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Facts
The assessee's appeal was against the order of the CIT(A) who had restored the matter to the AO for fresh assessment. The assessee argued that the assessment order was bad in law as the notice u/s 143(2) was issued by a non-jurisdictional AO.
Held
The Tribunal held that the CIT(A) should have adjudicated the legal issues regarding the jurisdiction of the AO, rather than remanding the matter for de novo assessment. The assessment order passed without jurisdiction is invalid.
Key Issues
Whether the assessment order is invalid due to a non-jurisdictional AO issuing the notice u/s 143(2)? Whether the CIT(A) erred in remanding the matter without adjudicating jurisdictional issues?
Sections Cited
143(2), 144, 250
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Shri Makarand V. Mahadeokar
"ी संजय गग", "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं / Year : 2017-18 Shah Dilip Sankarchand The ACIT बनाम/ 1208-A/2, First Floor Circle-1(3) v/s. Virchand Deepchand ni Haveli Ahmedabad – 380 015 Road Madangopal Haveli Road Manekchowk Ahmedabad 380 001 (Gujarat) "थायी लेखा सं./PAN: AAFHS 5333 H (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Mehul K. Patel, Advocate & Shri P. D. Shah, AR Revenue by : Shri Rignesh Das, CIT-DR सुनवाई की तारीख/Date of Hearing : 19/08/2025 घोषणा की तारीख /Date of Pronouncement: 22/08/2025 आदेश/O R D E R
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 30/12/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017-2018.
The assessee has raised the following grounds of appeal: Shah Dilip Sankarchand vs. ACIT 1(3) Asst.Year : 2017-18 2
1. That the learned National Faceless Appeal Centre has erred in law and facts by not quashing the assessment order as notice under section 143(2) of the Act has been issued by Non-Jurisdictional Assessing Officer viz Income Tax Officer, Ward 1(3)(4), Ahmedabad, and the finally, on account of non-participation during the entire assessment proceeding, the learned Dy. CIT, Circle 1(3), Ahmedabad, has passed the assessment order under section 144 of the Act, and in view of the said fact and settled law, the order passed by the learned AO is bad in law and therefore required to be quashed and accordingly the learned AO be directed.
2. The Learned National Faceless Appeal Centre has erred in facts and in law, by directing the leaned AO to make fresh assessment and therefore the learned AO should be directed to accept the returned income.
That your appellant craves a leave to add, alter or amend any grounds at the time of hearing.”
3. At the outset, the Ld.Counsel for the assessee has invited our attention to the impugned order of the Ld.CIT(A) and has submitted that the Ld.CIT(A) observing that the impugned assessment order of the Assessing Officer (AO) was an ex-parte/ best judgement assessment order passed u/s.144 of the Act, has restored the matter for assessment afresh to the file of the AO. That he, however, has not adjudicated the legal grounds taken by the assessee before the Ld.CIT(A). The Ld.Counsel, in this respect, has submitted that the assessee has challenged the very jurisdiction of the AO to frame the impugned assessment on the ground that the mandatory notice u/s.143(2) of the Act, was not issued by the jurisdictional AO. It was submitted that the returned income, for the year under consideration, of the assessee being more than Rs.25 lakhs, the pecuniary jurisdiction to frame the assessment lied with the Dy.Commissioner of Income Tax. However, a notice u/s.143(2) of the Act, was issued by the Income Tax Officer, Ward-1(3)(4), Ahmedabad, which did not have the jurisdiction to do so in the case of assessee. The Ld.Counsel has submitted that the Ld.CIT(A) has failed to decide the above legal grounds taken before him, which hit at the very validity of the assessment order being passed without issuance of notice u/s.143(2) of the Act by the AO having competent jurisdiction. The Ld.Counsel, therefore, has submitted that the Shah Dilip Sankarchand vs. ACIT 1(3) Asst.Year : 2017-18 3 matter may be restored to the file of the Ld.CIT(A) to decide the legal issues take by the assessee before him.
The Ld.Departmental Representative (DR), however, has relied upon the finding of the Ld.CIT(A).
We have considered the rival submissions. It is settled law that the legal issue contesting the very validity of the assessment order or hitting at the jurisdiction of the AO to frame assessment can be taken at the appellate stage. The Ld.CIT(A), in our view, was supposed to adjudicate the legal issues raised before him, but he has remanded the matter to the file of the AO for de novo assessment without adjudicating the legal issues. If the concerned AO has no jurisdiction, the assessment order passed by him will not be a valid order for want of issue of notice u/s.143(2) of the Act. Under the circumstances, no useful purpose will be served in restoring the matter to the file of the AO. Hence, the impugned order of the ld.CIT(A) is set aside and the matter is restored to the file of ld.CIT(A) with a direction to adjudicate on the legal issues raised by the assessee before him and, thereafter, to decide the appeal of the assessee in accordance with law.