ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-25, DELHI, DELHI vs. CIVITECH BUYILDCON PRIVATE LIMITED, DELHI

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ITA 3673/DEL/2026Status: DisposedITAT Delhi08 July 2026AY 2021-2210 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO lacked the proper jurisdiction to issue the notice under Section 148 as the returned income was below the monetary limits specified by CBDT Instruction No. 1/2011 for cases in metro cities. This jurisdictional defect was considered fatal and not curable.

What were the facts?

The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income Tax Act for AY 2020-21 and 2021-22. The assessee challenged the validity of the AO's assumption of jurisdiction, arguing that the returned income was below the threshold requiring jurisdiction by a DCIT.

What were the issues?

Whether the AO validly assumed jurisdiction under Section 147 when the returned income was below the prescribed monetary limits for reassessment by a DCIT in a metro city.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 119,Section 124(3),Section 292B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI

Before: SHRI M. BALAGANESH & SHRI VIMAL KUMAR

For Appellant: Shri Ved Jain, Adv, Shri Ayush Garg, Adv
For Respondent: Shri K. Hauthang, CIT DR
Hearing: 01/07/2026Pronounced: 08/07/2026

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA Nos. 3672 & 3673/Del/2026 (Assessment Years: 2020-21 & 2021-22) ACIT, Vs. M/s. Civitech Buildcon Pvt. Ltd, Central Circle-25, 65, Shrestha Vihar, Delhi Delhi (Appellant) (Respondent) PAN: AAECC5011A CO No. 222 and 223/Del/2026 (In ITA Nos. 3672 & 3673/Del/2026 (Assessment Years: 2020-21 & 2021-22) M/s. Civitech Buildcon Pvt. Ltd, Vs. ACIT, 65, Shrestha Vihar, Delhi Central Circle-25, Delhi (Appellant) (Respondent) PAN: AAECC5011A

Assessee by : Shri Ved Jain, Adv Shri Ayush Garg, Adv Revenue by: Shri K. Hauthang, CIT DR Date of Hearing 01/07/2026 Date of pronouncement 08/07/2026

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA Nos. 3672 & 3673/Del/2026 field by the revenue and CO Nos. 222 and 223/Del/2026 filed by the assessee for AY 2020-21 and 2021-22, arises out of the order of the ld Commissioner of Income Tax (Appeals)-29, Noida [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 10.12.2025 against the order of assessment passed u/s 147 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 22.03.2025 by the Assessing Officer, ACIT, Central Circle-25, New Delhi (hereinafter referred to Page | 1 as ‘ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.

2.

Though the Assessee has raised several legal and factual grounds before us in the cross objections for both the years, the common preliminary issue involved therein is challenging the validity of assumption of jurisdiction of the learned AO under section 147 of the Act and consequential framing of reassessment thereon for both the years under consideration. Since this goes to the root of the matter, we deem it fit and first take up the same for adjudication.

3.

We have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2020-21 was filed by the Assessee company on 16-12-2020 declaring total income of Rs. 2,23,400. The copy of the said return is enclosed in page 1 of the paper book filed for the assessment year 2020-21.

4.

The return of income for the assessment year 2021-22 was filed by the Assessee company on 18-12-2021 declaring total income of Rs. 14,68,300. The copy of the said return is enclosed in page 1 of the paper book filed for the assessment year 2021-22.

5.

The Assessee company is engaged in the business of real estate developers, promoters and to undertake the construction work and infrastructure development activities. During the financial year 2019-20 relevant to assessment year 2020-21, it purchased leasehold land in Greater Noida, Uttar Pradesh from Greater Noida Industrial Development Authority and obtained the requisite permission from the concerned authorities for the execution of the project. The case of the Assessee for both the years was sought to be reopened vide issuance of notice under section Page | 2 148 of the Act. For the assessment year 2020-21, notice under section 148 of the Act dated 26-03-2024 was issued by DCIT Circle 4(2), Delhi, which is enclosed in Page 18 of the Paper Book. For the assessment year 2021-22, notice under section 148 of the Act dated 23-03-2024 was issued by DCIT Circle 4(2), Delhi, which is enclosed in Page 18 of the Paper Book.

6.

Now the short point that arises for our consideration is as to whether the Learned DCIT , Circle 4(2) , Delhi per se, could have validly assumed jurisdiction over the Assessee to issue notice under section 148 of the Act, when the returned income for both the years under consideration is less than Rs 30 lakhs per annum. Since the returned income for both the years under consideration is less than Rs 30 lakhs, the jurisdiction of the Assessee’s case would lie with the Income Tax Officer (ITO) and not DCIT. We find the CBDT had issued Instruction No. 1/2011 dated 31-1-2011. For the sake of convenience, the same is reproduced hereunder:-

SECTION 119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - INSTRUCTIONS TO SUBORDINATE AUTHORITIES 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 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 areas) Income Declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs returns Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata,Hyderabad, Mumbai and Pune. Page | 3 The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.

7.

It is trite law that the Instructions given by the CBDT are also binding on the revenue authorities and any action of the revenue in violation of the CBDT Circulars / Notifications / Instructions / Procedural Manuals, would become fatal to the very assumption of jurisdiction itself. Reliance in this regard is placed on the recent decision of the Hon’ble Supreme Court in the case of Vijay Krishnaswami vs DDIT (Inv.) reported in 479 ITR 467 (SC) wherein it was held as under:-

“20. Perusing the backdrop, from the recommendations of Wanchoo Committee till the date amendment was brought introducing Section 245H in the IT Act granting power of immunity to Settlement Commission, the Revenue was facing the challenge of minimal prosecution and also for effectively proving the prosecution, what recourse ought to be taken was an issue before them. Simultaneously, the assessee who in bona-fide manner had disclosed the excess earning specifying the source without any suppression, were facing unnecessary prosecution. Therefore, to streamline the said situation the revenue has issued guidelines time and again. In the guidelines, it was specified that when an assessee is making an attempt to evade tax or its payment or penalty, if established, it is incumbent on the officers of the revenue to lodge the prosecution. In this regard, circular dated 24.04.2008 was published. Clause 3.3.1(iii) of the said circular deals with the offences under Section 276C(1) of IT Act. The relevant clause of the said circular is reproduced as under: - "(iii) Offences u/s 276C(1): Wilful attempt to evade taxes All cases where penalty u/s 271(1)(C) exceeding Rs.50,000/- is imposed and confirmed by the ITAT (if any second appeal has been filed) shall be processed for filing prosecution complaint. The case for prosecution under this section shall be processed by the A.O. preferably within 60 days of receipt of the ITAT's order, if any." The intent of the above scheme is indicative of the fact that the Department shall proceed to file prosecution/complaint only in those cases wherein penalty exceeding Rs. 50,000/- has been imposed by ITAT, within 60 days from the date of order of ITAT. 21. The Directorate of Income Tax, (PR PP & OL) has also published the Prosecution Manual, 2009, prescribing the 'procedure for launching prosecution'. In Clause 1.4 of Chapter III, specifying when the prosecution can be initiated. The said clause is relevant hence reproduced as under: "1.4 When can prosecution be initiated? A case should be processed for launching prosecution immediately after the commission of offence comes to the notice of the authority concerned. However, if some more evidences can be gathered during any proceedings, it would be advisable to complete such proceedings to gather all relevant evidences before initiating the prosecution. The Apex Court has laid down that if penalty for concealment fails then the prosecution initiated on same material/basis must also fail (M/s K.C. Builders Ltd v. CIT [265 ITR 344]). Therefore, it is advisable to initiate prosecution under section 276C(1) only after confirmation of concealment penalty by the ITAT. xx xx xx xx" 22. The said guideline was based on a judgment of K.C. Builders v. Assistant Commissioner of Income-tax [2004] 186 CTR 721/265 ITR 562/135 Taxman 461 (SC)/(2004) 2 SCC 731, wherein this Court laid down that if penalty for concealment fails, the initiation of the prosecution on the basis of the same material also fails, therefore, it was advised that after confirmation of concealment of penalty by ITAT, the prosecution may be lodged in terms as specified in the above circular dated 24.04.2008. 23. Similarly, on 09.09.2019, the Central Board of Direct Taxes (in short "CBDT") in exercise of power under Section 119 of IT Act issued clarification qua the criteria to be followed for launching prosecution in respect of certain categories of offence under the IT Act, including Section 276C(1). The relevant portion is referred as under - "iii. Offences u/s 276C(1): Wilful attempt to evade tax, etc. Cases where the amount sought to be evaded or tax on under-reported income is Rs. 25 Lakhs or below, shall not be processed for prosecution except with the previous administrative approval of the Collegium of two CCIT/DGIT rank officers as mentioned in Para 3. Further, prosecution under this Section shall be launched only after the confirmation of the order imposing penalty by the Income Tax Appellate Tribunal." 24. As such, the departmental circular dated 24.04.2008, Prosecution Manual, 2009, and CBDT's circular dated 09.09.2019, provide when the prosecution ought to be lodged by Revenue. The said Circulars have been issued to regulate the lodging of prosecution in genuine cases and to weed out the problems of the tax payers, and also to understand when can the prosecution for Section 276 ought to be lodged and continued. The said circular and clarification have been brought after the statutory scheme of Section 245H(1) and the appended proviso. In this situation, it is imperative Page | 5 for us to understand the binding nature of the departmental circular, Prosecution Manual, 2009, and CBDT's clarification. 25. Reflecting on the said issue, in Ranadey Micronutrients v. Collector of Central Excise 1996 taxmann.com 360/[1996] 87 ELT 19 (SC)/(1996) 10 SCC 387, while dealing with a case concerning interpretation of circulars providing for classification of micronutrients for the purpose of imposition of excise duty, this Court held - "15. There can be no doubt whatsoever, in the circumstances, that the earlier and later circulars were issued by the Board under the provisions of Section 37-B, and the fact that they do not so recite does not mean that they do not bind Central Excise officers or become advisory in character. There can be no doubt whatsoever that after 21-11-1994, excise duty could be levied upon micronutrients only under the provisions of Heading 31.05 as "other fertilisers". If the later circular is contrary to the terms of the statute, it must be withdrawn. While the later circular remains in operation the Revenue is bound by it and cannot be allowed to plead that it is not valid. 16. We reject the submission to the contrary made by the learned counsel for the Revenue and in the affidavit by M.K. Gupta, working as Director in the Department of Revenue, Ministry of Finance. One should have thought that an officer of the Ministry of Finance would have greater respect for circulars such as these issued by the Board, which also operates under the aegis of the Ministry of Finance, for it is the Board which is, by statute, entrusted with the task of classifying excisable goods uniformly. The whole objective of such circulars is to adopt a uniform practice and to inform the trade as to how a particular product will be treated for the purposes of excise duty. It does not lie in the mouth of the Revenue to repudiate a circular issued by the Board on the basis that it is inconsistent with a statutory provision. Consistency and discipline are of far greater importance than the winning or losing of court proceedings." 26. Further, in Paper Products Ltd. v. Commissioner of Central Excise [2001] 165 CTR 693/247 ITR 128/115 Taxman 147 (SC)/(1999) 7 SCC 84, where the dispute related to classification of products for the purpose of tax, in the context of circulars issued and in that regard, this Court observed as thus - "4. The question for our consideration in these appeals is : what is the true nature and effect of the circulars issued by the Board in exercise of its power under Section 37-B of the Central Excise Act, 1944? This question is no more res integra in view of the various judgments of this Court. This Court in a catena of decisions has held that the circulars issued under Section 37-B of the said Act are binding on the Department and the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. These judgments have also held that the position may be different with regard to an assessee who can contest the validity or legality of such instructions but so far as the Department is concerned, such right is not available." …………… 28. The Constitution Bench in the case of Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries [2008] 12 STR 416/17 STT 103 (SC)/(2008) 13 SCC 1 on a reference made by three Judge Bench, addressing the conflict of difference of interpretation of a circular by the Central Board of Excise and Customs, and by this Court coupled with binding nature of the same, observed as follows - "7. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the court to declare what the particular provision of statute says and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law." ………………. 30. In the recent pronouncement of this Court in Commissioner of Central Excise and Service Tax v. Merino Panel Product Ltd. (2023) 2 SCC 597, in an appeal against order passed by CESTAT which had set-aside the show-cause notice issued by the Revenue, placing reliance on the judgements in Ranadey (supra) and Paper Products Ltd. (supra) and considering the binding nature of circulars, in paragraph 22 observed as follows: "22. Thus, the starting point of our analysis on this question is that the CBEC Circular of 1-7-2002 is binding on the Revenue. If the show-cause notice issued by the Revenue is found to be contrary to the Circular, it would prima facie result in abrogation of the uniformity and consistency which is strongly emphasised upon in Ranadey Micronutrients [(1996) 10 SCC 387]. It goes without saying that the Revenue's stance against its own circular can potentially lead to a chaotic situation where, with one hand, the Revenue would lay down instructions on how to interpret the relevant statutes and rules, and with the other hand, it would promptly disobey those very directions. Maintaining predictability in taxation law is of utmost importance and, for this reason, the Court should not accept an argument by the Revenue that waters down its own Circular as this would fall squarely within the contours of the prohibition outlined in Paper Products [Paper Products Ltd. v. CCE, (1999) 7 SCC 84]." Page | 7

31.

From the above precedents, this Court unambiguously held that that the circulars issued by the Revenue are binding on the authorities, and can tone down the rigour of the statutory provision. Therefore, it can be concluded that the circulars as discussed above are binding on the authorities who are administering the provisions of the IT Act. 32. After perusal of the provisions of the IT Act, various circulars issued by the department and also the judgments referred hereinabove, it can be safely culled out that if an assessee has made suppression of income without disclosing the manner in which the excess amount was earned and concealed the account making wilful attempt to evade the tax which may be imposable and chargeable or payable, he/she is required to be prosecuted. Therefore, the recourse to lodge prosecution was made permissible subject to the department's circular dated 24.04.2008 which provided for confirmation by ITAT in case the penalty imposed under Section 276C(1) is exceeding Rs. 50,000/-. It is relevant here to note that the said circular was in vogue on the date of the grant of sanction by PDIT to DDIT for lodging the prosecution against the appellant. The said circular has been reaffirmed by the Prosecution Manual, 2009 and the clarification issued by the CBDT in 2019. As such, the circulars discussed above, were binding on the authorities and required to be adhered to while lodging the prosecution by the Revenue. 33. Admittedly, in the present case, the complaint was filed by DDIT after sanction of PDIT before the Additional Chief Metropolitan Magistrate (E.O.II), Egmore, Chennai, on 11.08.2018. Application under Section 245(C) was filed by the appellant before the Settlement Commission later. On the date of lodging the prosecution, the finding of concealment of income or imposition of the penalty of more than Rs. 50,000/- has not been recorded by the ITAT. Nothing has been brought on record to show that any wilful attempt to evade the payment of tax by assessee was made. No explanation has been put forth by Revenue to demonstrate as to why PDIT or DDIT did not comply the procedure while lodging prosecution in this case. Therefore, in our view, the act of the authority in continuing prosecution is in blatant disregard to their own binding circular dated 24.04.2008 and in defiance to the guidelines of the Department. 36. In view of the foregoing discussions in conclusion we can safely hold that the prosecution lodged with the help of proviso to sub-section (1) to Section 245H was in defiance to the circular dated 24.04.2008, which was in vogue. It was the duty of the PDIT and DDIT to look into the facts that in absence of any findings of imposition of penalty due to concealment of fact, the said prosecution cannot be proved against the assessee. It seems, even after passing the order by the Settlement Commission on 26.11.2019, it was brought to the notice of the High Court, but the authorities were persistent to pursue the prosecution without looking into the procedural lapses on their part. Such an act cannot be construed in right perspective and the Revenue have acted in blatant disregard to binding statutory instructions. Such willful non-compliance of their own directives reflects a serious lapse, and undermines the principles of fairness, consistency, and accountability, which in any manner cannot be treated to be justified or lawful. 37. It must also be noted that, in terms of Section 245-I, the findings of the Settlement Commission are conclusive with respect to the matters stated therein. Once such an order was passed, it was incumbent upon the authorities to inform the High Court that continuation of the prosecution would amount to an abuse of the process of law, in particular when the Settlement Commission did not record any finding of wilful evasion of tax by the appellant. Even otherwise, it was the duty of the High Court to examine the facts of the case in their right context and assess whether, in light of the above circumstances, the continuation of the prosecution would serve any meaningful purpose in establishing the alleged guilt. Upon a holistic consideration of the matter, we are of the view that the conduct of the authorities lacks fairness and reasonableness, and the High Court's approach appears to be entirely misdirected, having failed to appreciate the factual and legal position in right earnest. 38. In view of the foregoing discussions, we are constrained to allow these appeals setting aside the order impugned passed by the High Court. It is directed that prosecution lodged by the Revenue against the appellant shall stand quashed. In the facts and circumstances of the case as discussed hereinabove, we are inclined to impose costs against the Revenue which is quantified at Rs. 2,00,000/- payable to the appellant. Pending application(s), if any, shall stand disposed of. (emphasis supplied by us) 8. Based on the returned income for both the years, the jurisdiction of the Assessee vests only with the ITO and not with DCIT. Since this is a jurisdictional defect committed by the revenue, the same would not be curable either under the provisions of section 124(3), section 292B of the Act, as vehemently argued by the Learned DR.

9.

In view of the aforesaid observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that the Learned AO’s assumption of jurisdiction to reopen the case of the assessee is flawed in the facts and circumstances of the instant case and hence to be declared as void abinitio. Consequentially the reassessment proceedings are hereby quashed.

10.

Since the entire reopening proceedings are quashed, the adjudication of other factual and legal grounds of the Assessee and the grounds raised by the revenue would become academic in nature and they are left open.

11.

In the result, the cross objection of the Assessee for both the years are allowed and appeals of the revenue are dismissed as infructuous.

Order pronounced in the open court on 08/07/2026.

-Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08/07/2026 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi

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