SURENDER MODI,DELHI vs. CIRCLE 13(1), DELHI, DELHI

आदेश / ORDER SHRI M BALAGANESH, ACCOUNTANT MEMBE: The appeal in ITA No.5018/Del/2026 for AY 2017-18, arises out of the 1. order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 29.02.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.12.2019 by the Assessing Officer, DCIT, Circle-13(1) (hereinafter referred to as ‘ld. AO’).

At the outset, we find that there is a delay in filing of appeal before us 2. by the assessee by 732 days. Considering the inordinate delay, the bench imposed a cost of Rs. 25,000 on the assessee to be paid to Delhi High Court Legal Services Committee within 7 days from the date of hearing, subject to which the delay was to be condoned. The ld AR placed before us the copy of payment challan of Rs. 25,000 dated 10.09.2026 post completion of hearing, wherein it is found that assessee had paid Rs. 25,000 to Delhi High Court Legal Services Committee as directed by the Tribunal. Considering the compliance by the assessee, the delay in filing of appeal is hereby condoned and appeal of the assessee is admitted for adjudication. The assessee has raised the following additional grounds before us:-

"1. That on the facts and circumstances of the case and in law, impugned assessment proceedings u/s 143(3) itself is bad in law and is wholly without jurisdiction as per CBDT Instruction No. 1/2011 dated 31-01-2011 as the declared income of the assessee (Rs. 19,76,830/-) is less than Rs.20 lakhs and the jurisdiction of the assessee case lies with ITOs and not with ACs/DCs. Hence, the impugned notice along with consequential proceeding are liable to be quashed." 2. On the facts and circumstances of the case and in law, notice issued u/s 143(2) of the Act by Ld. DCIT, Circle 13(1) Delhi is without having pecuniary jurisdiction and void ab initio.”

These additional grounds go to the root of the matter and being legal 3. issue and facts relevant for its adjudication are already on record, in view of the decision of the Hon'ble Supreme Court in the case of NTPC Ltd., reported in 229 ITR 383 (SC), we are inclined to admit the aforesaid additional grounds and take up the same first for adjudication.

We have heard the rival submissions and perused the materials 4. available on record. The assessee in the instant case had filed the return of income for the Asst. Year 2017-18 on 16.12.2017 declaring taxable income of Rs.19.76,830/-. Notice u/s 143(2) of the Act dated 21.08.2018 was issued by DCIT, Circle-13(1), Delhi. Assessment Order was finally framed by DCIT, Circle 13(1), Delhi on 21.12.2019.

Since, the return of income is less than Rs.20,00,000/-, the notice u/s 5. 143(2) of the Act ought to have been issued by an Officer who is in the rank of ITO as per CBDT Instruction No.1/2011 dated 31.01.2011. Since the notice u/s 143(2) of the Act being a jurisdictional notice, the notice issued by DCIT instead of ITO is bad in law as the very assumption of jurisdiction becomes flawed which in turn would make the consequential framing of assessment void ab-initio. When this was confronted to Ld. DR, he pointed out to the provisions of section 124(3) of the Act wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice u/s 143(2) of the Act. In our considered opinion, this argument of the Ld. DR is to be rejected, as the provisions of section 124(3) of the Act speak about the territorial jurisdiction whereas the issue in the instant case involves pecuniary jurisdiction. It is trite law that instructions issued by the CBDT are binding on the Income Tax Department and not following of the same would render the assessment void ab-initio. Further the issue is also covered by the decision of Hon’ble Bombay High Court in the case of Ashok Devichand Jain vs. Union of India through The Secretary dated 08.03.2022 reported in 452 ITR 43 (Bom) , wherein the CBDT Instruction No.1/2011 dated 31.01.2011 have been duly considered by the Hon’ble Bombay High Court. For the sake of convenience, the entire order is reproduced herein under: “Petitioner is impugning a notice dated 30th March, 2019 under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitoner’s objection to reopening on various grounds. 2. 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 31st 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 a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.

Since the issue is covered by the decision of Hon’ble Bombay High 6. Court, the reliance placed by the Ld. DR on the decision of the Co-ordinate Bench of Guwahati Tribunal in the case of the Jayanta Khaund vs. ACIT [2024] 169 taxmann.com 474 need not be followed. Respectfully following the decision of Hon’ble Bombay High Court, we hold that notice u/s 143(2) of the Act issued by the ITO is a jurisdictional defect not curable u/s 292BB of the Act as it is an illegality and not an irregularity. Consequentially the assessment framed by the Ld. ITO is bad in law and declared as void ab-initio. Accordingly, the additional ground raised by the assessee is allowed.

Since the entire assessment is quashed, the adjudication of the original 7. grounds raised by the assessee become academic in nature and are left open.

In the result, the appeal of the assessee is partly allowed. 8.

Order pronounced in the open court on 21st -Sep-2026.

-Sd/- -Sd/- MAHAVIR SINGH M BALAGANESH VICE PRESIDENT ACCOUNTANT MEMBER Delhi Dated: 21/09/2026 AK Keot Copy to: SURENDER MODI, 22 LOWER GROUND FLOOR, SIRI FORT 1 ROAD, NEW DELHI-110049, DELHI CIRCLE 13(1), DELHI, 2 C. R. BUILDING, DELHI, NEW DELHI-110002, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE