BYRAMJEE JEEJEEBHOY PVT LTD,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SMT BEENA PILLAI (JUDICIAL MEMBER) AND SMT RATNA DASGUPTA (ACCOUNTANT MEMBER) ITA No. 2874/MUM/2026 Assessment Year: 2018-19 Byramjee Jeejeebhoy Pvt. Deputy Commissioner of Ltd., Income Tax, Circle 3(1)(1), Vs. 83 Jolly Maker Chambers, Room No. 603, 6th Floor, Nariman Point, Mumbai, Aayakar Bhawan, Maharishi Maharashtra- 400021 Karve Road, Mumbai, Maharashtra- 400020 PAN NO. AAACB6006E Appellant Respondent Appellant by : Shri Akshay Jain Respondent by : Shri Kumar C. (Sr. AR)

Date of Hearing : 04/08/2026 Date of pronouncement : 02/09/2026

ORDER PER RATNA DASGPUTA, AM

The captioned appeal of 02/03/2026 emanates from order dated 16/01/2026 passed by the National Faceless Appeal Centre - hereinafter referred to as Ld. CIT(A) - under section 250 of the Income-tax Act, 1961 - hereinafter referred to as "the Act"- for A.Y. 2018-19, raising the following grounds:-

Byramjee Jeejeebhoy Pvt Ltd. 2 ITA No. 2874/MUM/2026

i. On facts and circumstances of the case, the Learned Commissioner of Income-tax (Appeals) erred in law and on facts in passing the impugned order and thereby confirming the additions made in the assessment order passed under section 143(3) of the Income-tax Act, 1961 ("the Act") by the Learned Assessing Officer, which is bad in law and liable to be quashed. ii. On facts and circumstances of the case, the Learned CIT(A) has erred in law and on facts in confirming the addition of INR 1,88,28,600 made under section 50C of the Act by adopting the stamp duty value of INR 2,26,85,600 as deemed full value of consideration instead of the actual sale consideration of INR 17,50,000 without appreciating that:

a) The property sold was not vacant or buildable land; b) The land was encumbered and consisted of unauthorized structures with slum occupants; c) The property was sold on an "as is where is" basis, subject to claims and rights of occupants; d) The fair market value of such encumbered property was substantially lower than the stamp duty valuation.

The addition confirmed is arbitrary, unjustified and contrary to the facts and provisions of the Act.

iii. On facts and circumstances of the case, the Learned CIT(A) has erred in law in holding that the Assessing Officer was justified in not referring the valuation of the property to the Departmental Valuation Officer under section 50C(2) of the Act despite the Appellant having objected to the adoption of the stamp duty value. The Learned CIT(A) failed to appreciate that once an objection is raised to the stamp duty valuation, the Assessing Officer is mandatorily required to refer the matter to the Valuation Officer, and failure to do so renders the addition unsustainable in law.

Byramjee Jeejeebhoy Pvt Ltd. 3 ITA No. 2874/MUM/2026

iv. On facts and circumstances of the case, the learned CIT(A) has erred in not allowing the cost of land at 70% of the consideration taken. The appellant prays that based on past precedents, the cost for such ancient land should be considered as 70% of the consideration offered for tax. v. On facts and circumstances of the case, the Learned CIT(A) erred in confirming the computation of indexed cost of acquisition at INR 33,32,000 without properly considering the Appellant's entitlement to substitute the Fair Market Value as on 01.04.2001 and without considering judicial precedents applicable in the Appellant's own case.

i. That on the facts and circumstances of the case and in law, the notice under section 143(2) issued by the Ld. ACIT is wholly without jurisdiction and liable to be quashed as in view of CBDT Instruction No. 1/2011 dated 31-01-2011 the jurisdiction of the assessee lies with ITO and not Ld. ACIT, since the return income of the assessee is Nil (i.e., less than Rs. 30 lakhs). ii. That on the fact and circumstances of the case and in law, it is submitted that the notice u/s 143(2) issued by the Ld. AO is bad in law and void ab-initio, as it does not mention as to whether the case was selected for complete scrutiny or limited scrutiny in violation of CBDT instruction and thus is bad in law and liable to be quashed." iii. Without prejudice, on the fact and circumstances of the case and in law, if the case was selected for limited scrutiny, the Ld. AO

Byramjee Jeejeebhoy Pvt Ltd. 4 ITA No. 2874/MUM/2026

erred in making addition beyond the scope of said limited scrutiny and hence the addition made in the assessment order is liable to be deleted". In raising the additional grounds as above, the assessee has relied on the decision of the Hon'ble Apex Court in National Thermal Power Co. Ltd v. CIT, reported in 229 ITR 383 (SC).

Byramjee Jeejeebhoy Pvt Ltd. 5 ITA No. 2874/MUM/2026

Rs. 5,25,000/-, the difference of Rs. 1,88,28,600/- was added to the assessee's total income u/s 50C.

3.1 Aggrieved by the aforesaid order, the assessee appealed before the Ld. CIT(A), who dismissed the appeal, holding that the Ld. AO was fully justified in invoking the provisions of section 50C. He observed that the assessee's arguments that the land was encumbered, was part of slums, had unauthorized occupants, or was not buildable, were not supported by any cogent or conclusive evidence on record.

3.2 It is against the above order that the assessee is in appeal before this Tribunal.

Byramjee Jeejeebhoy Pvt Ltd. 6 ITA No. 2874/MUM/2026

Ltd (supra), we are inclined to admit the additional grounds and take up the same for adjudication.

Income Declared Income Declared (Mofussil areas) (Metro cities) ITOs ACs/DCs ITOs ACs/DCs Corporate Upto Rs.20 Above Rs.20 Upto Rs.30 Above Rs.30 returns lacs lacs lacs lacs Non- Upto Rs.15 Above Rs.15 Upto Rs.20 Above Rs.20 corporate lacs lacs lacs lacs returns Referring to the said above, the Ld. AR pointed out that if the declared income of a corporate assessee is less than Rs. 30 lakhs, the jurisdiction of the case lies with the Income Tax Officer (ITO) and not Assistant Commissioner of Income Tax (ACIT). It was submitted that in the assessee's case, although the declared income in the assessee's return of income was Nil for the relevant year, the impugned notice u/s 143(2) of the Act was wrongly issued by the ACIT who had no jurisdiction over the case by virtue of CBDT's Instruction as above, and the consequential assessment

Byramjee Jeejeebhoy Pvt Ltd. 7 ITA No. 2874/MUM/2026

proceedings were, therefore, wholly without jurisdiction and deserve to be quashed.

(i) That the validity of assessment orders passed by ACIT/DCIT in place of ITO, notwithstanding the monetary limits prescribed by the impugned CBDT Instruction, rests on the fundamental principle laid down by the Hon’ble Allahabad High Court in Hindustan Transport Co. v. IAC, reported in 189 ITR 326, where it was held that the distribution of functions amongst income-tax authorities is only a matter of administrative convenience – it is an internal arrangement of the Department which does not partake the character of jurisdiction in the strict sense. An administrative lapse, it is argued, cannot vitiate assessment proceedings. (ii) That there is yet another decision of the Hon'ble Allahabad High Court in Shivaaditiya Jems & Jewellery (143 taxmann.com 64) holding, inter alia, that CBDT's Instructions Nos. 1/2011 and 6/2011 were issued merely for equitable distribution of work amongst Assessing Officers, and that the officer vested with territorial jurisdiction over an assessee u/s 124(1) of the Act is clothed with all the powers conferred on an Assessing Officer.

Byramjee Jeejeebhoy Pvt Ltd. 8 ITA No. 2874/MUM/2026

(iii) That where an assessee participates in assessment proceedings without demur cannot subsequently turn around & challenge the jurisdiction of the Assessing Officer – any objection to jurisdiction of the AO must be raised within one month of service of notice u/s 143(2) or 142(1). This is in terms of specific provisions of section 124(3) of the Act and also supported, inter alia, by judicial pronouncement in Kalinga Institute of Industrial Technology (2023) reported in 151 taxmann.com 234(SC). (iv) That for lapses such as this, protection is also available under the provisions u/s 292 BB, which reads as follows: “292BB. Where an assessee has appeared in any proceeding or 75co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him. has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.” 8. Per contra, the Ld. AR vehemently argued that the jurisdictional notice under section 143(2) of the Act is invalid in law and deserves to be quashed. The gist of his submission, contained in letter dated 07/08/2026, is as follows:-

Byramjee Jeejeebhoy Pvt Ltd. 9 ITA No. 2874/MUM/2026

(i) That the impugned notice u/s 143(2) of the Act, issued by an ACIT, is in violation of CBDT's Instruction dated 31/01/2011 since the income declared by the assessee in the return filed by him for the relevant year was less than Rs. 30 lakhs. Reliance has been placed on the Hon'ble Bombay High Court's decision in Ashok Devichand Jain v. ITO (2023), reported in 452 ITR 43 (Bom), where the same CBDT Instruction was under consideration, and the Hon'ble Court quashed notice u/s 148 of the Act, observing, inter alia, as hereunder: -

“3. 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. 4. We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the 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.

Byramjee Jeejeebhoy Pvt Ltd. 10 ITA No. 2874/MUM/2026

(iii) That section 124 of the Act, relied on by Revenue, pertains to territorial jurisdiction of the Assessing Officer and not pecuniary jurisdiction. This view has been taken by the co-ordinate Bench of Delhi Tribunal in YKM Holdings Pvt. Ltd v. ACIT - 2024 (5) TMI 92 - which was delivered in the context of the CBDT Instruction of 2011 and applies squarely to the instant case.

(iv) That Revenue's reliance on Section 292 BB of the Act is misplaced, and that the Delhi Bench of the Tribunal in Balram Sharma v. ITO - 2026 (4) TMI 630 - has ruled that the section would not apply when the notice itself is invalid.

Byramjee Jeejeebhoy Pvt Ltd. 11 ITA No. 2874/MUM/2026

(v) That the Delhi Tribunal - in KshitizSachdeva Prop. Alert International v. ITO [2026 (4) TMI 721] and Vipul Mittal v. DCIT [2850/Del/2019] - quashed the entire assessment proceedings based on invalid notice u/s 143(2) after considering Hon'ble Allahabad High Court’s decision in Shivaaditiya Jems & Jewellery (P) Ltd.

8.1 Other decisions cited by the Ld. AR in support of the assessee’s claim include –

(i) Monarch & Qureshi Builders v. ACIT ([2024] 161 taxmann.com 356 (Mumbai – Trib.) ii. Ketan Tokershi Shah Versus The DCIT (2023 (8) TMI 874 – ITAT Mumbai) iii. M/s. Durga Manikanta Traders Versus The Income Tax Officer (2023 (1) TMI 1099 – ITAT Raipur) (iv.) Krishnendu Chowdhury Versus Income-Tax Officer (2017 (5) TMI 290 – ITAT Kolkata) (v.) Bhagyalaxmi Conclave Pvt. Ltd., Dhanlaxmi Conclave Pvt. Ltd., Bindhyawasini Developers Pvt. Ltd. versus DCIT (2021 (2) TMI 181 – ITAT Kolkata) (vi). ITO vs. Svadeshi Enterprises (ITA No. 5865/Mum/2024) (vii). Ram Kumar Gupta Versus DCIT (2026 (7) TMI 799 – ITAT Delhi) 9. We have carefully considered the rival submissions of both the parties in the light of the material placed before us, including the

Byramjee Jeejeebhoy Pvt Ltd. 12 ITA No. 2874/MUM/2026

catena of judicial pronouncements cited. Admittedly, notice u/s 143(2) of the Act is mandatory for making of assessment, and the same is required to be issued by the Assessing Officer who has jurisdiction to issue the same. In this particular case, the notice u/s. 143(2) was issued by the ACIT although the assessee had declared returned income of Nil for the relevant year. This was clearly not in line with the impugned CBDT Instruction which lays down that for corporate entities with declared income of less than Rs. 30 lakhs in the Metro cities, the ITO would be vested with statutory jurisdiction to issue statutory notices, etc. Revenue, on the basis of findings in Hindustan Transport Co. (supra), would have us believe that the distribution and allocation of functions amongst income-tax authorities is a matter of convenience and an internal arrangement of the Department and does not strictly demarcate jurisdiction in any statutory sense. However, we have already noted that the said decision does not have relevance in the present context because the CBDT Instruction, with which we are concerned, did not exist when that decision was rendered. Similarly, the other decision in the case of Shivaaditiya Jems & Jewellery, relied on by the Ld. DR, was distinguished by the Delhi ITAT in Para 6 of its order in KshitizSachdeva Prop. Alert International (ITA No. 6133/Del/2025), & co-ordinate Bench of the same Tribunal in the case of Vipul Mittal v. ACIT (ITA No.

Byramjee Jeejeebhoy Pvt Ltd. 13 ITA No. 2874/MUM/2026

2850/Del/2019), quashed the assessment proceedings on the basis of invalid notice of u/s 143(2) after considering, inter alia, the decision in Shivaaditiya Jems & Jewellery (supra).

9.1 So far as Revenue's contention, based on statutory bar engrafted in Section 124(3) is concerned, here again there are a line of decisions holding that the same applies to territorial, and not pecuniary, jurisdiction. The Hon'ble Bombay High Court, in Mr. Peter Vax v. CIT (Tax Appeal No. 19, 21 to 25 of 2017) held that sections 120 to 124 of the Act refer mainly to the territorial jurisdiction of the Assessing Officer. Further, the Mumbai Bench of ITAT in Mahavir Pukhraj Jain v. DCIT (ITA No. 379/Mum/2025) has, inter alia, followed the above decision to quash reassessment proceedings pursuant to notice issued u/s 148 by an ITO who did not have jurisdiction as per CBDT's Circular of 2011. The issue regarding scope of section 124(3) also came up for consideration before the Hon'ble Mumbai Bench of ITAT in Khadamat Integrated Solutions Pvt. Ltd. v ACIT (ITA No. 3766/Mum/2024), where the notice issued u/s 143(2) by an ITO was quashed because the same was in violation of the pecuniary limit prescribed by the CBDT Instruction of 2011. We also have the jurisdictional High Court decision in Bansilal B. Raisoni & Sons v. ACIT [(2019) 101 taxmann.com 20 (Bom)] where it was held that the 30-day time

Byramjee Jeejeebhoy Pvt Ltd. 14 ITA No. 2874/MUM/2026

limit for objecting to the AO’s jurisdiction applies to territorial or area-specific jurisdiction, and does not bar an assessee from challenging an action taken completely without the authority of law. Further, the same view was taken by the Co-ordinate Bench of the Raipur Tribunal in Aananda Devicon (P) Ltd.[(2024)163 taxmann.com 372].

9.2 Ld. DR for Revenue also cited the decision of the Hon'ble Supreme Court in Kalinga Institute of Industrial Technology (supra). The assessee in that case had filed a Writ Petition challenging notice u/s 143(2) issued by ACIT as without jurisdiction. The High Court allowed the W.P. and set aside the assessment on the ground that the jurisdictional officer had not adjudicated upon returns as jurisdiction had been changed after the returns were filed. However, the records also revealed that the assessee had participated pursuant to notice issued u/s 142(1) & had not questioned the jurisdiction of the AO. The Apex Court observed that the facts did not warrant the order made by the High Court. But since the Hon'ble Court noticed that the High Court had granted liberty to the concerned authority to issue appropriate notice, it was clarified that the AO is free to complete the assessment within the next 60 days. The facts in our instant case are different and, therefore, this decision is also distinguishable.

Byramjee Jeejeebhoy Pvt Ltd. 15 ITA No. 2874/MUM/2026

9.3 Now coming to alleged protection under Section 292 BB of the Act, from a plain reading of the section it can be seen that the same applies to a valid notice which is not served on the assessee, or not served upon him in time, or served upon him in an improper manner. In our considered view, it does not protect invalid issuance of notice on account of incorrect assumption of jurisdiction. This view was also taken by the Delhi Bench of ITAT in Balraj Sharma v ITO - 2026 (4) TMI 630.

Byramjee Jeejeebhoy Pvt Ltd. 16 ITA No. 2874/MUM/2026

interpreted as being applicable to all cases where the jurisdictional notice is challenged.

Order pronounced in the open Court on 02/09/2026

Sd/- Sd/- (BEENA PILLAI) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 02/09/2026 Z.U., P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER,

//True Copy// (Assistant Registrar) ITAT, Mumbai