Loading judgment…
Facts
The assessee, Gautam Kumar Sadhu, filed a return of income for AY 2017-18 which was selected for scrutiny. The assessment was framed ex-parte by the ACIT, adding ₹32,52,000/- for cash deposits during demonetization, and this order was affirmed by the Ld. CIT(A). The assessee challenged the assessment at the ITAT on grounds including an invalid notice under Section 143(2) and lack of pecuniary jurisdiction by the Assessing Officer.
Held
The ITAT condoned a 352-day delay in filing the appeal due to a bonafide reason. It held that the notice issued under Section 143(2) was invalid as it did not conform to CBDT instructions regarding the type of scrutiny. Furthermore, the assessment was quashed because the Assessing Officer lacked pecuniary jurisdiction, as the case fell outside the ITO's monetary limits specified by CBDT Instruction No.1/2011 for Metro Cities, and thus the ACIT should have issued the notice.
Key Issues
Whether the notice issued under Section 143(2) was invalid due to non-compliance with CBDT instructions regarding scrutiny type, and whether the Assessing Officer had pecuniary jurisdiction to frame the assessment.
Sections Cited
143(2), 142(1), 139(1), 119
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “B(SMC
Before: SHRI 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 17.05.2024 for the AY 2017-18.
At the outset, I note that the appeal of the assessee is barred by limitation by 352 days, for which condonation petition along with affidavit of the assessee is filed.
After hearing the rival contentions and perusing the materials available on record. I find that the reasons for delay as explained by ld. Authorized Representative is that the CIT (A) did not issue notices in registered e-mail and assessee only came to know when he enquired about the matter to the ld. AO. Due to this, there was an unavoidable delay of 352 days in filing the appeal. The ld. Authorized
The assessee has challenged the assessment framed by the ld. AO on the ground that no notice u/s 143(2) of the Act has been issued by the jurisdictional Assessing Officer. Besides, the assessee has challenged the assessment on the ground that the notice u/s 143(2) of the Act was not in conformity with the instruction issued by CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011.
The facts in brief are that the assessee filed the return of income on 30.03.2018, declaring total income at ₹10,41,590/-. The case of the assessee was selected for scrutiny through Computer Assisted Scrutiny Selection (CASS). The statutory notices including other notices and questionaries were issued and served upon the assessee. The assessee is engaged in the business as trading in the name and style of Ma Mahakali suppliers. The notice u/s 143(2) of the Act was issued by ITO Ward 24(3), Hooghly, Kolkata, whereas the assessment was framed by the ACIT, Circle 24(1), Kolkata who did not issue any notice u/s 143(2) of the Act. The ld. ITO 24(3), Hoogly, Kolkata also issued notice u/s 142(1) of the Act along with questionnaire called for the information/ details from the assessee which was not compiled by
In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. Assessing Officer.
After hearing the rival contentions and perusing the materials available on record, I find that in this case the notice u/s 143(2) of the Act dated 14.09.2018, a copy of which is available at page no. 36 of the Paper Book, specifies only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus, the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion, the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceedings would also be invalid. The case of the assessee find support from the decision of the co-ordinate Bench in the case of Tapas Kumar Das Vs. ITO in for A.Y. 2017-18, wherein a similar issue has been decided in favour of the assessee. The operative part of the same is extracted below:-
“After hearing the rival contentions and perusing the materials available on record, we find that particularly the notice was issued u/s 143(2) of the Act, a copy of which is available at page no. 25 of the Paper Book. We note that the said notice has not been issued in consonance with the CBDT Instruction F No. 225/157/2017/ITA-II Dated 23.06.2017. The said notice is extracted below for the sake of ready reference:- ““आमकरअधिनियम 1961 कीिारा 143(2) केअिीििोटिस Notice under section 143(2) of the Income-tax Act, 1961 संवीक्षा (कंप्यूिरआिाररतसंवीक्षाचयि Scrutiny (Computer Alded Scrutiny Selection) महोदय/महोदया/ भेससस,
Even, I find merit in the second limb of the arguments of the ld. AR that notice u/s 143(2) of the Act dated 14.09.2018, was issued by the ITO, Ward 24(3), Hoogly ,Kolkata, whereas the assessment was framed by the ACIT Circle-241) Hoogly, Kolkara which is in violation of pecuniary jurisdiction of the CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011. According to the said instruction, the ITO has pecuniary jurisdiction where the income is upto 20 lacs in the Metro Cities and 15 lacs in Mofussil areas whereas the DC/AC have jurisdiction above 20 lacs in Metro cities and above 15 lacs in the Mofussil areas. In the present case, the assessee filed the return of income u/s 139(1) of the Act on 30.3.2018, disclosing total income of ₹10,41,590/-. I note that notice u/s 143(2) was issued on 24.09.2018 by ITO ward 34(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.
We have heard Mr. PrithuDudhoria, learned advocate for the appellant and Mr. AbhratoshMazumder, learned senior counsel assisted by Mr. Avra Mazumder, learned advocate for the respondent. The assessee preferred appeal before the learned Tribunal challenging the order passed by the Commissioner of Income Tax (Appeals)-10, Kolkata (CIT(A)] dated 26.9.2017. One of the grounds urged before the learned Tribunal was that the Assessing Officer, who passed the assessment order did not have jurisdiction over the case of the assessee and, therefore, the notice as well as the assessment order are bad in law. The learned Tribunal took note of the facts and circumstances of the case and found that the assessee filed its return of income declaring the income to be nil. Subsequently, notice under section 143(2) was issued on 10.9.2015 and notice under section 142(1) dated 13.6.2016 was issued along with the questionnaire. The assessee contended that the notices were without jurisdiction and relied upon section 120 of the Act. In this regard, the assessee referred to the notification issued by the CBDT in Instruction No.1 of 2011. The learned Tribunal took into consideration the facts of the case and found that the assessment has been framed by the Assessing Officer, who inherently lacks jurisdiction to do so. The learned Tribunal took note of the decision of a Co-ordinate Bench of the learned Tribunal in the case of Bhagyalaxmi Conclave (P) Ltd. us. DCIT dated 3.2.2021. Apart from other decisions and allowed the assessee's appeal, the revenue had challenged the order passed in the case of Bhagyalaxmi Conclave (P) Ltd. before this court in ITAT/221/2022 etc. and by a judgment reported in 2022 (12) TMI 1514, the appeal filed by the department was dismissed wherein one of the questions framed is identical to the substantial questions of law suggested by the revenue in the instant case. Thus, we find that the learned Tribunal was right in allowing the assessee' appeal and setting aside the order passed by the Assessing Officer on the ground of lack of inherent jurisdiction. For the above reason, the appeal is dismissed and the substantial questions of law are answered against the revenue.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15.10.2025.