VENKATA SUJATHA CHRUVUPALLI,HYDERABAD vs. INCOME TAX OFFICER, WARD-9(3), HYDERABAD

The appellant craves leave to add/alter/modify the grounds of appeal as may be required for proper adjudication of the case.”

The assessee has also raised the following additional grounds of appeal:

That on the facts and circumstances of the case and in law, as the mandatory notice u/s 143(2) of the Act was issued by the non-jurisdictional Assessing Officer but not by the Jurisdictional Assessing Officer (JAO), the provisions of section 124(3)(a) or 127(4) does not come into Page 2 of Venkata Sujatha Chruvupalli play and therefore the impugned assessment order is invalid due to want of assuming valid jurisdiction by the JAO and the same is liable to be quashed.

That on the facts and circumstances of the case and in law, the impugned assessment order is bad-in-law and is liable to be quashed as the appellant was not provided with the opportunity of being heard before passing the transfer order u/s 127(2) of the Act and she has not been served with the copy of the order passed by the PCIT u/s 127(2) of the Act, if any, for the transferring the appellant case from ITO, Ward-1, Nalgonda to ITO, Ward-9(3), Hyderabad and no intimation notice u/s 129 of the Act along with notice 143(2) was served upon the appellant by the ITO, Ward-9(3), Hyderabad before assuming the jurisdiction.”

The Learned Authorized Representative (“Ld. AR”) has submitted that additional grounds so raised are admissible in view of judgment rendered by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The Learned Departmental Representative (“Ld. DR”) did not raise any objection for admission of the additional grounds. The prayer for admission of additional grounds is being admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in additional grounds are legal in nature for which relevant facts are stated to be emanating from the existing records.

The brief facts of the case are that the assessee had filed appeal before the Ld. CIT(A) for the Assessment Year 2017–18 against the order of the Learned Assessing Officer (“Ld. AO”) passed under section 143(3) dated 09.12.2019. However, the assessee could not succeed before the Ld. CIT(A) and the appeal was dismissed. The assessee is therefore in further appeal before the Tribunal.

At the outset of hearing before us, the Ld. AR submitted that the assessee is not pressing any of the original grounds of Page 3 of Venkata Sujatha Chruvupalli appeal. In view of the statement made by the Ld. AR, all the original grounds of the assessee are dismissed as not pressed.

Under the additional grounds the assessee has challenged the very validity of the assessment on the jurisdictional issue relating to non-issuance of a valid notice under section 143(2) of the Act by the jurisdictional Assessing Officer. The Ld. AR submitted that the assessee had filed its return of income for the year under consideration before the ITO, Ward – 9(3) (“JAO”) and the jurisdiction over the assessee always vested with the JAO. In this regard, he invited our attention to the return of income placed at page no.1 of the paper book to demonstrate that the return was filed before the JAO. He further invited our attention to the notice issued under section 143(2) of the Act dated 24.09.2018 placed at page nos. 6 and 7 of the paper book and submitted that the said notice was issued by a non-jurisdictional Assessing Officer i.e., ITO, Ward – 1, Nalgonda (“non-JAO”). Our attention was also drawn to the assessment order dated 09.12.2019 placed at page nos. 70 to 74 of the paper book to show that the assessment order was ultimately passed by the JAO. It was therefore contended that while the assessment order has been passed by the JAO, no valid notice under section 143(2) of the Act was ever issued by him and the only notice on record has been issued by the non-JAO. It was further submitted that issuance of a valid notice under section 143(2) by the JAO is a mandatory condition precedent for framing a valid assessment under section 143(3) of the Act and in the absence of such notice, the entire assessment becomes void ab initio and liable to be quashed. In this regard, the assessee relied on the judgement of the Hon’ble Delhi High Court in the case of SK Industries Vs. ACIT, [2022] 141 taxmann.com 568 (Delhi), which was affirmed by the Hon’ble Page 4 of Venkata Sujatha Chruvupalli Supreme Court by dismissal of Revenue’s SLP in the case of ACIT Vs. SK Industries, [2022] 141 taxmann.com 569 (SC).

The Ld. DR, on the other hand, relied upon the remand report of the Ld. AO dated 16.05.2025 and submitted that the notice under section 143(2) dated 24.09.2018 bears the seal and signature of the JAO and therefore the contention of the Ld. AR that the notice was issued by a non-jurisdictional officer is incorrect. It was therefore submitted that the additional grounds raised by the assessee deserve to be rejected.

We have heard the rival submissions and perused the material available on record. There is no dispute about the fact that the return of income was filed by the assessee before the JAO and there is also no dispute regarding the fact that the jurisdiction over the assessee vested with the JAO. In this regard, we have gone through para no.3 of the remand report of the Ld. AO dated 16.05.2025, which is to the following effect:

On 27th July, 2015, the Petitioner wrote a letter to Respondent No. 1 to ignore the proceedings initiated vide notice Page 10 of Venkata Sujatha Chruvupalli dated 21st July, 2015 sent bb Respondent No. 1 since the Petitioner had not received any notice from Respondent No. 1 under section 143(2) of the Act within the time limit prescribed under the Act. This time limit was up to 30th September, 2014. Another notice was issued by Respondent No. 2 on 8th September, 2015, which was responded to by the Petitioner on 23rd March, 2016 again pointing out that these notices were beyond the prescribed limit i.e., 30th September, 2014. Accordingly, the Petitioner requested that the assessment proceedings be dropped considering the decision of this Court on identical facts for A.Y. 2012-13. The Petitioner in the said letter also mentioned that it had requested to ignore the assessment proceedings for A.Y. 2013-14, where the facts were identical. By an order dated 5th May, 2015 in WP(C) No. 664/2015, this Court quashed the assessment order on the same ground, namely, that the concerned AO of the Petitioner had not issued notice within the time limit under section 143(2) of the Act.

Nevertheless, in the present case, Respondent No. 1 persisted with the assessment proceedings and passed an ex parte assessment order on 31st March, 2016, which has been challenged by the Petitioner in the present petition.

Mr. Dileep Shivpuri, Senior Standing Counsel for the Revenue referred to reply filed in the present case and submitted that the case of the Petitioner was chosen by the departmental software, Computer Aided Scrutiny Selection, and that there was no human intervention involved in the selection. It is further stated that the Permanent Account Number (PAN) of the Petitioner fell within the jurisdiction of Respondent No. 2 and hence notice was sent by the Office of Respondent No.

He further referred to Section 124(3)(a) of the Act and contended that the Petitioner ought to have questioned the jurisdiction of Respondent No. 2 immediately after receiving the notice under section 143(2) of the Act.

As far as the last submission is concerned, learned counsel for the Petitioner submits that it is only if the Petitioner had filed a return under section 139(1) of the Act with Respondent No. 2 would the question of drawing the attention of Respondent No. 2 for delay in issuing a notice have arisen. Since the Petitioner is not obliged to file any return, the question of availing section 124(3)(a) of the Act did not arise.

Be that as it may, in the considered view of the Court, the AO having jurisdiction i.e. Respondent No. 1 ought to have issue a notice under section 143(2)(a) of the Act within the prescribed time limit i.e., 30th September, 2014 in order to proceed with the assessment. Considering that a similar mistake of an AO not having jurisdiction over the Assessee issuing a notice to it had been committed earlier, there was no occasion for the Revenue to continue to repeat the same mistake and expect that it will be condoned.

On perusal of the above, we find that under the identical facts the Hon’ble High Court has held that issuance of a valid notice under section 143(2) of the Act by the JAO is a mandatory condition precedent for assumption of jurisdiction to frame an assessment under section 143(3) of the Act. In the absence of such valid notice, the JAO lacks inherent jurisdiction to proceed with the assessment. Since in the present case no valid notice under section 143(2) of the Act was issued by the JAO, the assessment framed under section 143(3) of the Act is without jurisdiction and is therefore liable to be quashed as void ab initio. Accordingly, the additional grounds raised by the assessee are allowed and the assessment order passed under section 143(3) of the Act dated 09.12.2019 is hereby quashed. Consequently, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.