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Facts
The assessee filed an ITR for AY 2017-18, declaring an income of ₹22,40,160/-, and its case was selected for scrutiny via CASS. The Ld. AO made an addition of ₹31,44,400/- under Section 68 for unexplained cash credit, which was affirmed by the Ld. CIT(A). The assessee challenged the assessment, arguing that the Section 143(2) notice was invalid due to non-conformity with CBDT instructions regarding the type of scrutiny and being issued by a non-jurisdictional Assessing Officer.
Held
The Tribunal held that the Section 143(2) notice was invalid because it failed to specify the type of scrutiny (limited/complete/manual) as mandated by CBDT instructions. Furthermore, the notice was issued by an ITO Ward 34(2) exceeding its pecuniary jurisdiction, making it a non-jurisdictional issuance. Citing precedents, the Tribunal concluded that a defective Section 143(2) notice renders all subsequent assessment proceedings invalid and void ab initio.
Key Issues
Whether a Section 143(2) notice is invalid if it does not specify the type of scrutiny as per CBDT instructions, and whether it is invalid if issued by an Assessing Officer exceeding their pecuniary jurisdiction.
Sections Cited
143(2), 143(3), 142(1), 68, 119, 139(1)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
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 20.11.2024 for the AY 2017-18.
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.
“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, Sir/Madam/ M/s, आपकोसूधचतककयाजाताहैककनििासरणवर्स केपावतीसंख्या 2017-18 269322761301017 केअिुसारआपकेद्वाराटदिांक 30/10/2017 कोदाखिलकीगईआयकरवववरणीकोसंवीक्षाकेललएचुिागयाहै। This is for your kind information that the return of income filed by you for assessment year 2017-18 vide ack, no. 269322761301017 on 30/10/2017 has been selected for Scrutiny. इससंबंिमें, आपकोटदिीक को 2. 16/11/2018 01:00 PM तकसाक्ष्यप्रस्तुतकरिेअथवासाक्ष्यप्रस्तुतकरािेकाअवसरप्रदािककयाजारहाहैजजसपरआपउक्तआयकरवववरणी केसमथसिमेंनिभसरहैं/ रहेंगे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 16/11/2018 at 01:00 PM. उपयुसक्तनिटदसष्िप्रमाण सूचिाकोआपकोऑिलाइिमाध्यमसेइलेक्रॉनिकरूपमें 3. / परअपिेई- Incometaxindiaefiling.gov.in फाईललंगिाताद्वाराप्रस्तुतककयाजािाहै।बादकीनििासरणकायसवाहीभीआयकरववभागकी 'ई-कायसवाही' सुवविाद्वाराकीजायेगी। 'ई-कायसबाही' परएकसंक्षक्षप्तिोिआपकेसंदभसकेललएसंलग्िहै। 3. The evidence/information specified above has to be furnished online electronically through your E-filing account in incometaxindiaefiling.gov.in. Subsequent assessment proceedings shall also be conducted electronically
Even, We find merit in the second limb of the argument of the ld. AR that notice u/s 143(2) of the Act dated 10.08.2018, was issued by the ITO, Ward 34(2), Kolkata, 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
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 18.07.2025.