SMT. BASANTI BAI AGRAWAL, MAHASAMUND,MAHASAMUND vs. INCOME TAX OFFICER, WARD-MAHASAMUND, MAHASAMUND

8. Disallowance made without confronting the assessee with brokers' statements violating Section 142(3) and principles of natural justice is liable to be deleted.

9. Modified Ground: Purchases were genuine and supported by verifiable documents, yet held as bogus without proper appreciation of evidences produced by the assessee making the addition of Rs.8,04,705/- liable to be deleted.

11. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of Appeal.”

Assessment framed u/s.143(3) by the Ld. ITO, Mahasamund is without jurisdiction as jurisdiction vested with the Ld. DCIT/ACIT-3(1), Raipur in view of Section 143(2) read with Section 2(7A) read with Section 120 read with Notification No.1/2014 dated 15.11.2014 issued by the Ld. JCIT, Range-3, Raipur, rendering entire assessment illegal and void-ab-initio being inconsistent with statutory prescription.

That since the additional ground raised by the assessee is the ground challenging the validity of the jurisdiction of the A.O framing the impugned assessment, therefore, such ground goes to the root of the matter since inherent lack of jurisdiction is incurable and is covered by the aforesaid judgment of the Hon’ble Apex Court (supra) and therefore, the same is admitted for adjudication.

5. The Ld. Sr. DR could not refute these facts on record and was not able to substantiate through any documentary evidence that the contention raised by the Ld. Counsel for the assessee was incorrect.

6. Having heard the contentions of the parties herein at length and after careful consideration of the legal issue at hand, I am of the considered view that the Ld. Counsel for the assessee has fairly demonstrated that the issuance of notice u/s. 143(2) of the Act by the ITO, Ward- Mahasamund and subsequent assessment framed u/s. 143(3) of the Act by the ITO, Ward Mahasamund suffers from lack of jurisdiction, hence liable to be quashed. It is established principle of law for any proceeding by the quasi-judicial authority as per the Act, it has to be performed within the parameter of valid jurisdiction. That as per the Circular/Notification of the department dated 15.11.2014 (supra), it has been clearly laid down that so far as the assessees are concerned who other than companies have filed return of income above Rs.10 lacs, in such case, the officer who has the rightful jurisdiction over such assessee is the Dy./ACIT-3(1), Raipur. Admittedly, as per the return of income, computation of income and even as per the assessment order, it had been displayed that the return of income filed by the assessee was above Rs.10 lacs and to be more specific it was Rs.10,27,640/-. That in spite of such return of income filed, the assessment was framed and completed not by the Dy/ACIT-3(1), Raipur but by the ITO, Ward- Mahasamund who inherently lacked valid jurisdiction with regard to the assessee. That in exercise of quasi-judicial power as per the Act sans valid jurisdiction such an act has to be struck down as arbitrary, bad in law and void ab initio.

I take guidance from the judgment of the Hon’ble High Court of 7. Calcutta in the case of Pr. CIT-5, Kolkata Vs. Raghvendera Mohta, ITAT/51/2025, IA No.GA/1/2025, GA/2/2025, dated 05.05.2025 wherein the Hon’ble High Court of Calcutta held and observed as follows: “5. The assessee preferred appeal before the learned Tribunal challenging the order passed by the Commissioner of Income Tax (Appeals)-10, Kolkata [CIT(A)] dated 26.9.2017. One of the grounds urged before the learned Tribunal was that the Assessing Officer, who passed the assessment order did not have jurisdiction over the case of the assessee and, therefore, the notice as well as the assessment order are bad in law. The learned Tribunal took note of the facts and circumstances of the case and found that the assessee filed its return of income declaring the income to be nil. Subsequently, notice under section 143(2) was issued on 10.9.2015 and notice under section 142(1) dated 13.6.2016 was issued along with the questionnaire. The assessee contended that the notices were without jurisdiction and relied upon section 120 of the Act. In this regard, the assessee referred to the notification issued by the CBDT in Instruction No.1 of 2011. The learned Tribunal took into consideration the facts of the case and found that the assessment has been framed by the Assessing Officer, who inherently lacks jurisdiction to do so.

7. For the above reason, the appeal is dismissed and the substantial questions of law are answered against the revenue.”

Further, the Hon’ble High Court of Calcutta in the case of Pr. 8. Commissioner of Income Tax Vs. Shree Shoppers Ltd. (2023) NYPCTR 379 (Cal.) on the same issue of validity of jurisdiction had held and observed as follows:

“4. The short issue which falls for consideration in the instant case is whether there is valid notice issued under Section 143(2) of the Act for commencing the scrutiny assessment. The Tribunal has noted the facts and rendered a finding that on the date when the case was selected for scrutiny, the authority who issued the notice namely, the Income Tax Officer, Ward No.9(4), Kolkata did not have jurisdiction and the jurisdiction was with the Deputy Commissioner of Income Tax. The following factual finding has been recorded by the Tribunal : "Therefore, the legal ground stands to be admitted and the same relates to invalid notice issued u/s. 143(2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. 143(3) of the Act, the statutory requirement of serving of valid notice u/s. 143(2)of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs.48,47,180/- in the e- return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143(2) of the Act was issued by ITO, Ward-9(4), Kolkata dated 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No.1/2011 supra) revised the monetary limit for issuing notice by ITO/DCs/ACs. Through this instruction it stated that in case of metro cities in case of corporates declare income above Rs.30 lakh the jurisdiction of such corporate assessee will lie with the DCs/ACs. It is not in dispute that as on the date of selecting the case for scrutiny, the very basis for having jurisdiction over the assessee is the returned income which was more than Rs.30 lakhs and the same was lying with the DCs/Acs but the notice u/s. 143(2) of the Act has been issued by ITO, Ward-9(4), Kolkata. It is true that subsequently the assessment has been framed by DCIT, Circle-9(2), Kolkata but the point in dispute is that on date of issuing a notice u/s. 143(2) of the Act, whether the ITO, Ward- 9(4), Kolkata was having a valid jurisdiction to issue such notice u/s. 143(2) of the Act."

5. The above factual position recorded by the Tribunal is not in dispute. Therefore, we are of the clear view that the Tribunal rightly allowed the assessee's appeal and quashed the scrutiny proceedings as defect in issuance of notice is incurable as it goes to the root of the matter.”

Also, the Hon’ble High Court of Bombay in the case of Ashok 9. Devichand Jain Vs. Union of India, (2023) 151 taxmann.com 70 (Bombay) on the similar issue had held and observed as follows:

“4. We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs.30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019.

6. In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019.

Further, the ITAT, Raipur in the case of Shri Arun Agrawal Vs. 10. ACIT-3(1), Raipur, dated 16.10.2023 for A.Y.2010-11, on the similar issue had held and observed as follows:

14. Be that as it may, I am of the view that as the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No.1/2011 (supra) r.w. CBDT Instruction No.6/2011 (supra )was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus, the Ground of Appeal No.1 raised by the assessee is allowed in terms of my aforesaid observations.

Therefore, it is obvious and trite that any action by the revenue authority without jurisdiction is bad in law, void ab initio and hence, liable to be struck down on the said count itself.