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Facts
The assessee filed an appeal against the order of the NFAC for AY 2017-18, with a delay of 149 days which was condoned. The assessee raised an additional ground challenging the pecuniary jurisdiction of the assessing officer based on CBDT Instruction No. 1/2011.
Held
The Tribunal held that while Instruction No. 1/2011 ordinarily vests jurisdiction for returns below Rs. 20 lakhs with the ITO, subsequent instructions allowed for monetary limit adjustments. Therefore, the notice issued by ACIT and assessment by ITO were not in violation. However, the Tribunal noted that both lower authorities passed ex-parte orders.
Key Issues
Whether the notice u/s 143(2) and subsequent assessment were invalid due to improper pecuniary jurisdiction. Whether the lower authorities erred in passing ex-parte orders without affording adequate opportunity to the assessee.
Sections Cited
143(2), 143(3), 144
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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: MS. MADHUMITA ROY, & SHRI NAVEEN CHANDRA
This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 28.12.2023 for A.Y 2017-18
There is a delay of 149 days. The assessee has filed an affidavit for condonation of delay. The reasons for delay in filing appeal stated by the assessee seem to be reasonable. Accordingly, we condone the delay.
The assessee has raised five grounds of appeal. He has also filed an application for admission of additional grounds as follows:
(6) On the facts and circumstances of the case the notice issued u/s 143(2) by the Ld.ACIT is bad in law in the absence of pecuniary jurisdiction as provided in CBDT Instruction No 1/11, dated 31.1.2011 and the assessment completed by ITO ward 70(1) on the basis of un- jurisdictional notice is also bad in law.
Admittedly, this issue was never raised before the lower authorities. But since the challenge to the jurisdiction of the Assessing Officer goes to the root of the matter, in light of the ratio laid down by the Hon'ble Supreme Court in the case of NTPC 229 ITR 383, the same deserves to be admitted and adjudicated. Accordingly, the additional plea raised for the first time is admitted, since it requires no verification of facts and the facts are very much in the body of the assessment order in the first page itself.
The facts of the instant case is that the assessee is an individual and has filed return of income on 04.08.2017 at total income of Rs.17,05,033/- and the assessment was completed on 06.12.2018 at a total income of Rs.70,81,033/- by ITO ward 70(1), New Delhi. The notice u/s 143(2) of the Income Tax Act, 1961 dated 17.08.2018 was issued by Page 2 of 6 ITO Ward 70(1), Delhi.
In the grounds of appeal raised by the appellant with the memo filed on 25.07.2024 before the Hon'ble Income Tax Appellate Tribunal, the assessee’s additional ground is that the assumption of pecuniary jurisdiction is illegal and bad in law as the returned income was less than Rs. 20 lakhs and notice was issued by ACIT and assessment was framed u/s 143(3) of the Act by the ITO which is not sustainable in the eyes of law.
7. At the very outset of the opening of the arguments, the ld. counsel for the assessee submitted that as per CBDT Instructions No. 1 of 2011 dated 31.01.2011, jurisdiction for assessment vested, in metro cities, with the Income tax Officer upto Rs. 20 lakhs and where income declared returned by a non-corporate assessee was above Rs. 20 lakhs, the pecuniary jurisdiction would be of DC/ACIT. Since the declared income in this case is Rs. 17.05 lakh, the assumption of jurisdiction by ACIT Cir 66(1), Delhi for issuance of notice u/s 143(2) is invalid and hence the whole proceedings are illegal and unsustainable in law. The ld. counsel for the assessee relied upon the following judgement in support of his contentions:
Capital Boradways [P] Ltd Vs ITO 301 Taxmann.com 506 (DEL)
Page 3 of 6 no 6/2011 dated 8.4.2011 empowering the CIT to adjust the monetary limit for the ITO/DCITs in his charge. The ld DR, submitted that the said Instruction allows monetary adjustment limited to an amount of 5 lakh according to the work load of the officers. The ld DR stated that since the assessee’s return was only of Rs 17.05 lakh, after the said Instruction is applied, the pecuniary jurisdiction would change from ITO to DCIT.
The ld DR therefore emphasized that the notice u/s 143(2) was therefore correctly issued by the ACIT Cir 66(1).
We have heard the rival submissions and have perused the relevant material on record. We find that Income tax return for AY 2017-18 was filed on 04.08.2017 at Rs. 17,05,033/- which is less than Rs. 20 lakhs. As
per the Instruction no 1/2011, ordinarily the pecuniary jurisdiction of cases of Return below 20 lakh in Metro cities, lies with the ITO. We find however, that the CBDT through subsequent Instruction allowed adjustment of monetary limit by Rs 5 lakh in a PCIT charge according to the work load of the officers under him. We therefore find no violation of CBDT Instruction when the notice u/s 143(2) dated 17.08.2018 was issued by ACIT, Circle 66(1), New Delhi and assessment being framed by the ITO,70(1), Delhi. The additional ground is dismissed.
1. Page 4 of 6 the order ex-parte. We find that the AO has passed order u/s 144 without any compliance from the assessee. Even before the CIT(A), there was no participation from the assessee. We are of the considered view that in the above factual matrix, the CIT(A) should have given adequate opportunity of being heard to the assessee. Accordingly, in the interest of justice and fair play, we restore the issues to the file of the ld. CIT(A) for adjudication of issues afresh. The assessee is directed to furnish the necessary documents for verification and the ld. CIT(A) is directed to examine the same and decide the issues as per the provisions of law after affording reasonable and sufficient opportunity of being heard to the assessee. is allowed for statistical purposes.
The order is pronounced in the open court on 19.09.2025.