Loading judgment…
Facts
The assessee filed an appeal against the order of the CIT(A). The assessee sought to raise additional grounds challenging the jurisdiction of the Assessing Officer (AO) who issued the notice u/s 143(2) of the Income Tax Act, 1961, arguing that the AO did not have the pecuniary jurisdiction based on the returned income exceeding Rs. 20 lakhs.
Held
The Tribunal held that the additional grounds raised by the assessee go to the root of the matter, challenging the jurisdictional issue. Following judicial precedents, the Tribunal admitted the additional grounds and found that the notice u/s 143(2) was issued by an officer without jurisdiction, making the assessment order liable to be quashed.
Key Issues
Whether the notice issued u/s 143(2) by an officer without pecuniary jurisdiction renders the subsequent assessment order void ab initio. Whether the additional grounds challenging jurisdiction can be raised at the appellate stage.
Sections Cited
143(2), 143(3), 124, 120, 127, 2(7A)
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
(Assessment Year: 2017-18) Om Prakash Bansal (HUF), vs. ACIT, Circle 46(1), 3990, F/F, Naya Bazar, New Delhi. Delhi – 110 006. (PAN : AABHO0485L) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Suresh Kumar Gupta, CA REVENUE BY : Shir Vipul Kashyap, Sr. DR Date of Hearing : 05.08.2025 Date of Order : 24.10.2025 O R D E R
PER S.RIFAUR RAHMAN,AM:
This appeal has been filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘ld. CIT (A)) dated 19.04.2024 for the assessment year 2017-18.
2. At the time of hearing, ld. AR of the assessee brought to our notice application for admission of additional grounds of appeal wherein following additional grounds of appeal are raised :-
“1. The assessment is invalid and without jurisdiction as the appellant has declared returned income exceeding Rs.20,00,000/- and, therefore, jurisdiction over appellant lies with Circle not with ITO, Ward 47(1), Delhi as per CBDT Circular No.1/2011 F.No.187/12/2010-IT(A-I) dt. 03.01.2011 and hence the assessment initiated vide notice u/s 143(2) of IT Act by the AO i.e. ITO is invalid, illegal and without jurisdiction.
2. On the facts and circumstances of the case and, the assessment order passed by AO i.e. ACIT, Circle 46(1), New Delhi need to be quashed as the order is passed without issuing notice u/s 143(2) by the authority having jurisdiction over the appellant.” By relying on the decision of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC) and Jute Corporation of India Ltd. vs. CIT 187 ITR 688 (SC), ld. AR prayed that the issue raised by the assessee is legal issue which can be raised at any stage of the appellate proceedings.
3. On the other hand, ld. DR for the Revenue objected to the additional grounds and raised the same at this stage without raising the same before the lower authorities.
4. Considered the rival submissions and material placed on record by both the parties. We observe that the issues raised by the assessee in additional grounds go to the root of the matter challenging the jurisdictional issue. In the light of Hon’ble Supreme Court in the case of NTPC Limited (supra), we are inclined to admit the additional grounds and take up the same for adjudication herein below.
5. At the time of hearing, Ld. AR contested only the legal issues raised in the additional grounds. He submitted that the proceedings u/s 143(2) dated 21.09.2018 was initiated by ITO, Ward 47(1), New Delhi i.e. JAO who did not have jurisdiction over the assessee. He further submitted that as per last ITR available for AY 2018-19 filed on 25.08.2018, the returned income of assessee is Rs.20,34,480/- and even considering the ITR for the year under consideration dated 08.09.2017 also, the returned income was Rs.30,71,730/-. Therefore, the jurisdiction over the assessee was with Circle and not with above Ward Officer. Since returned income of assessee exceeds the income of Rs.20 lakhs, the jurisdiction on the assessee lies with Circle, the above limit of income for non-corporate charge with Circle is fixed as per CBDT Instruction no. 01/2011 and the jurisdiction over the case lied with Assistant/Deputy Commissioner of Income Tax since the income declared was above Rs.20 Lakhs. He referred to the said CBDT Instruction no. 01/2011 which is reproduced as under: - “Order-Instruction - Income Tax References have been received by the Board from the large number of taxpayers especially from the mofussil areas, that the existing monetary limits for assigning cases to Deputy Commissioners / Assistant Commissioners and ITOs is causing hardship to the taxpayers. INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-I)] DATED 31-1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil Income Declared areas) (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from1-4-2011.”
He submitted that however, in the present case, notice u/s 143(2) was issued by ITO, Ward 47(1) on 21.09.2018, who did not have jurisdiction over the assessee and thus, notice u/s 143(2) issued is without jurisdiction. He submitted that the fact that ITO did not have jurisdiction is evident from the fact that assessment has been completed by ACIT, Circle – 46(1), Delhi, thus in the absence of valid notice u/s 143(2) by the jurisdictional AO, the assessment order is liable to be quashed and the issue is no more res integra. In this regard, he relied on the case of Ashok Devichand Jain v. Union of India (452 ITR 43) (Bom) wherein it was held as under: - “Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitioner’s objection to reopening on various grounds.
The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.
3. Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice.
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. 5. The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law. 6. In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019. 7. Consequently the order dated 18th November, 2019 rejecting Petitioner’s objection is also quashed and set aside.”
7. Further, he submitted that the reassessment proceedings in the present case are to be treated as being initiated by non-jurisdictional assessing officer and, therefore, the reassessment proceedings and consequent assessment order both needs be quashed. In this regard, further he relied YKM Holdings Pvt. Ltd. v. ACIT Circle–4(1) dated 29.04.2024, M/s. Kelvin International vs. DCIT in dated 22.12.2013 and J Mitra and Bros. VS. ACIT in ITA No.3643/Del/2023 dated 10.04.2024, where similar view was considered and decided that no jurisdiction over the assessee and issue of notice u/s 143(2) of the Act issued by the non-jurisdictional officer is bad in law.
8. Ld. AR submitted that in view of the above decisions, it is evident that notice u/s 143(2) issued in this case is without jurisdiction and, therefore the said notice along with the assessment order passed on the foundation of such notice is liable to be quashed.
Coming to the second objection regarding issue of completion of assessment by non-jurisdictional authority, it is submitted that the jurisdiction of the assessee on the basis of CBDT jurisdictional list w.e.f. 15.11.2014 falls in Circle 47(1), Delhi based on the territorial jurisdictional of Naya Bazar, Delhi and submitted copy of instructions on record. He further submitted that the assessment has been completed by Circle 46(1), Delhi who did not have jurisdiction over the assessee. H submitted that it is therefore a case of exercise of jurisdiction for making assessment by the authority who had no jurisdiction over the assessee as per section 2(7A) r.w.s. 120(3) of the Act. He submitted that since that be the case, such assessment is invalid in law in view of the decisions cited herein above. Further he relied on various judgments in his written submissions. Thus, in view of the above, he prayed that the assessment order passed is without jurisdiction and accordingly, the appeal filed by the assessee be allowed.
On the other hand, ld. DR of the Revenue submitted that the issue raised by the assessee in additional ground should have challenged the same within one month before the Assessing Officer after receiving the notice. This issue was never raised before the first appellate authority also. He submitted that income has to be assessed and income alone cannot be considered for jurisdiction. He relied on section 124 (3) of the Act as per which assessee has to file objections within two months. In this regard, he relied on the decision of Hon’ble jurisdictional High Court in the case of Abhishek Jain vs. ITO (2018) 94 taxmann.com 355 (Delhi). He objected to the submissions of the ld. AR and heavily relied on the findings of the authorities below.
In the rejoinder, ld. AR of the assessee submitted that section 124 applies with the territorial jurisdiction and it is not applicable to pecuniary jurisdiction. The relevant section applicable is section 120 and he reiterated that the action of the Assessing Officer is illegal and in this
Considered the rival submissions and material placed on record. We observed that assessee has filed its return of income declaring income of Rs.30,71,730/-. As per the CBDT Instruction No.01/2011, the jurisdiction over the assessee’s case lies only with Assistant/Deputy Commissioner of Income-tax as the income declared by the assessee is above Rs.20 lakhs falls under the category of non-corporate returns. It is brought to our notice that notice u/s 143(2) was issued by the ITO, Ward 47 (1) on 21.09.2018, who do not have jurisdiction over the assessee in the case considering the fact that the return of income declared by the assessee is over and above Rs.20 lakhs. The assessment was completed by the ACIT, Circle – 46(1), Delhi u/s 143(3) of the Act. However, we observe that the jurisdiction lies only with DCIT, however the statutory notice u/s 143(2) was issued by the ITO instead of the present Assessing Officer i.e. DCIT. Ld. DR objected to the submissions of the assessee for the reason that the present jurisdictional issue raised now instead of raising the same during assessment itself within one month from the date of receipt of the notice u/s 124 (3) of the Act. After considering the factual matrix in this case, we observe that similar issue under consideration is considered by “4. We have heard the rival submissions and perused the material available on record. At the outset, we find that the additional grounds raised
by the assessee go to the root of the matter challenging the jurisdictional per se. All the facts relevant for its adjudication are placed on record. Hence, in the light of decision of Hon’ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383, we are inclined to admit the additional grounds and take up the same for its adjudication.
5. We find that assessee’s returned income for the A.Y. 2015- 16 was Rs. 37,78,510/- hence, the jurisdiction of the assessee should lie with ACIT/DCIT since the returned income had exceeded Rs. 30,00,000/-, in view of the CBDT Instruction No.1/2011 dated 31.01.2011. For the sake of convenience, the said Instruction No.1/2011 [F. No.187/12/2010-IT(A-I)] dated 31.01.2011 is hereby reproduced:- “SECTION 119 OF THE INCOME-TAX ACT, 1961-INCOME-TAX AUTHORITIES- INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A-1)), DATED 31- 1-2011 References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil areas) Income Declared (Metro cities) ITOS ACS/DCS ITOS DCS/ACS Corporate returns Upto Rs. 20 Above Rs. 20 Upto Rs. 30 Above Rs. 30 lacs lacs lacs lacs Non-corporate Upto Rs. 15 Above Rs. 15 Upto Rs. 20 Above Rs. 20 returns lacs lacs lacs lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011.”
6. In the instant case, the notice under section 143(2) of the Act stood issued to the assessee on 12.04.2016 by ITO Ward 27(4), Delhi. In July, 2016, the ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/- . Copy of the said transfer memo is enclosed in page 5 of the paper book. After the transfer of jurisdiction from ITO to DCIT, no fresh notice under section 143(2) of the Act was issued by ACIT, Circle 4(1), Gurgaon. The assessment was ultimately framed under section 143(3) of the Act for A.Y. 2015-16 on 14.12.2017 by ACIT, Circle – 4(1), Gurgaon. It is pertinent to note that assessment for the A.Y. 2014-15 of the assessee was completed under section 143(3) of the Act on 30.11.2016 by DCIT, Circle – 27(2), New Delhi. Hence, it was argued that the notice under section 143(2) of the Act dated 12.04.2016 issued by the ITO selecting the return of assessee for A.Y. 2015-16 for scrutiny is without jurisdiction and consequently, the assessment framed under section 143(3) of the Act dated 14.12.2017 required to be quashed as void ab initio. When this was confronted to learned DR, he pointed out to the provisions of section 124(3) of the Act wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice. In the instant case, nowhere up to learned CIT(A), the assessee has challenged the jurisdiction of the learned AO. In our considered opinion, this argument of the learned DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Further, the provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice under section 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued under section 143(2) of the Act on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Hon’ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom). In this case, very same issue was addressed in the light of CBDT Instruction No.1/2011[F. No.187/12/2010-IT(A-I)] Dated 31.01.2011. For the sake of convenience, the entire order is reproduced hereunder: “1. Petitioner is impugning a notice dated 30th March, 2019 issued under section 148 of the Income Tax Act, 1961 (the Act) for A.Y. 2012-13 and order passed on 18th November, 2019 rejecting Petitioner’s objection to reopening on various grounds.
2. The primary ground that has been raised is that the Income Tax Officer who issued the notice under section 148 of the Act, had no jurisdiction to issue such notice. According to Petitioner as per instruction No. 1/2011 dated 31st January, 2011 issued by the Central Board of Direct Taxes, where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC.
Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice.
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.
The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law.
6. In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019.
7. Consequently the order dated 18th November, 2019 rejecting Petitioner’s objection is also quashed and set aside.
Petition disposed.”
In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Consequently, assessment framed under section 143(3) of the Act is hereby quashed as void ab initio. The additional ground no.2 is hereby allowed.” 13. Similar view was expressed by the ITAT, Mumbai in the case of Monarch & Quershi Builders v. ACIT Circle – 33(2) and by the coordinate Bench in the case of Sapna Rastogi vs. ITO – ITA No. 617/DEL/2024.
Further the Revenue has not brought on record an order u/s 127 of the Act passed in order to transfer the case to DCIT, Circle …………, New Delhi except making the submissions that assessee should file the objection within one month u/s 124(3) of the Act. Since the issue of notice u/s 143(2) is the basis of initiation of the assessment u/s 143(3) and the jurisdictional officer should have issued the notice and also completed the assessment. The present Assessing Officer has completed the assessment without following the due process of law and we, respectfully following the decisions of the coordinate Bench and ITAT Mumbai, are inclined to hold that the jurisdictional notice u/s 143(2) was not issued by the DCIT before completing the assessment u/s 143(3) of the Act and that there is an unwarranted defect in this case which is not curable. Accordingly, the assessment passed in the given case is quashed and accordingly, the additional grounds raised by the assessee are allowed.
15. The assessee has raised several grounds on merits as well. Since we have already decided the additional grounds of appeal on jurisdictional issue, we are inclined to keep the other grounds of appeal open at this stage.
16. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 24th day of October, 2025.