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Facts
The assessee challenged an order of the National Faceless Appeal Centre (NFAC) which upheld an assessment order. The core of the assessee's argument was that the Assessing Officer (ITO) who issued the notice under Section 148 and passed the assessment order lacked pecuniary jurisdiction.
Held
The Tribunal held that the notice issued under Section 148 by the ITO was invalid due to lack of pecuniary jurisdiction, as the assessee's income exceeded Rs. 20 lakhs (and for corporate assessees, Rs. 30 lakhs as per CBDT instructions). Consequently, the assessment order was quashed.
Key Issues
Whether an assessment order passed by an Income Tax Officer lacking pecuniary jurisdiction is null and void, and whether such a defect is curable.
Sections Cited
143(3), 143(2), 115JB, 148, 124, 132, 132A, 153C, 120
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH MUMBAI
Before: SHRI VIKRAM SINGH YADAV & SHRI SANDEEP GOSAIN&
Date of Hearing 29.07.2025 Date of Pronouncement 24.09.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order dt. 25.09.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2017-18.
2. At the very outset, Ld. AR has moved an application for admitting ground No. 1 raised in the present appeal as additional grounds as the same is legal in question and was not raised before any of the lower authorities.
3. After having gone through the ground raised by the assessee and hearing the parties on this ground, we find that this ground raised by the assessee is purely legal in question and requires no further evidence therefore while relied upon the decision in the case of NTPC V/s. CIT(1998) 229 ITR 383 (SC) . we allow the application for raising additional ground and consequently the said ground is admitted to be heard on merits.
4. Since ground No. 1 raised by the assessee is legal in question and goes to the roots of the case therefore we have decided to adjudicate the same firstly.
Ground No. 1 The assessment order u/s 143(3) of the Act pursuant to notice issued u/s 143(2) of the Act is null & void as the ITO who issued the notice & who passed the order was not having pecuniary jurisdiction over the appellant in as much as the return was filed declaring total income of Rs. 1,11,27,900/- u/s 115JB of the Act for which the jurisdiction vests with the ACIT/DCIT.
5. This ground raised by the assessee relates to challenging order of assessment passed u/s 143(3) of the Act pursuant to notice u/s 143(2) of the Act as null and avoid on the ground that the same was issued by ITO, who was not having pecuniary jurisdiction over the assessee in as much as the return was filed declaring total income of Rs. 1,11,27,900/- u/s 115JB of the Act while filing his return and as per Instruction No. 1 of 2011 dated 31.01.2011 issued by CBDT, pertains to jurisdiction based on income. According to this circular, jurisdiction of corporate assessee’s, whose income exceeds 30 lakhs lies with ACIT / DCIT. In this regard we place reliance upon the decision in the case of Ashok Devichand Vs. Union of India (452 ITR 43) (Bom), wherein it was held as under:
Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th 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 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.
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 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 30th March, 2019. 7. Consequently the order dated 18th November, 2019 rejecting Petitioner's objection is also quashed and set aside."
However, the reliance is being placed by Ld. DR on Sec. 124(3) but the same is of no help as provisions of Sec. 124(3) of the Act, refer to Sec. 120, which applies only to ‘territorial jurisdiction’ and not to other jurisdiction and in this case the assessee has raised the issue on jurisdiction other than territorial jurisdiction. Thus, in our view the issue of validity of jurisdiction is a condition precedent to the validity of any assessment order. As in the present case, the assessee’s income exceeds 30 lakhs, and the assessment made pursuant to notice issued by the ITO who was vested with no jurisdiction as per CBDT Instruction No. 1 of 2011. Therefore reliance is being placed upon the decision of Jurisdictional Hon’ble Bombay High Court in the case of Mr. Peter Vax Vs CIT in Tax Appeal No. 19, 21 to 25 of 2017, wherein it was held as under:
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, 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 Section 153C of the IT Act without fulfillment of the jurisdictional parameters prescribed therein.
After having considered the facts and circumstances of the present case and also taking in to consideration the legal preposition as discussed by us above, we have no hesitation to quash assessment proceedings as the income of the assessee exceeds 30 lakhs since the assessment notice in the present case was issued and the assessment order was passed by ITO who was vested with no jurisdiction. Accordingly this ground raised by the assessee stands allowed by holding assessment order u/s 143(3) of the Act in pursuant to notice issued u/s 143(3) of the Act as null and avoid.
Since we have allowed Ground No. 1 raised by the assessee and quashed the assessment order passed in the present case therefore there is no need to adjudicate other grounds raised by the assessee and the same are kept open.
In the result the appeal filed by the assessee stands allowed.