Jurisdictional Error Voids Tax Order: A Case of Miscommunication

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Case Name

Ramshila Enterprises Pvt. Ltd. vs. Principal Commissioner of Income Tax (High Court of Calcutta)

GA No.3929 of 2015 With ITAT No.181 of 2015

Date: 8th March 2016

Key Takeaways

• The court emphasized the importance of jurisdiction in issuing tax orders.
• It highlighted the procedural requirements for transferring jurisdiction under the Income Tax Act.
• The decision underscores the necessity for tax authorities to ensure proper communication and adherence to procedural rules.

Issue

Did the Commissioner of Income Tax, Kolkata-II, have the jurisdiction to issue an order under Section 263 of the Income Tax Act after the jurisdiction had been transferred to another authority?

Facts

• Ramshila Enterprises Pvt. Ltd. filed a return for the assessment year 2008-2009.
• A notice under Section 263 was issued on March 18, 2013, by the CIT, Kolkata-II.
• The jurisdiction over the case had been transferred to the ACIT/DCIT, Central Circle XIX, Kolkata, on September 3, 2012.
• The order under Section 263 was passed on March 26, 2013, without giving the assessee a proper opportunity to be heard.

Arguments

• For Ramshila Enterprises: The CIT, Kolkata-II, lacked jurisdiction to issue the order as the jurisdiction had been transferred. The order was passed without proper notice and opportunity for a hearing.
• For the Revenue: The service of notice was proper, and the CIT had jurisdiction at the time of issuing the order.

Key Legal Precedents

• SBI vs. S. N. Goyal: Discussed the concept of functus officio, where an authority loses its power to act once a decision is made and communicated.
• Pandurang and Others vs. State of Maharashtra: Highlighted that a decision by a court lacking jurisdiction is a nullity.
• Section 263 and Section 127 of the Income Tax Act: These sections were central to the arguments about jurisdiction and procedural correctness.

Judgement

The court ruled in favor of Ramshila Enterprises, stating that the CIT, Kolkata-II, was functus officio and lacked jurisdiction to issue the order under Section 263. The order was declared null and void due to the improper transfer of jurisdiction and lack of proper notice to the assessee.

FAQs

Q: What does ‘functus officio’ mean in this context?

A: It means that once an authority has made a decision and communicated it, they lose the power to alter that decision or take further action on it.

Q: Why was the order under Section 263 declared void?

A: The order was declared void because it was issued by an authority that no longer had jurisdiction over the case, as the jurisdiction had been transferred to another authority.

Q: What is the significance of this case for other taxpayers?

A: This case highlights the importance of ensuring that tax authorities follow proper procedures and maintain clear communication when transferring jurisdiction. It also underscores the necessity for taxpayers to be given a fair opportunity to be heard.

The subject matter of challenge in the appeal is a judgment and order dated 30th July, 2015 passed by the learned Tribunal disposing of 19 several appeals by a common judgment. All the aforesaid 19 appeals were preferred by 19 several assessees. The appellant in this case is Ramshila Enterprises Pvt. Ltd., that is to say, one of the 19 appellants before the Tribunal. In dealing with this appeal we are only concerned with the appellant, Ramshila Enterprises Pvt. Ltd. Our findings and observations are naturally restricted to the appellant before us. The relevant assessment year was 2008-2009. Return was filed on 6th November, 2008 showing loss of a sum of Rs.4053/- and seeking refund of a sum of Rs.39,546/-. From the profit and loss account it appears that a sum of Rs.27,232/- was written off allegedly incurred on account of preliminary expenses. A sum of Rs.92,000/-, on the asset side, on account of preliminary expenses, was shown in the balance-sheet. From the balance-sheet, it also appears that as at 31st March, 2007, the share capital was Rs.63.63 lacs and the reserve and surplus was Rs.59.70 lacs approximately. However, as on 31st March, 2008 that is to say in the relevant previous year the share capital rose to Rs.2,57,00,000/- approximately and the reserve and surplus rose to Rs.37.52 crores approximately. There was no scrutiny assessment. Refund as prayed for was duly granted by a cheque dated 8th May, 2009 as would appear from page 191 of the additional papers submitted by Mr. Poddar. On 12th April, 2010 a notice under section 148 was issued to the assessee, a copy whereof is at page 192 of the additional papers filed by Mr. Poddar. Assessment under Section 147/143(3) was completed on 21st May, 2010 by disallowing a sum of Rs.23,000/- under Section 35D by which the profit and loss account had been debited on account of preliminary expenses. A notice under Section 263 was issued on 18th March, 2013, which, it is claimed by the revenue, was served at the last known address of the assessee i.e. at 4, G. C. Avenue by affixation. It is also claimed that service was sought to be effected on 18th March, 2013 itself without success and thereafter, on 19th March, 2013 the service was effected by affixation, as would appear from the document appearing at page 590 signed by the Income Tax Inspector. The notice dated 18th March, 2013 required the assessee to appear on 25th March, 2013 along with its written submissions, if any, to show cause as to why the assessment made under Section 147/143(3) on 21st May, 2010 should not be revised under Section 263 of the Income Tax Act. An order under Section 263 was passed ex parte by the CIT on 26th March, 2013 setting aside the order dated 21st May, 2010 passed under Section 147/143(3) and remitting the matter to the Assessing Officer with the following directions:-

“i] Examine the genuineness and source of share capital, not on a test check basis but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital.

ii] Further the A.O. should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest.

iii] The A.O. is directed to examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors, if any. After conducting the inquiries & verification as directed above, the A.O. should pass a speaking order, providing adequate opportunity of being heard to the assessee.”

Challenging the aforesaid order of the CIT, the assessee unsuccessfully approached the learned Tribunal. The learned Tribunal dismissed the appeal.

The assessee is, therefore, before us. Mr. Poddar, learned senior advocate appearing for the assessee/appellant, has pressed the following questions of law:-

“(a) Whether the Tribunal was justified in holding that the Commissioner of Income Tax, Kolkata-II, had jurisdiction over the appellant at the time of issue of the Show Cause notice on 18th March, 2013 and passing of the order on 26th March, 2013 under section 263 of the Income Tax Act, 1961 in spite of transfer of jurisdiction to the Commissioner of Income Tax, Central Circle, Kolkata vide an order dated 3rd September, 2012 under section 127 (2)(a) of the said Act and its purported findings in that behalf are arbitrary, unreasonable and perverse?

(b) Whether and in any event, the order under section 263 was passed without granting any opportunity to the appellant and the purported findings of the Tribunal regarding service of notice and grant of opportunity are arbitrary, unreasonable and perverse?”

Mr. Poddar submitted that the assessee had already changed his address from 4, Ganesh Chandra Avenue to 27, Brabourne Road, as would appear from the communication issued to the assessee by the Income Tax Pan Service Unit desptached on 29th July, 2011, which would go to show that the current address of the assessee was “ 5th Floor, Room No.503, Narayani Building, 27, Brabourne Road, West Bengal, Pin- 700 001”, whereas the notice dated 18th March, 2013 was sent at 4, Ganesh Chandra Avenue, 1st Floor,Room No.1. Mr. Poddar submitted that mode of service is provided by Section 282 of the Income Tax Act. According to him, clauses (a) and (b) are material for our purpose, but we would like to quote sub-Section 1 of Section 282 in extenso, which reads as follows:-

“282. Service of notice generally.-(1) The service of a notice or summons or requisition or order or any other communication under this Act (hereinafter in this section referred to as “communication”) may be made by delivering or transmitting a copy thereof, to the person therein named:-

(a) by post or by such courier services as may be approved by the Board; or

(b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or

(c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000);

(d) by any other means of transmission of documents as provided by rules made by the Board in this behalf.”

Mr. Poddar contended that the law requires service both personally and by post. He added that where service has been sought to be effected by both the modes of service and any one of them is successful, service can be deemed to have been completed. He contended that the CIT did not follow the procedure for service of notices. He did not even try to serve by post or by courier. It may, according to him, be due to an ulterior motive. Because that would have shown with some amount of certainty as to when was the notice dated 18th March, 2013 actually posted by him. This is important, according to him, for the simple reason that time granted was only seven days from the date of issue, which by no stretch of imagination can be said to be a reasonable time. The CIT, therefore, deliberately did not take recourse to the procedure laid down in the law and took recourse to personal service that too at a wrong address. He drew our attention to the declaration made by the Inspector, which is at page 590 of the additional papers filed by him. He submitted that it would appear that the Inspector did not make any attempt whatsoever to try to find out the correct address of the assessee. Even assuming that the Inspector served by affixation, it was a perfunctory piece of job performed by him and by no means is in accordance with the law laid down by various Courts including the Supreme Court. He in support of his submission relied upon the judgement in the case of Rameshwar Sirkar –Vs-Income Tax Officer reported in (1973) 88 ITR 374 wherein the following views were expressed:-

“The mere fact that the serving officer did not find the assessee to be served with the notice at his address is not sufficient to establish that he could not be found. It must be shown not only that the serving officer went to that place at a reasonable time when the assessee was expected to be present, but also that if he was not found, proper and reasonable attempts had been made to find him either at that address or elsewhere. A notice by affixture without reasonable attempts to find the assessee is not a proper notice.”

He also drew our attention to the statutory Form of an application for allotment of Permanent Account Number, which is provided in the Income Tax Rules in Form 49A, which requires of the assessee to give both his residential and office address, and column 8 of the Form requires the assessee to specify the address for communication whether residence or office. He submitted that all changes in the address of the assessee are also required to be notified in the same form. He wanted to submit that the address of the assessee at Narayani Building in Brabourne Road was duly recorded way back on 29th July, 2011, as indicated above. What clinches the issue, according to him, is the fact that on 18th March, 2013 itself the assessee received a notice under Section 143(2) of the Income Tax Act pertaining to a subsequent assessment year i.e. 2012-13 in his office at Narayani Building, 27, Brabourne Road. Mr. Poddar submitted that this goes to show that the CIT tried to steal a march by keeping the assessee in the dark. He passed an order under Section 263 setting aside the order passed under Section 147/143(3) without giving any opportunity of hearing to the assessee and therefore, the order is patently bad.

The learned Tribunal without any evidence arrived at the following erroneous finding:-

“26.s. Coming back to the language of section 263(1) requiring the passing of order ‘after giving the assessee an opportunity of being heard’, it transpires that it refers to giving opportunity of hearing. If despite genuinely giving opportunity of hearing by the CIT, the assessee tries to hoodwink by evading the service of notice as has been done in the cases before us, then the requirement of giving ‘opportunity of hearing’ gets fully satisfied with. As such, we do not find any lack of opportunity of hearing by the ld. CIT in all such cases. This argument fails.”

Mr. Poddar contended that there was no opportunity given not to talk of any genuine opportunity as erroneously opined by the learned Tribunal. Mr. Ghosal, learned senior advocate, appearing for the revenue drew our attention to paragraph 26.m of the impugned judgment, which reads as follows:-

“As far as service of notice in the case of Ramshila Enterprises Pvt. Ltd. is concerned, we find that the assessee has been shifting its address from time to time, as has been pointed out by the learned DR. When such frequent change in the address is seen in the background of the factual position as discussed in the earlier part of the order, we cannot resist the conclusion that the service at the last known address by affixture was proper.” He backed up his submissions by referring to the following documents filed by Mr. Poddar.

He drew our attention to a document dated 8th May, 2009 at page 191 issued by the ITO Ward 4(1) by which cheque dated 8th May, 2009 on account of refund was sent to the assessee. The address, appearing in the aforesaid document, of the assessee is 4th Floor, room no.405, Mukti Chamber, 4 Clive Row, Kolkata. Same is the address appearing in another document issued by the Income-tax department appearing at page 191A. He then drew our attention to the notice under section 148 of the Income-tax Act dated 12th April, 2010, which was admittedly received by the assessee in pursuance whereof, he also filed his response and this letter was served upon the assessee at 14 Princep Street, 3rd Floor, Kolkata-700012. He also drew our attention to a letter dated 21st May, 2010 addressed by the assessee to the CIT appearing at page 578 of the additional documents, filed by Mr. Poddar, from which it appears that the prayer for migration made by a letter dated 11th March, 2010 was no longer being pressed.

Mr. Ghosal submitted that it is not known as to from which place to which place was the prayer made by the assessee for migration. All that is discernible from the letter dated 21st May, 2010 is that the prayer for migration was not pressed. He contended that there are thus four addresses available;

a) Ganesh Chandra Avenue

b) Clive Row

c) Princep Street

d) Brabourne Road

He contended that if contention of Mr. Poddar is to be believed that the assessee had shifted to Narayani Building at Brabourne Road from his office at Ganesh Chandra Avenue then in that case the notice under section 148 dated 12th April, 2010 could not have been served upon the assessee at 14,Princep Street. The assessee does not dispute the fact that the notice was duly received by him and he acted on that basis. It cannot be held in the circumstances that the assessee was not carrying on business at the relevant point of time from 4, Ganesh Chandra Avenue. The only conclusion, according to him, which can be arrived at is that the assessee avoided service. He submitted that this is what the learned Tribunal meant when it held that the service was proper. He contended that the finding of fact arrived at by the learned Tribunal is final. Perversity cannot be a ground in the facts of the case so that this Court can arrive at any independent finding. Therefore, the question no.(b) should be answered in the negative and in favour of the revenue.

We have considered the rival submissions. Considering that the assessee admittedly received the notice dated 12th April, 2010 under Section 148 at a place other than 4,Ganesh Chandra Avenue where the assessee admittedly was carrying on business and considering that the assessee had simultaneously been operating from four different places indicated above, we are of the opinion that the view taken by the learned Tribunal in paragraph 26.m, quoted above, is a plausible view and does not admit of any challenge on the ground perversity. Therefore the question No. (b) is answered in the negative and in favour of the Revenue.

Now we come to the question No.(a).

Mr. Poddar, learned senior advocate, drew our attention to an order dated 3rd September, 2012 appearing at page 584 of the additional papers filed by him, which is an order passed under section 127 of the Income Tax Act by no other than the CIT, Kolkata-II, Kolkata, who passed the impugned order under Section 263, transferring the jurisdiction over five assessees including the appellant before us to the ACIT/DCIT, Central Circle XIX, Kolkata in the interest of revenue for better coordination, effective investigation and meaningful assessment consequent to a search conducted on 17th November, 2011 against the business concern of Atha Mines. Mr. Poddar contended that the appellant before us is not in any way connected with Atha Mines Group. But the point of substance is that the impugned order under section 263 was passed by the CIT, Kolkata-II, Kolkata in spite of the fact that the jurisdiction had already been transferred by his predecessor- in-office by his order dated 3rd September, 2012 with immediate effect. Mr. Podder contended that CIT, Kolkata-II, Kolkata thereafter had no longer any jurisdiction left with him to be exercised in respect of the return or returns filed by the assessee or assessments made. He submitted that the exercise of power was not only ex parte, without notice, but was also without jurisdiction.

He drew our attention to the letter dated 18th March, 2013 received by his client from the Deputy Commissioner of Income-tax, which is a notice under section 143(2) pertaining to the assessment year 2012-2013. He submitted that the order dated 3rd September, 2012 transferring jurisdiction to a ACIT/DCIT, Central Circle-XIX, Kolkata had already become operative and was also acted upon. Therefore, CIT, Kolkata-II, Kolkata could not have exercised jurisdiction. The impugned order passed by him is altogether without jurisdiction and is, therefore, a nullity.

He drew our attention to a judgment of the Apex Court in the case of Pandurang and Others Vs. State of Maharashtra reported in (1986) 4 SCC 436 for the proposition that even a right order by a wrong forum is a nullity.

In the aforesaid judgment their Lordship held as follows:-

“4. When a matter required to be decided by a Division Bench of the High Court is decided by a learned Single Judge, the judgment would be a nullity, the matter having been heard by a court which had no competence to hear the matter, it being a matter of total lack of jurisdiction. The accused was entitled to be heard by at least two learned Judges constituting a Division Bench and had a right to claim a verdict as regards his guilt or innocence at the hands of the two learned Judges. This right cannot be taken away except by amending the rules. So long as the rules are in operation it would be arbitrary and discriminatory to deny him this right regardless of whether it is done by reason of negligence or otherwise. Deliberately, it cannot be done.

Negligence can neither be invoked as an alibi, nor can cure the infirmity or illegality, so as to rob the accused of his right under the rules. What can be done only by at least two learned Judges cannot be done by one learned Judge. Even if the decision is right on merits, it is by a forum which is lacking in competence with regard to the subject matter. Even a ‘right’ decision by a ‘wrong’ forum is no decision. It is non-existent in the eye of law. And hence a nullity. The judgment under appeal is therefore no judgment in the eye of law. This Court in State of M.P. v. Dewadas has taken a view which reinforces our view. We, therefore, allow the appeal, set aside the order passed by the learned Single Judge, and send the matter back to the High Court for being placed before a Division Bench of the High Court, which will afford reasonable opportunity of hearing to both the sides and dispose it of in accordance with law, expeditiously.”

He also relied upon a Division Bench judgement of this Court in the case of ITO, ‘A’ Ward, District Howrah And Others Vs. Ashoke Glass Works reported in (1980) 125 ITR 491 (Cal) wherein the following view was expressed:-

“So when the jurisdiction is validly removed by a competent authority under the provisions of a statute, the original court or any Tribunal or authority in such event will be incompetent, as having ceased to have jurisdiction, to proceed further with the pending proceeding or proceeding which may be instituted after such removal of jurisdiction.”

Mr. Ghosal, learned senior advocate appearing for the revenue submitted that the transfer order itself indicates that jurisdiction of ITO, WD-4(1), Kolkata was transferred to SCIT/DCIT Central Circle XIX, Kolkata, which is at page 584.

The jurisdiction of the CIT remained unchanged. In other words, it is the jurisdiction of the Trial Court, which was changed. The jurisdiction of the appellate authority remained unchanged. Therefore, the order under challenge was validly passed by the CIT.

Mr. Poddar, in reply, drew our attention to the explanation appended to section 127 of the Income-tax Act which reads as follows:-

“In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, 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 or such order or direction in respect of any year.”

He submitted that the transfer of a case would mean all pending and future proceedings. He submitted that even the learned Tribunal has conceded that “CIT, Central Circle, Kolkata had jurisdiction over cases with ACIT/DCIT, Central Circle-XIX, Kolkata”.

He submitted that having held that the learned Tribunal was wrong in point of law, in holding as follows:-

“The definition of ‘case’ for the purpose of sec.127 of the Act as given in the Explanation below sec.127 does not debar the Commissioner from transferring only a particular case, more so when the request for transfer was made in specific circumstances, such as proper co-ordination of search cases. The Commissioner transferring jurisdiction has power to transfer all proceedings under the Act, which are pending, completed or which may be commenced after the date of transfer, but that does not mean that he does not have powers to restrict his order of transfer only to a particular case for which request was made, thereby, leaving the jurisdiction in respect of other cases pertaining to an assessee to be exercised by the AO/CIT who already had it. The power to do a particular act also includes a power to restrict the exercise of power partly. It cannot be said that the power should be exercised either as a whole or not at all. Such an argument is fallacious and defeats the very purpose of conferring a larger power. As the actual transfer of the files from the incumbent AO to the new AO had taken place only on 29.7.2013 and further the order sought to be revised by the ld. CIT u/s 263 was passed much prior to the even making of request for transfer of jurisdiction in respect of search matters, we have absolutely no doubt in our mind that only the CIT Kolkata II, Kolkata had the jurisdiction to revise the assessment order passed u/s147 as has been done in this case. The contention of the learned AR in this regard is held to be without substance and not unacceptable.”

We have considered the rival submissions. It is not necessary for us to consider whether the Commissioner had jurisdiction to restrict the order of transfer, for the simple reason that the order of transfer in this case was not a restricted one. Reading the order dated 3rd September, 2012 as a whole, it does not appear that any restricted transfer was sought to be made for any particular year or years or otherwise. The order of transfer, as we have already indicated, was passed in the interest of revenue for better coordination, effective investigative and meaningful assessment.

The actual transfer of files may have taken place on 29th July, 2013 but admitted position is that a notice under Section 143(2) by the transferee-assessing officer was issued on 18th March, 2013. The existence of files does not confer the jurisdiction when the same has validly been transferred and also acted upon. The jurisdiction over the subject-matter has to be conferred by law. The jurisdiction in this case had been transferred by the order dated 3rd September, 2012 by no other than the CIT Kolkata- II, Kolkata himself.

Once that was done CIT Kolkata – II, Kolkata lost the seisin over the matter.

He became ‘functus officio’.

Reference in this regard may be made to the Stroud’s Judicial Dictionary of Words and Phrases, 7th Edition, Page 1085 wherein the following meaning has been expressed:-

“FUNCTUS OFFICIO. An arbitrator or referee cannot be said to be functus officio when he has given a decision which is held to be no decision at all (Davies v Howe Spinning Co Ltd, 27 B.W.C.C. 207).

Where a judge has made an order for a stay of execution which has been passed and entered, he is functus officio, and neither he nor any other judge of equal jurisdiction has jurisdiction to vary the terms of such stay (Re V.G.M. Holding Ltd [1941] 3 All E.R. 417).

An arbitrator or umpire who has made his award is functus officio, and could not by common law alter it in any way whatsoever; he could not even correct an obvious clerical mistake. See Mordue v Palmer, 6 Ch. App. 22; Henfree v Bromley, 6 East, 309; Brooke v Mitchell, 6 M. & W.473. See now Arbitration Act 1950 (c.27), s.17.”

Reference may also be made to the judgement in the case of Re V.G.M. Holdings, Ltd. reported in 1941 (3) All England Law Reports, 417 wherein the following views were expressed:-

“I think that it would be a strange position if a judge were at liberty to reconsider his decision and grant a stay of execution after he had made an order refusing it. I think that, when a judge has made an order such as that in the present case, the only remedy for the respondent, if he is dissatisfied with the order, is to go to the Court of Appeal...”

A special bench in the case of Komal Chand –Vs- The State of Madhya Pradesh, reported in AIR 1966 Madhya Pradesh 20 opined in this regard as follows:-

“Section 35 of the Stamp Act, inter alia, says that no instrument chargeable with duty shall be registered by any public officer unless such instrument is duly stamped. This provision thus casts a duty on the registering officer to examine whether an instrument presented for registration is duly stamped. If, as section 36 says, an instrument chargeable with duty shall not be registered unless such instrument is duly stamped, then it follows that the registering officer must perform the duty of seeing whether an instrument presented for registration is or is not duly stamped before admitting it to registration and not afterwards. If he finds that the document is not duly stamped, then he must impound it under Section 33 of the Act. Neither in the Registration Act nor in the Stamp Act is there any provision giving to the registering officer any power to examine whether an instrument already registered was or was not duly stamped and to impound it. As soon as the registering officer registers a document presented to him for registration, the function in the performance of which the document was produced before him is over and thereafter becomes functus officio having no power under section 33 to impound the instrument.

The matter is really concluded by the decision of the Supreme Court in Govt. of Uttar Pradesh v. Mohammad Amir Ahmad Khan, AIR 1961 SC 787. That was a case where the question arose whether the Collector has any power to impound an instrument sent to him for adjudication under section 31 of the Stamp Act. The Supreme Court held that under that section the Collector had no such power, as the provision gave him the power only to give his opinion as regards the duty with which in his judgment the instrument was chargeable and when that function was performed by the Collector he became functus officio.

It was observed by the Supreme Court that the power to impound only exists when an instrument is produced before judicial officers or other officers performing judicial functions as evidence of any fact to be proved, or before other public officers who have to perform any function in regard to those instruments as, for example, registration. The Supreme Court also approved the decisions in Collector, Ahmednagar v. Rambhau, AIR 1930 Bom 392 (FB); Paiku v. Gaya, ILR (1948) Nag 950 : (AIR 1949 Nag 214) and Panakala Rao v. Kumaraswami, AIR 1937 Mad 763 where the doctrine of functus officio was applied and it was held that the Court had no power to recall and impound a certificate of sale after executing it and delivering it to the purchaser, or to reopen a case and impound documents proved after signing the decree, or to impound an instrument admitted in evidence after delivery of judgment. Here, when the Sub-Registrar had registered the document in question on 31st October, 1950 he became functus officio on that date and thereafter he had no power to impound the same. In the present case, the Sub-Registrar purported to act under paragraph 232 of the Registration Manual when he made a report to the Collector that the ‘Takseemnama’ was not duly stamped. But on reading paragraphs 231 and 232 it is clear that they do not say that after a document is admitted to registration, the registering officer can make a report to the Collector that it was not sufficiently stamped on the other hand, paragraph 231 expressly lays down a direction that before taking any further action, that is to say, in the matter of registration, the registering officer must see that the document is duly stamped. The words “after registering the document” occurring in paragraph 232 obviously refer to the entry of the document in the Register maintained of documents presented for registration. They do not mean that the registering officer can make a report about insufficiency of stamp after the document has been admitted to registration.”

In the case of SBI –vs- S. N. Goyal reported in 2009 (8) SCC 92 the following views were expressed:-

“It is true that once an authority exercising quasi-judicial power takes a final decision, it cannot review its decision unless the relevant statute or rules permit such review. But the question is as to at what stage an authority becomes functus officio in regard to an order made by him. P. Ramanatha Aiyar's Advanced Law Lexicon (3rd Edn., Vol. 2, pp. 1946-47) gives the following illustrative definition of the term “functus officio”:

Thus a judge, when he has decided a question brought before him, is functus officio, and cannot review his own decision.” Black's Law Dictionary (6th Edn., p. 673) gives its meaning as follows:

“Having fulfilled the function, discharged the office, or accomplished the purpose, and therefore of no further force or authority.”

We may first refer to the position with reference to civil courts. Order 20 of the Code of Civil Procedure deals with judgment and decree. Rule 1 explains when a judgment is pronounced. Sub-rule (1) provides that the court, after the case has been heard, shall pronounce judgment in an open court either at once, or as soon thereafter as may be practicable, and when the judgment is to be pronounced on some future day, the court shall fix a day for that purpose of which due notice shall be given to the parties or their pleaders. Sub-rule (3) provides that the judgment may be pronounced by dictation in an open court to a shorthand writer [if the Judge is specially empowered (sic by the High Court) in this behalf]. The proviso thereto provides that where the judgment is pronounced by dictation in open court, the transcript of the judgment so pronounced shall, after making such corrections as may be necessary, be signed by the Judge, bear the date on which it was pronounced and form a part of the record. Rule 3 provides that the judgment shall be dated and signed by the Judge in open court at the time of pronouncing it and when once signed, shall not afterwards be altered or added to save as provided by Section 152 or on review. Thus, where a judgment is reserved, mere dictation does not amount to pronouncement, but where the judgment is dictated in open court, that itself amounts to pronouncement. But even after such pronouncement by open court dictation, the Judge can make corrections before signing and dating the judgment. Therefore, a Judge becomes functus officio when he pronounces, signs and dates the judgment (subject to Section 152 and power of review). The position is different with reference to quasi-judicial authorities. While some quasi-judicial tribunals fix a day for pronouncement and pronounce their orders on the day fixed, many quasi-judicial authorities do not pronounce their orders. Some publish or notify their orders. Some prepare and sign the orders and communicate the same to the party concerned. A quasi-judicial authority will become functus officio only when its order is pronounced, or published/notified or communicated (put in the course of transmission) to the party concerned. When an order is made in an office noting in a file but is not pronounced, published or communicated, nothing prevents the authority from correcting it or altering it for valid reasons. But once the order is pronounced or published or notified or communicated, the authority will become functus officio. The order dated 18-1-1995 made on an office note, was neither pronounced, nor published/notified nor communicated. Therefore, it cannot be said that the appointing authority became functus officio when it signed the note dated 18-1-1995.”

Applying the law laid down in S. N. Goyal’s (supra) case we are reinforced, in our opinion that the CIT Kolkata – II, Kolkata had become functus officio prior to 18th March, 2013 because the transferee – assessing officer had assumed jurisdiction without which the notice dated 18th March, 2013 under Section 143(2) could not have been issued. Therefore, the order of transfer was duly published/ notified and/or communicated and thereafter acted upon by the transferee-assessing officer.

We are, as such of the opinion that the issuance of the notice dated 18th March, 2013 under Section 263 and the consequent order dated 26th March, 2013 passed under Section 263 of the Income Tax Act were acts without jurisdiction and therefore a nullity.

For the aforesaid reasons the question No.(a) is answered in the negative.

It is not necessary for us to express any opinion as to whether the findings of fact involved therein are perverse or not.

The point is, thus decided in favour of the assessee.

The appeal stands allowed. The parties shall however bear their own costs.

(GIRISH CHANDRA GUPTA, J.)

(ASHA ARORA, J.)