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Facts
The assessee filed a return of income declaring NIL income. The case was selected for scrutiny, and notices u/s 143(2) and 142(1) were issued. The assessment was framed by the AO, making additions. The assessee argued that the notice u/s 143(2) was issued by a non-jurisdictional officer, making the assessment invalid.
Held
The Tribunal held that the notice u/s 143(2) was issued by an officer without pecuniary jurisdiction, which is a violation of CBDT instructions. The assessment framed by such an officer is bad in law and void ab initio. The Tribunal relied on various judicial precedents to support its decision.
Key Issues
Whether the assessment order is bad in law due to the issuance of notice u/s 143(2) by a non-jurisdictional officer and whether the entire assessment proceedings are vitiated.
Sections Cited
143(2), 142(1), 143(3), 120, 127, 292BB, 147
AI-generated summary — verify with the full judgment below
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 10.07.2025 for the AY 2015-16.
The only issue raised by the assessee is against the notice issued u/s 143(2) of the Act by non-judicial AO and therefore, the notice itself as well as the consequential assessment framed u/s 143(3) of the Act dated 27.12.2017, is nullity and bad in law.
The ld. AR vehemently submitted before us that the income as per the return of income was nil and therefore the jurisdiction to issue notice u/s 143(2) in terms of CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011 is with ITO and not with the DCIT, Circle 11(1), Kolkata, who has issued notice u/s 143(2) and also framed the assessment. The ld. AR stated that notice u/s 143(2) of the Act by the DCIT, Circler 11(1), 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. The ld. AR therefore prayed that the notice u/s 143(2) dated 28.09.2016 is invalid and escaped the assessment framed by the ld. AO. The Ld. A.R in defense of arguments relied on the decision of the Jurisdictional High Court in the case of Kusum Goyal vs. ITO & ors in GA No. 81 of 2010 WP No. 1229 of 2009 wherein the Hon’ble Court has decided the similar issue in favour of the assessee. The ld. AR also submitted that even on pecuniary jurisdiction was not
5. The Ld. D.R on the other hand relied on the order of authorities below. The ld. DR contended that the transfer of case was within the jurisdiction of concerned CIT and therefore the assessee had no locus standi to question the jurisdiction of the DCIT, Circle 11(1), Kolkata.
After hearing the rival contentions and perusing the material on record, I find that though the notice u/s 143(2) was issued by DCIT, Circle 11(1), Kolkata who is the non-jurisdictional AO instead of ITO. The case of the assessee is also covered by the decision of Co-ordinate Bench decision in the case of Amiya Gopal Dutta (supra). For the sake of ready reference, the operative part is extracted below:
“5. At the outset, the Ld. Counsel for the assessee submitted that the assessment passed u/s 144 of the Act dated 17.12.2018 is void ,ultra vires and nullity in the eyes of law as the same was passed by the Assistant Commissioner of Income Tax, Circle-1(1), Jalpaiguri whereas as per the CBDT circular 1/2011 [F. No. 187/12/2010-IT(A-I)] dated 31.01.2011 the Board has issued instruction in exercise of power u/s 119 of the Act that in case of non-corporate assessee where the income is declared up to Rs. 15 Lacs, the assessment would be framed by ITO and above Rs. 15 Lacs AC/DCs whereas the said limit was set at Rs. 20 Lacs and above Rs. 20 Lacs ITO/ and AC/DCs respectively. The The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.
In terms of the above instruction in the case of non-corporate assessee in non-metro cities, the ITR filed upto Rs. 15 lacs has to be assessed by ITO and therefore in the instant case the assessment is framed in violation of above instruction by the Board. The case of the assessee is squarely covered by the decision of Co-ordinate Bench of Kolkata benches in the case of Hirak Sarkar (supra). The operative part is reproduced as under:
I have considered the rival contentions of both the ld. representatives of the parties. Before proceeding further, it will be appropriate to refer to section 120 of the Act which, for the sake of ready reference, is reproduced as under:
“Jurisdiction of income- tax authorities (1) Income- tax authorities shall exercise all or any of the powers and perform all or any of the functions Conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. [Explanation.- For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1)]. (2) The directions of the Board under sub- section (1) may authorise any other income- tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income- tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub- sections (1) and (2), the Board or other income- tax authority authorised by it may have regard to any one or more of the following criteria, namely:- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases …… 6. A perusal of the aforesaid statutory provisions would reveal that the jurisdiction of Income Tax Authorities may be fixed not only in respect of territorial area but also having regard to a person or classes of persons and income or classes of income also. Therefore, the CBDT having regard to the income as per return has fixed the jurisdiction of the Assessing Officers.
7. Now, in this case, the reasons for forming belief of escapement of income by the assessee were recorded by the ITO, Ward-23(3), Hooghly and thereafter, notice u/s 148 of the Act was also issued by the by the ITO, Ward-23(3), Hooghly. However, the Power to transfer cases (1) The [Principal Director General or] Director General or [Principal Chief Commissioner or] Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
A perusal of the above statutory provisions would reveal that jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from ITO, Ward-23(3), Hooghly to ACIT, Circle-23(1), Hooghly. Even, there is no document on the file that the ACIT, Circle-23(1), Hooghly had ever recorded any reasons to form belief that the income of the assessee has escaped assessment nor did he issue any notice u/s 147 of the Act. On the other hand, the ITO, Ward-23(3), Hooghly had recorded the reasons for reopening of the assessment and had issued notice u/s 148 of the Act, but did not proceed further with the framing of assessment. Under the circumstances, the assessment framed by ACIT, Circle-23(1), Hooghly, is bad in law on two counts, firstly he did not have any pecuniary jurisdiction to frame the assessment and secondly he himself did not form any belief that the income of the assessee has escaped assessment nor did he issue notice u/s 148 of the Act which was sine qua non to assume jurisdiction to frame to assessment. The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal in and Others vide order dated 03.02.2021, wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. The relevant part of the order dated 03.02.2021 passed in and Others is reproduced as under:
“5.2. The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, in order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid down in a number of other decisions of the ITAT, Kolkata Bench on this issue. 5.3. Kolkata “B” Bench of the Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd.(supra) held as follows: “10.In this case, the ITO Ward-3(3), Kolkata, issued notice u/s 143(2) of the Act on 04/09/2014. In reply, on 22/09/2014, the assessee wrote to the ITO, Ward- 3(3), Kolkata, stating that he has no jurisdiction over the assessee. Thereafter on 31/07/2015, the DCIT, Circle-11(1), Kolkata, had issued notice u/s 142(1) of the Act to the assessee. The DCIT, Circle-11(1), Kolkata, completed assessment u/s 143(3) of the Act on 14/03/2016. The issue is whether an assessment order passed by DCIT, Circle-11(1), Kolkata, is valid as admittedly, he did not issue a notice u/s 143(2) of the Act, to the assessee. This issue is no more res-integra. This Bench of the Tribunal in the case of Soma Roy vs. ACIT in Assessment Year 2015-16, order dt. 8th January, 2020, under identical circumstances, held as under:-
“7. A closer look at Section 292BB shows that if the assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since the Respondent had participated in the proceedings, the provisions of Section 292BB would be a complete answer. On the other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for the Respondent submitted that the notice under Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid.
8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act.
According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself.”
Since the facts before us are materially similar to ones as decided by the Co-ordinate Bench of the tribunal, we, respectfully the decision of the coordinate bench ,quash the assessment order passed on the ground of lack of jurisdiction. Accordingly the appeal of the assessee is allowed.” 6.1. It is pertinent to note that in the Co-ordinate Bench decision the issue of pecuniary jurisdiction has been decided whereas in the above High Court order issue of transfer of jurisdiction in terms of Section 127(1), (2) and (3) has been discussed and decided. We also note that the Co-ordinate Bench in the case of M/s Rupasi Bangla Agro Industries Pvt. Ltd. vs. ITO in for AY 2013-14 dated 14.12.2023 has decided the issue u/s 143(2) in favour of the assessee after distinguishing the decision of Hon’ble Apex Court in the case of DCIT (Exemption) & Another vs. Kalinga Institute of Industrial Technology; Special Leave to Appeal (C ) No(s). 29304/2019 and WP(C ) No. 898/2017 which was relied by the Ld. D.R. to defend his
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14.01.2026.