MAHAVIR PUKHRAJ JAIN,MUMBAI V. THE DCIT, CIRCLE 42(1)(1), MUMBAI, MUMBAI

ITA 379/MUM/2025

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The case revolves around the reassessment of income tax for the assessment year 2013-14 concerning the assessee, Mahavir Pukhraj Jain. The primary legal issue was the jurisdiction of the ITO who issued a notice under section 148 of the Income Tax Act, 1961, for reopening the assessment under section 147. The assessee challenged the jurisdiction, citing CBDT circular No. 1/2011, which specified that for non-corporate assessees with income above Rs. 20 lakhs, the jurisdiction lies with the Assistant/Deputy Commissioner of Income Tax, not the ITO. The Tribunal examined the procedural validity of the notice and the subsequent reassessment, ultimately finding them to be without proper jurisdictional foundation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779194 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 20-01-2025
• Other Referred Cases: Y. Narayana Chetty Vs. ITO, CIT Vs. Maharaja Pratap Singh Bahadur, CIT Vs. Robert, Income-tax officer, Ward 11(4), Delhi Vs. M/s Indus Valley Investment & Finance Pvt. Ltd., Ashok Devichand Vs. Union of India, Mr. Peter Vax Vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAN KOSURI
• Assessee Lawyers: RAJESH SHAH
• Keywords: Set aside; Reassessment proceedings
• Section: 147; 148; 143(3); 132

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 379/Mum/2025 (Assessment Year: 2013-14) Mahavir Pukhraj Jain Flat No. 603/B, Manan Apartment, New Link Road, Dahisar East, Mumbai – 400068. Vs. DCIT, Circle – 42(1)(1) Kautilya Bhawan, Aenue -3, Near Videsh Bhavan, G-Block, BKC Bandra (E) – 400051 PAN/GIR No. ADEPJ8540R (Applicant) (Respondent) Assessee by Shri Rajesh Shah, CA Revenue by Shri Annavaran Kosuri, Sr. DR Date of Hearing 24.07.2025 Date of Pronouncement 13.10.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dt. 10.01.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2013-14. 2. The Ld. AR appearing on behalf of the assessee pressed Ground No. 2 of appeal, as the same is legal in question, wherein the jurisdiction for issuance of notice Printed from counselvise.com 2 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. u/s 148 of the Act has been challenged. In our view since this ground is purely legal in question and goes to the roots of the case therefore we have also decided to take up this ground firstly. 3. Ground No. 2 raised by the assessee relates to challenging the order of Ld. CIT(A) wherein the jurisdiction of ITO in recording the ‘reasons for reopening’ u/s 147 of the Act and ‘issuing notice’ u/s 148 of the Act was challenged. 4. In this regard Ld. AR appearing on behalf of the assessee submitted that the ITO has erred in recording the reasons for reopening of the case u/s 147 of the Act and also erred in issuing the notice u/s 148 of the Act dated 30.03.2016 as the ITO did not have valid jurisdiction over the assessee’s case as per CBDT circular No. 1/2011. 5. However on the contrary Ld. DR while relying upon the orders passed by the AO relied upon the provisions of Sec. 124(3) of the Act and submitted that at this stage assessee cannot be allowed to challenge the jurisdiction of the AO while passing the order of assessment. 6. We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records, we noticed that as per the Printed from counselvise.com 3 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. facts of the present case, ITO recorded reasons for reopening u/s 147 of the Act and issued notice u/s 148 of the Act on 30.03.2016. However, the jurisdiction in the assessee’s case, as per CBDT instruction No. 01/2011, lay with the Assistant/Deputy Commissioner of Income Tax since the income declared was above Rs. 20 Lakhs. Since the assessee had filed the return of income for Rs. 29,57,760/- on 28.09.2013. The CBDT Instruction No. 01/2011, which are reproduced as under: Order-Instruction Income Tax 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 area) Income Declared (Metro cities) ITOs ACs/DCs ITOs ACs/DCs Corporate Return Upto to 20 lacs Above Rs. 20 lacs Upto 30 lacs Above 30 lacs Non-corporate return Upto 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Printed from counselvise.com 4 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. 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.\" 7. Regarding this circular the jurisdiction of the non corporate assessee whose income exceeds 20 lakhs lies with ACIT / DCIT and not with the ITO. Admittedly in the present case assessee had filed his return of income of Rs. 29,57,760/-, hence the jurisdiction in accordance with the CBDT was with ACIT / DCIT, Circle 32(2), as even the original assessment order in the present case was also passed u/s 143(3) of the Act by DCIT, Circle 32(2) on 26.02.2016. 8. Thereafter, just after 32 days of the original assessment order passed by the DCIT, Circle 32(2), the ITO 32(2)(3) issued noticed u/s 148 of the Act on 30.03.2016. Further the order against the objections and the assessment order was ultimately passed by ACIT/DCIT without issuing a fresh notice u/s 148 of the Act. Hence in our view the ACIT / DCIT had not acquired jurisdiction to reassess the income of the assessee. In this regard reliance is being placed upon the decision in the case of Y. Narayana Chetty Vs. ITO 35 ITR 388, 392 (SC), CIT Vs. Maharaja Pratap Singh Bahadur 41 ITR 421(SC) & CIT Vs. Robert 48 ITR 177 (SC). Printed from counselvise.com 5 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. 9. Even the Coordinate Bench of ITAT Delhi, in the case of Income-tax officer, Ward 11(4), Delhi Vs. M/s Indus Valley Investment & Finance Pvt. Ltd. [ITA No. 4239/Del/2011] after considering the above ruling of apex court, decided the matter on identical issue and made the following observations: \"It is well-settled that if a notice under section 148 of the Act has been issued without the jurisdictional foundation u/s 147 of the Act being available to the AO, the notice and the subsequent proceedings will be without jurisdictional and thus, liable to be struck down. In view of foregoing, we have no hesitation in upholding the findings of the Ld. CIT (A), quashing the reassessment order. Consequently, ground no 1 in the appeal is dismissed.\" This was the appeal of revenue. 10. Reliance is further being placed upon the decision in the case of Ashok Devichand Vs. 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. 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. Printed from counselvise.com 6 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. 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. 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. 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.\" 11. Although Ld. DR had relied upon Sec. 124(3) of the Act to support his arguments, but in our view the provisions of Sec. 124(3) of the Act refers to Sec. 120 of the Act. Thus applies only on territorial jurisdiction and not to other jurisdiction i.e pecuniary jurisdiction as in the Printed from counselvise.com 7 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. present case the assessee has raised the issue of pecuniary jurisdiction, other than territorial jurisdiction. Thus, in this regard reliance is being placed by us on the decision of Jurisdictional Hon’ble Bombay High Court in the case of Mr. Peter Vax Vs CIT in Tax Appeal No. 19, 21 to 25 of 2017, wherein it was held as under: 44. The ITAT with respect has misconstrued the provisions of Section 124 of the IT Act. Sections 120 to 124 of the IT Act no doubt refer to the jurisdiction of the Income Tax Authorities. However, from the scheme of these provisions, it is apparent that reference is to the territorial jurisdiction of the authorities. Section 124(1) refers to direction or order issued under Section 120 vesting with jurisdiction in the Assessing Officer over any area, limits of an area, etc. Section 124(2) provides that where a question arises under this Section as to whether the Assessing Officer has jurisdiction to assess any person, the question will have to be determined by the authorities specified which will include, in a given case the Board. Section 124(3) then provides that no person shall be entitled to call in question the jurisdiction of an Assessing Officer, where an action has been taken under Section 132 or 132A after the expiry of one month from the date on which he was served with a notice under Section 153C or after the completion of the assessment, whichever is earlier. Now, this provision refers to mainly the territorial jurisdiction of the Assessing Officer. This provision cannot be interpreted to mean that an assessee is left without a remedy where the Assessing Officer invokes the provisions of Section 153C of the IT Act without fulfillment of the jurisdictional parameters prescribed therein. 12. After having gone through the entire facts and circumstances and legal prepositions as discussed by us above, we are of the view that the issue of validity jurisdiction is a condition precedent to the validity of any Printed from counselvise.com 8 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. assessment u/s 147 of the Act. Therefore in our view the ITO, who issued the notice u/s 148 of the Act had no jurisdiction to issue such notice, thus the same is bad in law. The notice u/s 148 is jurisdictional notice and therefore any inherent defect, therein is not curable. Therefore, the assessment made in pursuant to such notice is bad in law as has been held by the Coordinate Bench of ITAT Delhi in the case of Indus Valley Investment and Finance Pvt Ld., (supra). Therefore taking into consideration the entire facts and circumstances of the present case since the initial notice issued u/s 148 of the Act was by a non jurisdictional ITO and the reassessment has been made by ACIT, who has never issued notice u/s 148 of the Act, thus does not acquire jurisdiction. 13. Therefore considering the entire facts and circumstances as discussed by us above, we have no hesitation to quash the reassessment proceedings. Since there was no valid notice pursuant to which the reassessment proceeding was made in the present case. Accordingly, this ground raised by the assessee stands allowed. 14. Since we have allowed ground No. 2 and quashed the proceedings therefore there is no need to adjudicate other grounds raised by the assessee and the same are kept open. Printed from counselvise.com 9 ITA No.379/Mum/2025 Mahavir Pukhraj Jain., Mumbai. 15. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 13.10.2025 Sd/- Sd/- (GIRISH AGRAWAL) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 13/10/2025 KRK, PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण,मु\u0003बई/ DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai Printed from counselvise.com "