ITO-26(2)(1), MUMBAI, KAUTILYA BHAVAN BKC, MUMBAI vs. SVADESHI ENTERPRISES (MUMBAI), FORT, MUMBAI

ITA 5865/MUM/2024Status: DisposedITAT Mumbai06 January 2026AY 2014-1514 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal decided to take up the assessee's cross-objection first, as it pertained to the validity of the assessment order. The Tribunal condoned the delay in filing the cross-objection, relying on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others. Regarding the jurisdictional issue, the Tribunal held that the assessment order passed under Section 143(3) of the Act was void ab initio. This was because the Income Tax Officer (ITO) who issued the notice under Section 143(2) and completed the assessment lacked the requisite jurisdiction. The Tribunal noted that as per CBDT Instruction No. 1/2011, cases with declared income above Rs. 30 lakhs (or Rs. 20 lakhs for non-corporate assessees as per a related case cited) fall under the jurisdiction of ACIT/DCIT. Since the assessee's declared income of Rs. 2,56,43,720/- exceeded this limit, the ITO wrongly assumed jurisdiction. The Tribunal relied on its own decisions and those of coordinate benches in Monarch & Qureshi Builders and Sapna Rastogi, holding that a jurisdictional defect in the notice under Section 143(2) is fatal and not curable. Consequently, the assessment order was quashed. As the assessment order was quashed, the Revenue's appeal was rendered infructuous and dismissed. The Tribunal expressly left the other grounds of appeal raised by the assessee on merits undecided.

What were the facts?

The assessee, Svadeshi Enterprises, is in appeal against an assessment order for AY 2014-15, passed under Section 143(3) of the Income-tax Act, 1961. The Revenue has also filed an appeal. The assessee's cross-objection challenges the jurisdiction of the Assessing Officer (ITO) who passed the assessment order. The assessee declared a total income of Rs. 2,56,43,720/- for the relevant year. The ITO disallowed a provision of Rs. 3 crore for vacating occupants/tenants, deeming it a contingent liability. The CIT(A) deleted this addition. The assessee's cross-objection argues that the ITO lacked jurisdiction based on CBDT Instruction No. 1/2011, which stipulates that cases with declared income above Rs. 30 lakhs should be handled by ACIT/DCIT, not ITO. The Tribunal condoned a delay in filing the cross-objection.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction on account of liability for payment for vacating occupants/tenants, ignoring that a mere provision cannot be allowed as an expense? (Revenue's Ground 1). The Revenue argued that a mere provision is not an expense. The assessee's contention is not recorded on this specific point, but the CIT(A) allowed the deduction. 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction on account of liability for payment for vacating occupants/tenants without appreciating that the assessee stated Rs. 3 Crore was provided in FY 2013-14 and the matter was under litigation, thus not an ascertained/accrued liability? (Revenue's Ground 2). The Revenue argued the provision was not ascertained/accrued. The assessee's contention is not recorded. 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in relying upon the decision of Hon’ble Apex Court in the case of Bharat Earth Movers, as the facts are different? (Revenue's Ground 3). The Revenue argued the cited case law was not applicable. The assessee's contention is not recorded. 4. Whether the assessment order passed by the Ld. ITO Ward 17(3)(2), Mumbai, is wholly without jurisdiction, as per CBDT Instruction No. 1/2011, given the declared income of Rs. 2,56,43,720/-? (Assessee's Cross Objection Ground 1). The assessee argued that its declared income exceeded the monetary limit for an ITO's jurisdiction as per CBDT Instruction No. 1/2011, making the assessment order void ab initio. The Revenue's contention is not recorded.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 148,Section 127,Section 124(3),Section 143(2)

AI-generated summary — verify with the full judgment below

Before: SHRI RAHUL CHAUDHARY & SHRI PRABHASH SHANKAR

For Appellant: Mr. Akshay & Nishil Jain, ARs, Shri Swapnil Choudhary, (Sr. DR)
Hearing: 22.12.2025Pronounced: 06.01.2026

PER PRABHASH SHANKAR [A.M.] :-

The above captioned appeals preferred by the Revenue and Cross

Objections of th

The order continues below.

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