Del/2024; 20/01/2026; 2021-22
