Section 127

Section 127 — the law in short

What the courts have decided on section 127, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v ABC Papers Ltd Supreme CourtCuts both ways
  My case was transferred under section 127 to an Assessing Officer in another state — which High Court now hears the appeal against the Tribunal's order?
  The High Court where the Assessing Officer who passed the assessment order sits. The Supreme Court held on 18 August 2022 that an appeal under section 260A lies only to that High Court, and that a transfer of the case under section 127 does not shift appellate jurisdiction — even a transfer for the same assessment year. The Delhi High Court's contrary decisions in CIT v. Sahara India Financial Corporation Ltd. and CIT v. Aar Bee Industries Ltd. were overruled. Nor does the location of the Tribunal decide the forum, since a Bench of the Tribunal often covers several states.
• Sky Light Hospitality LLP v ACIT Supreme CourtHelps department
  The reassessment notice was issued in the name of my old private limited company, which had already been converted into an LLP and dissolved. I am told that makes the notice void. Is that always right?
  Not always, and this is the decision the Revenue will cite against you. The Delhi High Court dismissed the writ petition, holding that the issue of the notice in the name of the dissolved private limited company was an error and technical lapse which caused no prejudice, that there was no doubt and debate that the notice was meant for the petitioner and no one else, and that human errors and mistakes cannot and should not nullify proceedings which are otherwise valid — that being the effect and mandate of section 292B. The Supreme Court dismissed the special leave petition with the words: 'In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act.'
• Ajantha Industries v CBDT Supreme CourtHelps taxpayer
  My file has been moved to another city under section 127. The order says only that it was for facility of investigation, and nobody has given me the reasons. Is that enough?
  No. Section 127(1) requires the authority to record reasons before it transfers your case, and the Supreme Court held that recording them is not enough on its own — they have to reach you. Reasons sitting in the departmental file that were never communicated do not save the order: the Andhra Pradesh High Court's judgment upholding this transfer was set aside and the transfer orders quashed. The point of communicating them is to let you challenge the transfer under Constitution Art. 226, or under Constitution Art. 136, on the ground that it rests on irrelevant and extraneous material.
• B. Mohammad Iqbal v ACIT High CourtHelps taxpayerNo later treatment found
  The section 276CC complaint against me was filed by an Assistant Commissioner although my case was with the Income-tax Officer, and no assessment was ever made on the capital gain the complaint alleges. Can that prosecution stand?
  No, on this decision. The Madras High Court quashed the complaint. Only the officer on whom jurisdiction has been conferred by directions or orders is the Assessing Officer; here the show cause notice came from the Income-tax Officer of the ward while the complaint was laid by the Assistant Commissioner, with no transfer under section 127 and no intimation under section 129, so the sanction under section 279 had been given without any application of mind to the question of jurisdiction. Separately, no regular assessment had ever been made, so the tax threshold in the proviso to section 276CC could not be tested and the prosecution was premature.
• FCS Manufacturing (India) Pvt Ltd v DDIT High CourtCuts both waysNo later treatment found
  Your bank accounts are provisionally attached and the business cannot operate. Is there a way out short of paying?
  Yes — offer security. Provisional attachment exists to protect the revenue, not to freeze a business indefinitely. Where a bank guarantee and directors' undertakings could secure the revenue, continuation of the attachment was set aside.
• Novateur Electrical and Digital Systems Pvt Ltd v ACIT ITATHelps taxpayerNo later treatment found
  My case was moved between charges during a restructuring and the department says that gives it extra time under Explanation 1 to s.153 because of s.129. Is that right?
  No. The extension in Explanation 1 to s.153 for time taken in reopening a proceeding or in giving an opportunity of being reheard is available only where the assessee has demanded a rehearing under the proviso to s.129 — and s.129 applies only to a change of the incumbent of an office, not to a change of jurisdiction, which is s.127. Where the case simply moved from one jurisdiction to another and no rehearing was asked for, no time is excluded and the assessment is time-barred.
• Statutory position — s.124: how an Assessing Officer gets jurisdiction over you, who decides a dispute about it, and the three deadlines in s.124(3) after which you cannot object at all CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The notice has come from an officer in a place I have nothing to do with. Can I say he has no jurisdiction, who decides that, and have I already lost the point by filing my return and answering him?
  Jurisdiction reaches an Assessing Officer through section 120: the Board issues directions, those directions may authorise another authority to issue written orders, and section 124(1) then gives the officer vested with an area jurisdiction over a business whose place or principal place is in that area and over every other person residing in it. A dispute about whether he has jurisdiction is not for him and not for the Tribunal in the first instance: section 124(2) sends it to the Principal Director General, Director General, Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, and to the Board if two of them disagree. The provision that decides cases is section 124(3), which fixes three deadlines — one for a person who has filed a return, one for a person who has not, one where there has been a search or requisition — after which no person shall be entitled to call the jurisdiction in question at all. Section 124(4) then obliges the officer, on a timely objection he does not accept, to refer the matter for determination before he makes the assessment. Whether the section 124(3) bar is absolute is genuinely disputed: the Delhi and Karnataka High Courts have applied it against assessees, and the Gujarat High Court has held it no answer where no order under section 127 transferred the case at all. For a tax year beginning on or after 1 April 2026 the provision is section 242 of the Income-tax Act, 2025, where the bar sits in sub-section (4).

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.