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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
PAN: AAFCK4877R (Appellant) (Respondent) Present for: Assessee by : Sri Dhaval Shah Revenue by : Shri Surendra Mohan, Sr.DR Date of Hearing : 07.11.2025 Date of Pronouncement: 24.12.2025 O R D E R
Per : Narender Kumar Choudhry, Judicial Member:
1. The instant appeal and CO have been preferred by the assessee against the order dated 30th May, 2024 impugned herein passed by the National Faceless Appeal Centre / Commissioner of Income Tax (Appeals) [in short „Ld. CIT(A)] under section 250 of the Income Tax, 1961 [in short „Act‟] for the A.Y. 2016–17.
2. At the outset, it is observed that there is delay of 94 days in filing of the CO on which the Assessee has claimed as under:
Kindly refer to the cross objection filed by the appellant for. A.Y. 2016-17 on 15.04.2025 before the Hon'ble Tribunal against the order of Ed. CIT(A) dated 30.05.2024 u/s 250 of the Act. It is submitted that the department appeal memo was received by the appellant on 12.12.2024. Accordingly, the present cross objections were due to be filed on or before 11.01.2025. Since, the cross objections are filed on 15.04.2025, there is a delay of 94 days [3 months and 4 days] in filing the present cross objection.
2. The appellant most humbly submits that the delay in filing the appeal is due to genuine and bona fide reasons and circumstances beyond the control of the appellant as explained hereunder: Brief background 3. The appellant is a 100% subsidiary of M/s Public Services Company (PSC), headquartered in the State of Kuwait. The company was incorporated in India on 15.03.2014 to carry out medical screening of persons visiting Kuwait as a pre-visa process as per the mandate received by M/s PSC from the State of Kuwait. For the year under consideration, M/s PSC has entered into a contract with the appellant to carry out medical screening work in India. Later, the said contract was not renewed and hence the appellant company became in operational from 12 April 2018 and the directors and KMP went back to Kuwait and the other employees also left the organisation. The office premises at Andheri, Mumbai was closed. 4. In the meantime, assessment proceedings were initiated against the appellant in August 2017. The appellant had appointed a consultant, M/s Devesh K. Shah & Co (Now M/s Devesh K. Shah & Associates LLP), Chartered Accountants to CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. handle the assessment and first appeal proceedings. Pursuant to completion of appeal proceedings by Ld. CIT(A), the consultants were not regularly associated with the appellant. Since the operations of the appellant were already ceased in India, any further communication required for the ongoing tax related matters. was done with the parent company of the appellant.
5. Thereafter, department has filed the appeal before the Hon'ble Tribunal. However, the appellant was not aware of appeal filed by department. No physical notice was received as the office address of the appellant was closed from April 2018. The email ID of the consultant was available with the department and accordingly, the notice of hearing was sent on the email id of the consultant. The consultant informed the parent company, M/s PSC about such appeal hearing. Thereafter, after taking instructions from the appellant's parent company, a request for the copy of appeal memo in Form 36 was filed and the appeal memo was received by their Consultant on 12.12.2024. Reason for delay in filing the cross objections 6. It is submitted that upon receipt of the appeal memo in Form 36, immediately. the consultant approached a tax counsel to take legal advice on the matter who suggested to file cross objections/appeal before Hon'ble Tribunal against the order of Ld. CIT(A). 7 Accordingly, the consultant approached the parent company, M/s. PSC for necessary action to be taken as advised by the counsel. The consultant explained the facts of the case, relevant law, and legal consequences. The consultants accordingly advised to file cross objections before Hon'ble Tribunal.
8. The parent company, M/s PSC, being situated at Kuwait, does not have background, understanding of Income Tax laws and the functioning of judiciary in India.
9. After explaining the legalities of the matter, M/s PSC in the second week of February 2025, asked for some time to decide the course of action. Meanwhile, the consultants were requested to take additional time from the Tribunal for the hearing. After taking advise from the management, M/s PSC granted approval for filing the cross objections and engaging a counsel to represent the case. The consultants appointed the counsel and arranged to file cross objections before the Hon'ble Tribunal on 15.04.2025.
10. It is submitted that M/s PSC has now fully taken charge of the matter and is actively involved in the appellate proceedings to ensure timely and appropriate legal representation before the Hon'ble Tribunal.
The Petitioner respectfully submits that the delay in filing the cross objection of 94 days is due to bona fide and unavoidable circumstances beyond its control as explained above. The delay in filing cross objections is purely unintentional and arose solely due to factors beyond the control of the appellant. It is submitted that there was no willful intention to delay the filing of the cross objection.
12. It is submitted that the appellant has a strong case challenging jurisdiction of the assessing officer passing the assessment order as well as on merits w.r.t. disallowance of various expenses made in the assessment order. If the delay is not condoned, the appellant shall be highly prejudiced as substantial additions and demand will be confirmed without affording the appellant a sufficient opportunity to present it's case.
13. In view of the above, it is submitted that the delay of 94 days in filing the appeal before Hon'ble Tribunal may kindly be condoned.
14. In this connection, reliance is placed on the decision of the ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………….. 17. In light of the above submissions and contentions, the appellant prays that the delay of 94 days in filing the present cross objections may kindly be condoned and the cross objections be kindly decided on merits.
3. On the contrary, the Ld. DR refuted the claim of the Assessee qua condonation of delay.
4. We have given thoughtful consideration to the rival claims of the parties on the issue qua limitation or condonation of delay. The Hon'ble Supreme Court in the case of Collector of Land Acquisition v. Mst. Katiji and Others [167 ITR 471] with regard to condonation of delay in filing an appeal, has laid down certain principles including that “ordinarily, a litigant does not stand to benefit by lodging an appeal late. Refusing to condone delay can result in a meritorious
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. "Eveready's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner”. Thus, by considering the reasons stated by the Assessee, which are self-explanatory, as genuine, bonafide and un-intentional, we are inclined to condone the delay. Thus, the delay of 94 days in filing of CO, is condoned.
5. Coming to Cross Objection, the Assessee has raised additional grounds, such as order passed under section 143(3) of the Act is invalid and bad in the eyes of law. Further, the notice under section 143(2) of the Act has been issued by the invalid Authority and hence bad in the eyes of law. Further, the Assessing Officer, ACIT(12)(3)(1),Mumbai passing the assessment order under section 143(3) of the Act has not issued mandatory notice under section 143(2) of the Act.
As the Assessee in the CO, has raised the legal issues, which emanates from the orders/documents/material already available on record and goes to the root of the case and therefore, in view of the judgment of the Hon‟ble Apex Court in the case of National Thermal Power Corporation Ltd. vs. CIT (1998) 229 ITR 383 (SC), the legal grounds raised
by the assessee were admitted and allowed to be raised.
7. Coming to the legal grounds of the assessee, we observe that the Assessee has mainly focused that in this case,notice under section 143(2) of the Act was issued by the Income Tax Officer, Ward-12(3), Mumbai on 01.08.2017, which resulted into passing the assessment order dated 25.05.2023 under section 147 read with section 144 read with section 144B of the Act by the CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. Assessment unit of the Revenue Department/ACIT-12(3)(1) but not by the Income Tax Officer, Ward-12(3)(2), Mumbai, who issued the notice under section 143(2) of the Act and therefore the same was in violation of the Instruction No.1/2011 dated 31.01.2011 issued by the CBDT, fixing the mandatory limit for making the assessment by the appropriate authorities, as according to the aforesaid Instruction, only Deputy / Assistant Commissioner was empowered to assess the income of the Assessee, as the Assessee by filing its return of income on 29.11.2016 for assessment year under consideration had declared its total income of Rs.16,38,56,590/-.
7.1 Further, as in the metro cities, the Income Tax Officer was empowered to make the assessments only, in the cases of the income declared upto Rs.30 Lakh only, and therefore, notice issued by the Income Tax Officer under section 143(2) of the Act dated 01.08.2017 was not as per the Instruction and / or power given by the CBDT and thus would entail the quashing of the assessment order as well.
7.2 The Assessee in support of aforesaid contentions, also relied upon on various judgments, including in the case of Ashok Devichand Jain vs. Union of India in W.P. No.3489 of 2019 dated 08.03.2022 decided by the Hon‟ble High Court and in the case of Monarch and Qureshi Builders vs. ACIT, in dated 21.12.2023, wherein the Hon‟ble Coordinate Bench of the Tribunal followed the aforesaid judgment of the Hon‟ble High Court, in the case of Ashok Devichand Jain (supra).
On the contrary, the learned DR refuted the claim of the Assessee by submitting that the Instruction (supra) issued by the CPC is just for the convenience of the Assessing Officer and / or the CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. Revenue Authorities. Further, as per the provisions of section 124(3) of the Act, at this stage, the Assessee cannot be allowed to raise the objection with regard the jurisdiction of the Assessing Officer in passing the assessment order. As the assessee has not raised any objection, within the prescribed time limit, since the date on which he was served with the notice under section 143(2) of the Act, and therefore, the Assessee cannot be allowed to raise the question qua jurisdiction of the Assessing Officer.
8.1 The learned AR in support of aforesaid contentions, also relied on the judgments passed by the Hon‟ble Apex Court in the case of Deputy Commissioner of Income Tax (Exemption) vs. Kalinga Institute of Industrial Technology, reported in (2023) 151 taxmann.com 434 (SC) and Ambience Farms (P.) Ltd. vs. Assistant Commissioner of Income Tax, reported in (2025) 175 taxmann.com 687 (SC).
Heard the parties and perused the material available on record and considered the rival submissions of the parties. The Assessee has raised the issue that admittedly the Assessee by filing its return of income on 29.11.2016 for assessment year under consideration had declared its total income at Rs.16,38,56,590/- and therefore as per Instruction no. 1 (supra), only DC/AC was empowered to make the assessment on the basis of pecuniary limit as prescribed in the said instruction and thus the notice 01.08.2017 u/s 143(2) of the act issued by the ITO, on the basis of which, the assessment order 25.05.2023 under section 147 read with section 144 read with section 144B of the Act has been passed by the Assessment unit of the Revenue Department/ACIT-13(2)(1) but not by the Income Tax Officer, Ward-12(3)(2), Mumbai, who issued the notice under section 143(2) of the Act, would be nullity and would entail quashing of the Assessment order as well.
9.1 The legal issue raised by the assessee goes to the very root of the case, and therefore, we deem it appropriate to decide the legal issue raised by the assessee qua jurisdiction of the Assessing Officer for issuing the jurisdictional notice under section 143(2) and/or passing the assessment order by the subsequent Assessing Officer on the basis of notice u/s 143(2) of the act issued by the ITO and/or without issuing any fresh notice u/s 143(2) of the Act.
We observe that admittedly the notice under section 143(2) of the Act is mandatory and requirement of issuing the same, cannot be waived off, as has also been held in the case of Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon, reported in 321 ITR 362 (SC) by holding that the notice under section 143(3) of the Act is mandatory for making the assessment and omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with.
11. Further, the CBDT vide Instruction No.1/2011 dated 31.01.2011 has increased the existing monetary limits of the Deputy Commissioners/Assistant Commissioners and Income Tax Officers, for assessment of retuned income, as per monetary limit, which read as under:
“INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)], DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil Income Declared (Metro Areas) cities) ITOs ACs/DCs ITOs DCs/ACs Corporate Upto Rs.20 Above Upto Above returns Lacs Rs.20 Lacs Rs. 30 Lacs Rs.30 lacs Non- Upto Rs.15 Above Upto Above corporate Lacs Rs.15 Lacs Rs.20 Lacs Rs.20 Lacs returns
Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.”
Admittedly, the Assessee had declared its income at Rs.16,38,56,590/-, by filing its original return of income on 29.11.2016 for the assessment year under consideration, which was selected for complete scrutiny, and therefore, the statutory notice under section 143(2) of the Act was issued on 01.08.2017 by Income Tax Officer (supra). Admittedly accordingly to Instruction No.1/2011 referred to above, only DC / AC has the power to make the Assessee‟s assessment and to issue the notice under section 143(2) of the Act, whereas in the instant case, as observed above the notice dated 01.08.2017 under section 143(2) of the Act was issued by the Income Tax Officer (supra), who in fact had no jurisdiction or competency or power to make the assessment of the income involved/declared over and above Rs.30 Lakh, therefore, the assessment order passed in the absence valid jurisdiction notice, would be nullity.
We further observe that Hon‟ble Jurisdictional High Court in the case of Ashok Devichand Jain (supra) has also dealt with an identical situation, wherein statutory notice under section 148 of the Act was issued by the ITO but not by the DC/AC as prescribed in aforesaid Instruction No.01/2011 (supra) and therefore the notice u/s 148 of the act was challenged by the assessee, and the Hon‟ble Jurisdictional High Court thus by taking cognizance of such fact that the notice was issued by the ITO, who does have any jurisdiction, held “such notice as bad, on the count of having been issued by an officer, who had no authority in law to issue such notice. The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein, is not curable”. The Hon‟ble High Court ultimately set aside the notice dated 30.03.2019 under section 148 of the Act, by observing and holding as under:
“Petitioner is impugning a notice dated 30" March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18 November, 2019 rejecting Petitioner's objection to reopening on various grounds.
The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31* January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by & Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DO/AC.
Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice.
We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019.
The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law.
6. In the circumstances, we have no hesitation in setting aside the notice dated 30* March, 2019.”
We further observe that the Hon‟ble Coordinate Bench of the Tribunal in the case of Ketan Tokeshi Shah vs. Deputy CIT in decided on 26.07.2023 has also dealt with identical issue and the Instruction No. 1/2011 (supra) and by following the judgment in the case of Ashok Devichand Jain (supra) held the assessment completed under section 143(3) of the Act by issuing a notice under section 143(2) of the Act by DCIT, Central Circle – 2, Thane, as without jurisdiction and consequently quashed the assessment itself.
Thus respectfully following the judgment of the Hon‟ble Jurisdictional High Court in the case of Ashok Devi Chand Jain (supra), which has also been followed by the Tribunal in more than 10-20 cases, we are of the considered view that in the instant case, as the Income Tax Officer who issued notice under section 143(2) of the Act had no power/jurisdiction to make the assessment of the assessee, because of the pecuniary limit and as it is held by the Hon‟ble High Court in Devi Chand Case (supra) that inherent defect is not curable, thus the assessment order passed in pursuance to CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. the notice under consideration under section 143(2) of the Act issued by the authority, who was not empowered to assess the income / make the assessment and it is also a fact that no subsequent notice has ever been issued by the Assessing Officer who passed the assessment order finally and it is also not the case of the Department that the jurisdiction to make the assessment of the assessee was entrusted earlier to the Income Tax Officer specifically and /or was entrusted/ transferred subsequently to the Assessing Officer especially, who ultimately passed the assessment order. Thus, on this count itself, the notice under section 143(2) of the Act as well as the assessment order dated 13.12.2018 under section 143(3) of the Act passed in pursuance to such notice, is liable to be quashed being nullity and / or void ab initio.
Now coming to the objection raised by the learned DR to the effect that the assessee has not raised any objection with regard to the jurisdiction of the Assessing Officer in issuing the notice under section 143(2) of the Act by incompetent authority, as alleged. We observe from the judgment of the Hon‟ble High Court in the case of Kalinga institute of Industrial Technology (supra), the Hon'ble High Court set aside the notice issued under section 143(2) of the Act on the ground that Jurisdictional Officer had not adjudicated upon returns, as jurisdiction had been changed after returns were filed by considering peculiar facts that the jurisdiction was vested with the Commissioner of Income Tax (OSD)(Exemption), however a notice under section 143(2) of the Act was issued by the Assistant Commissioner of Income Tax, Corporate, Circle-1(2) Bhubaneshwar, whereas the Ld. Joint Commissioner of Income Tax (OSD)(Exemption), Bhubaneshwar by filing an affidavit claims that jurisdiction over the assessee was validly vested with the Circle and accordingly the assessment under section 143(3) of the Act was completed, as per the provisions of the Act.
16.1 However the Hon‟ble Apex Court by taking into consideration peculiar facts and circumstances the case specific to the effect that since records revealed, the assessee had participated pursuant to notice issued under section 142(1) and had not questioned the jurisdiction of the Assessing Officer and the jurisdiction had been changed after the returns were filed and the Hon‟ble High Court had granted liberty to the Concerned Authority to issue appropriate notice and section 124(3)(a) preclude the assessee from questioning the jurisdiction of the Assessing Officer, if he does not do so within 30 days of the receipt of notice under section 142(1) of the Act, ultimately by allowing the SLP directed that the Assessing Officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days.
16.2 Here it is not the case of the Department that the Income Tax Officer, who had issued the notice under section 143(2) of the Act was empowered and competent to issue such notice and to make the assessment in the case of assessee and / or income declared by the assessee, which was admittedly more than Rs.30 Lakh, the limit prescribed in the circular referred to above for making the assessment by the ITO. Further, the Hon‟ble Apex Court in the case of Kalinga Institute of Industrial Technology (supra) has taken into cognizance of the provisions of section 124(3)(a) of the Act, which deals with the territorial jurisdiction of the Assessing Officer, as also held by the Hon‟ble Jurisdictional High Court in the case of Peter Vaz vs. CIT, (2021) 128 taxmann.com 180 (Bom). by observing and holding as under: -
“44. The ITAT with respect has misconstrued the provisions of Section 124 of the IT Act. Sections 120 to 124 of the IT Act no doubt refer to the jurisdiction of the Income-tax Authorities. However,
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. from the scheme of these provisions, it is apparent that reference is to the territorial jurisdiction of the authorities. Section 124(1) refers to direction or order issued under section 120 vesting with jurisdiction in the Assessing Officer over any area, limits of an area, etc. Section 124(2) provides that where a question arises under this Section as to whether the Assessing Officer has jurisdiction to assess any person, the question will have to be determined by the authorities specified which will include, in a given case the Board. Section 124(3) then provides that no person shall be entitled to call in question the jurisdiction of an Assessing Officer, where an action has been taken under section 132 or 132A after the expiry of one month from the date on which he was served with a notice under section 153C or after the completion of the assessment, whichever is earlier. Now, this provision refers to mainly the territorial jurisdiction of the Assessing Officer. This provision cannot be interpreted to mean that an assessee is left without a remedy where the Assessing Officer invokes the provisions of 153C of the IT Act without fulfillment of the Jurisdictional parameters prescribed therein.”
We further observe that Hon‟ble Jurisdictional High Court in the case of Bansilal B. Raisoni & Sons vs. Assistant Commissioner of Income Tax, Central Circle-1 Nasik, (2019) 101 taxmann.com 20 (Bom) has also held the same, as observed above.
We further observe that the Hon‟ble High Court of Gujarat in the case of Commissioner of Income Tax – 2 vs. Ramesh D. Patel, (2014) 42 taxmann.com 540 (Gujarat) has also held that section 124 of the Act, pertains to territorial jurisdiction of Assessing Officer vested under sub section (1) or (2) of section 120 of the Act, by observing as under:
“ That section 124 of the Act, pertains to territorial jurisdiction of Assessing Officer vested under sub section (1) or (2) of section 120 of the Act and objection to such jurisdiction can be raised in terms of section 124(1). In terms of sub section (3) of section 124, the right to raise such objection shall be forgone beyond the stages mentioned therein. The said provisions are squarely consistent with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and has no relevance insofar as the inherent jurisdiction for passing an order of assessment under section 153A of the Act is concerned, when
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. no such authorization under section 132 was issued or requisition under section 132A of the Act was made”.
We further observe that Hon‟ble Coordinate Bench of the Tribunal in the case of Aananda Devicon (P.) Ltd. vs. Assistant Commissioner of Income Tax (2024) 163 taxmann.com 372 (Raipur-Trib.) has also dealt with an identical issue and held that on a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under subsection (I) and subsection (2) of Section 120 of the Act. The assessee's objection to the validity of the jurisdiction assumed by the Income- Tax Officer, is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011. dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124, would not assist the case of the revenue. For brevity and ready reference, conclusion drawn by the Hon'ble bench is reproduced herein below: -
“14. We shall now deal with the objection raised by the Ld. DR that as the assessee had not called in question the jurisdiction of the Income-Tax Officer, Ward-2(2), Bhilai within the stipulated time period of one month from the date on which he was served with the notice(s) u/ss.143(2) and 142(I), dated 03.03.2015, therefore, it was not permissible for him to challenge the same for the first time in the course of the proceeding before the tribunal. Having given a thoughtful consideration to the aforesaid claim of the Id. DR we are unable to persuade ourselves to subscribe to the same. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under subsection (I) and subsection (2) of Section 120 of the Act. On the other hand, sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub- section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. a notice under sub-section (I) of Section 142 or sub-section (2) of SectionI43. In sum and substance, the obligation cast upon an assessee to call in question the jurisdiction of the A.O as per the mandate of sub- section (3) of Section 124 is confined to a case where the assessee objects to the assumption of territorial jurisdiction by the A.O, and not otherwise. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Peter Vaz v. CIT, Tax Appeal Nos. 19 to 30 of 2017, dated 05.04.2021 and that of the Hon'ble High Court of Gujarat in the case of CIT v. Ramesh D Patel (2014) 362 ITR492 (Guj.). In the aforesaid cases the Hon'ble High Courts have held that as Section 124 of the Act pertains to teritorial jurisdiction vested with an AO under subsection (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124 which places an embargo on an assessee to raise an objection as regards the validity of the jurisdiction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial jurisdiction and would have no relevance in so far his inherent jurisdiction for framing the assessment is concerned. Also, support is drawn from a recent judgment of the Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income- tax v. Nopany & Sons [2022] 136 taxmann.com 414/286 Taxman 388 (Calcutta). In the case before the Hon'ble High Court the case of the assessee was transferred from ITO, Ward-3 to ITO, Ward-4 and the impugned order was passed by the ITO, Ward-4 without issuing notice w/s 143(2) and only in pursuance to the notice that was issued by the ITO, Ward-3, who had no jurisdiction over the assessee at the relevant time. Considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no jurisdiction to issue the same at the relevant. point of time, the Hon'ble High Court quashed the assessment. Apart from that, the aforesaid view is also supported by the order of the ITAT, Kolkata 'B' Bench in the case of OSL Developers (P) Ltd. v. JTO, (2021) 211 TTJ (Kol) 621 and that of ITAT, Gauhati Bench in the case of Balaji Enterprise V, ACIT [2021] 124 taxmann.com 78/187 TD 101 (Guwahati - Trib.). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee's objection to the validity of the jurisdiction assumed by the Income- Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011. dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124 would not assist the case of the revenue.”
We further observe that the learned DR also relied upon the judgment of the Hon‟ble Apex Court in the case of Ambience Farms (P.) Ltd. (supra), wherein SLP filed against the decision of the Hon‟ble High Court has been dismissed. In that case, the Hon‟ble High Court dealt with an issue, wherein the assessee challenged the notice under section 143(2) of the Act issued by the ACIT / DCIT
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. (International Taxation) in pursuance to specific notification dated 28.05.2022 issued by the CBDT, whereby the ACIT/DCIT (International Taxation) was specifically authorized to act as “prescribed authority” for the purpose of issuance of notice under section 143(2) of the Act. However, in the instant case, neither any order for transfer of jurisdiction of the Assessing Officer has been made under any of the provisions of section nor the Income Tax Officer, who issued the notice under section 143(2) of the Act in the instant case was specifically entrusted / empowered to issue the notice under section 143(2) of the Act and thus the said judgment based on different facts, is not applicable to the instant case.
Thus, on the aforesaid analyzations, it has become clear and therefore we reiterate that the provisions of section 124 of the Act deals with the territorial jurisdiction of the Assessing Officer and if no objection is raised within the time limit, as prescribed under section 124(3)(a) of the Act, then the Assessee would be precluded to raise the objection qua territorial jurisdiction, however, in the instant case, as we are not dealing with the territorial jurisdiction but in fact deals with the notice u/s 143(2) of the Act issued by the Income Tax Officer, who had no authority and / or power to assess the income of the assessee and / or to make the assessment in the case of the assessee being beyond pecuniary jurisdiction/limit, as prescribed by the CBDT vide Instruction no. 01/2011.
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. 22. We further observe that Hon‟ble Apex Court in the case of Union of India Vs. Rajeev Bansal (2024) 167 taxmann.com 70 has dealt with the power of the Revenue Authorities and held as under:
“30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner. Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Section 34 of the Income Tax Act 1922 prescribed a duty on Income Tax Officers to seek prior approval of the Commissioner before issuing a reassessment notice. In CIT v. Maharaja Pratapsingh Bahadur of Gidhaur, a three-Judge Bench of this Court held that a notice issued under Section 34 without prior approval of the Commissioner was invalid.
The Income Tax Act 1961 also mandates assessing officers to fulfil certain pre-conditions before issuing a notice of reassessment. Section 149 requires assessing officers to issue a notice of reassessment under Section 148 within the prescribed time limits. Further, Section 151 requires assessing officers to obtain sanction of the specified authority before issuing notice under Section 148. In Chhugamal Rajpal v. S P Chaliha, a three-Judge Bench of this Court held that Section 151 must be strictly adhered to because it contains “important safeguards.”
A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions.”
As the Hon'ble Apex Court in Rajeev Bansal has clearly held that “ If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner. Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. There cannot be any waiver of a statutory
CO No.85/MUM/2025 (A.Y. 2016-17) Khadamat Integrated Solutions Pvt. Ltd. requirement or provision that goes to the root of the jurisdiction of assessment. An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction”. And the Hon‟ble Apex Court in Hotel Blue Moon case (supra) laid down the dictum that “the notice under section 143(3) of the Act is mandatory for making the assessment and omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with”. And in this case, it is a fact that the notice u/s 143(2) of the Act was not issued by the AC/DC, who ultimately passed the Assessment order, but the same was issued by the Income Tax Officer, who had no authority/competency/ power to make the assessment in the case of the assessee and/or assess the income of the assessee being beyond pecuniary jurisdiction/limit, as prescribed by the CBDT vide Instruction no. 01/2011, therefore we have no hesitation to quash the notice dated 01.08.2017 under section 143(2) of the Act, which is the foundation of the assessment order, along with the assessment order dated 25.05.2023 under section 147 read with section 144 read with section 144B of the Act. Thus, the same are quashed.
As we have quashed the notice u/s 143(2) of the Act and the assessment order itself, thus inclined not to delve into other grounds/aspects of the case as raised by the Assessee, as the adjudication of the same, would be futile exercise. Thus, the Cross Objection under consideration filed by the Assessee is allowed.
In view of the judgment in Cross Objection filed by the assessee, the appeal filed by the Revenue Department has become infructuous, thus, the same is dismissed being infructuous.
In the result, Cross Objection filed by the Assessee is allowed, whereas the appeal filed by the Revenue Department stands dismissed as infructuous.