January 21, 2026 : The Delhi Bench ‘I’ of the Income Tax Appellate Tribunal has set aside the entire assessment proceedings against Kunshan Q Tech Microelectronics (India) Pvt. Ltd. for Assessment Year 2021–22, holding that the case was transferred by a non-jurisdictional authority. The Tribunal ruled that the jurisdictional defect went to the root of the matter, rendering all subsequent proceedings void in law.
A Bench comprising Judicial Member C.N. Prasad and Accountant Member Amitabh Shukla held that the transfer of jurisdiction under Section 127 of the Income-tax Act, 1961 was ordered by PCIT–10, Delhi, who did not have lawful authority over the assessee. Applying the settled legal maxim Sublato Fundamento Cadit Opus, the Tribunal observed that once the foundation of jurisdiction fails, the superstructure built upon it must necessarily collapse.
Kunshan Q Tech, an Indian subsidiary engaged in microelectronics manufacturing, had filed its return for AY 2021–22 declaring a loss of ₹98.71 crore. However, following transfer pricing proceedings and an assessment under Section 143(3) read with Section 144C(13), the Assessing Officer determined total income at ₹353.43 crore, leading to additions of about ₹4,447.75 crore.
These additions included transfer pricing adjustments on raw material purchases exceeding ₹3,700 crore, disallowance of depreciation, alleged stock discrepancies, additions under Section 69C for unexplained expenditure, application of Section 115BBE, and levy of interest under Sections 234B and 234C. The final assessment order dated 29 October 2024 was passed by the Deputy Commissioner of Income Tax, Central Circle–30, New Delhi, based on a jurisdictional transfer order issued on 27 May 2022 by PCIT–10, Delhi.
Before the Tribunal, the assessee raised an additional legal ground challenging the very authority of PCIT–10 to pass the Section 127 transfer order. It was argued that the company’s principal place of business and books of account were located in Greater Noida, Uttar Pradesh, and that jurisdiction under Section 124 is determined by the principal place of business, not by PAN history or registered office. The assessee also relied on CBDT notifications issued under Section 120, under which corporate assessees whose names begin with the letter “K” fall within the jurisdiction of PCIT–5 (Corporate Charge). PCIT–10, holding a non-corporate charge, was therefore said to lack inherent jurisdiction.
The Revenue objected to the admission of this ground on the basis that it was raised belatedly. Rejecting this objection, the Tribunal admitted the ground, relying on the Supreme Court’s ruling in NTPC v. CIT, which permits purely legal issues affecting jurisdiction to be raised at any stage. The Bench held that jurisdictional facts flow from statutory provisions and official notifications, all of which are matters of public record and require no fresh factual inquiry.
On merits, the Tribunal held that PCIT–10, Delhi, was not the jurisdictional authority over the assessee either under Section 124 or under the jurisdictional allocation notified under Section 120. It categorically ruled that jurisdiction cannot be conferred by consent, administrative convenience, or reliance on PAN records. The defect was one of inherent lack of jurisdiction, not a curable procedural irregularity. The Tribunal further held that the bar under Section 124(3) regarding delayed objections does not apply where jurisdiction is absent ab initio.
Consequently, the Tribunal declared the Section 127 transfer order null and void and held that the final assessment order dated 29 October 2024 was without authority of law. All consequential proceedings, including transfer pricing adjustments, additions, and tax demands, were held to be non est in law. The appeal filed by the assessee was allowed in full, granting complete relief to Kunshan Q Tech.
Case Title: Kunshan Q Tech Microelectronics (India) Pvt. Ltd. vs DCIT
Case No.: ITA No. 5356/Del/2024
Coram: C.N. Prasad (Judicial Member) and Amitabh Shukla (Accountant Member)
