NARBHERAM LEASING CO. PVT. LTD.,KOLKATA vs. A.C.I.T., CIRCLE - 7(1), KOLKATA

ITA 915/KOL/2026Status: DisposedITAT Kolkata22 July 2026AY 2016-20176 pages

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 143(2) was by a non-jurisdictional officer, rendering the subsequent assessment invalid. The assessment was quashed based on this procedural irregularity.

What were the facts?

The assessee filed a return declaring a total loss. The case was selected for scrutiny, and a notice under Section 143(2) was issued by an Income Tax Officer (ITO) who lacked the pecuniary jurisdiction according to CBDT instructions. The assessment was subsequently framed by an Assistant Commissioner of Income Tax (ACIT).

What were the issues?

Whether the assessment framed is invalid due to the issuance of a Section 143(2) notice by an officer without proper pecuniary jurisdiction as per CBDT instructions.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

For Appellant: Shri A. Kochar, AR

For Respondent: Shri Purushottam Kumar, DR

Hearing: 16.06.2026Pronounced: 22.07.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.02.2026 for the AY 2016-17.

At the time of hearing, the ld. Counsel for the assessee pressed ground no.3 which is extracted below:-

“3. For that the Notice issued u/s 143(2) of the Act dated 21.08.2017 having been issued by the ITO, Ward 8(2), Kolkata, is without assuming the jurisdiction as per the CBDT Instruction No. 1/11, dated 31.01.2011. As per the CBDT Instruction No.1/11 dated 31.01.2011 the "CORPORATE RETURNS" upto Rs.30 Lakhs Income for ITOs in Metro Cities areas from 01.04.2011 and in cases where income exceeds Rs.30 Lakhs the jurisdiction to assess lies with the DC/AC of Income Tax. The Notice u/s 143(2) of the Act should/must

The ld. CIT (A) in the appellate proceedings, confirmed the order of the ld. AO on merit though, the legal issue was not raised before the ld. Commissioner of Income-tax (Appeals).

After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee was selected under scrutiny and undisputedly, notice u/s 143(2) of the Act was issued by ITO Ward 8(2), Kolkata, whereas the assessment was framed by the ACIT Circle 8(2), Kolkata. Therefore, we find merit in the contention of the ld. Counsel for the assessee that the assessment framed without issuing notice u/s 143(2) of the Act is invalid and nullity as the notice was issued by the ITO Ward 8(2) Kolkata on 21.08.2017, a copy of which is available at page no.2 and 3 of the Paper

In the present case, the assessee filed the return of income on 10.09.2016, declaring total loss of ₹1,83,41,576/-. We note that assessment was framed by ACIT, Circle 8(2), Kolkata which is in violation of the CBDT Instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011. Therefore, the said assessment has been issued by non- jurisdictional AO which is invalid and cannot be sustained. The case of the assessee find support from the decision of the

“We have heard Ms. Smita Das De, learned standing counsel for the appellant/revenue. Though the respondent has been served and affidavit of service filed, none appears for the respondent. The short issue which falls for consideration in the instant case is whether there is valid notice issued under Section 143 (2) of the Act for commencing the scrutiny assessment. The Tribunal has noted the facts and rendered a finding that on the date when the case was selected for scrutiny, the authority who issued the notice namely, the Income Tax Officer, Ward No.9(4), Kolkata did not have jurisdiction and the jurisdiction. was with the Deputy Commissioner of Income Tax. The following factual finding has been recorded by the Tribunal: "Therefore, the legal ground stands to be admitted and the same relates to invalid notice issued u/s. 143 (2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. 143 (3) of the Act, the statutory requirement of serving of valid notice u/s. 143 (2) of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs.48,47,180/- in the e-return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143 (2) of the Act was issued by ITO, Ward-9(4), 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No.1/2011 supra)

“We, after hearing the rival submissions of the parties and perusing the materials available on record note that the return of income of the assessee was of Rs.16,50,920/ which falls under the jurisdiction of the ITO, Ward- 28(2), Kolkata but notice u/s 143(2) of the Act was issued by ACIT, Circle-28, Kolkata and also the assessment order was duly framed by ACIT, Circle-28. Kolkata, which is clearly a violation of the jurisdictional mandate under CBDT Circular No. 1/2011 dated 31.01.2011. We note that this procedural irregularity rendered the assessment proceedings invalid and bad in law." This Court observes that the jurisdictional issue has rightly been determined by the learned Tribunal and no substantial questions of law arises in this appeal.

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

Order pronounced on 22.07.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 22.07.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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