SUMAN DEVI,GURGAON V. ITO WARD 4(3) GURGAON, GURGAON

ITA 2817/DEL/2024

AI Insights

The case involves an appeal by Suman Devi against the assessment order for the year 2016-17, which was contested on the grounds of improper jurisdiction of the assessing officer. The appellant argued that the notice under section 143(2) of the Income Tax Act, 1961, was issued by an officer who did not have the jurisdiction to do so, as per the CBDT's circular No. 1/2011. The Tribunal, referencing a similar case and the CBDT's instructions, found that the jurisdictional error was significant enough to render the assessment void ab initio.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126756 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Other Referred Cases: YKM Holdings Pvt. Ltd. Vs. ACIT, Ashok Devichand Jain vs. UOI
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: M.R. SAHU
• Keywords: Set aside; Competent authority; National Faceless Appeal; Commissioner; Commissioner of Income Tax; Transfer; Transfer of jurisdiction; Department; ITES; Section 143(2)
• Section: 148; 144; 143(3); 143(2); 119; 43; 13; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘G’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.2817/Del/2024 Assessment Year: 2016-17 Suman Devi, C/o-CA MR Sahu, H. No. 651, 1st Floor, Sector-10A, Nr. G.D. Goenka Public School, Gurgaon Vs. Income Tax Officer, Ward-4(3), Gurgaon PAN:CEMPD0587D (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1064724078(1), dated 08.05.2024, involving proceedings under section 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Assessee by Sh. M.R. Sahu, CA Department by Sh. Sahil Kumar Bansal, Sr. DR Date of hearing 07.04.2025 Date of pronouncement 25.04.2025 ITA No.2817/Del/2024 2 | P a g e 2. Heard both the parties. Case file perused. 3. It transpires during the course of hearing that the appellant/assessee raises his legal ground/argument challenging the validity of the impugned assessment framed on 17.12.2018 by the Income Tax Officer, Ward-4(3), Gurgaon for want of a valid section 143(2) notice. 4. It is in this factual background that the Revenue invites our attention to the assessment discussion in para 1 that the above section 143(2) notice had indeed been issued by the ACIT, Circle- 4(1), Gurgaon on 17.08.2017. The assessee’s case before us is that once she had returned income of Rs.2,66,730/- only on 07.09.2016; the above learned authority never had any jurisdiction to issue section 143(2) notice going by the CBDT’s circular no. 1/2011 under section 119 of the Act, dated 31st January, 2011 making it clear that in the metro city, having return income upto 30 lakhs the jurisdiction would lie with the ITO’s concern. 5. Mr. Bansal vehemently submits in this factual backdrop that the assessee’s case is hit by section 124(3) as she is estopped from challenging the ACIT’s jurisdiction who had issued section 143(2) notice. We find no merit in the Revenue’s instant technical ITA No.2817/Del/2024 3 | P a g e arguments once it has come on record that the assessee’s case is purely covered as per CBDT’s binding instructions on the field authority and also that this tribunal’s coordinate bench in ITA No.1020/Del/2019, YKM Holdings Pvt. Ltd. Vs. ACIT, dated 29.04.2024 has already rejected the Revenue’s very stand as under: “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. 201516 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. ITA No.2817/Del/2024 4 | P a g e 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 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 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 ITA No.2817/Del/2024 5 | P a g e 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. 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, ITA No.2817/Del/2024 6 | P a g e 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. 8. Petition disposed.” 7. 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.” 6. We adopt the above detailed discussion mutatis mutandis to quash the impugned assessment for want of valid section 143(2) notice issued by the competent authority, in very terms. Ordered accordingly. All other pleadings on merits in the instant appeal has been rendered academic. 7. This assessee’s appeal is allowed in above terms. Order pronounced in the open court on 25th April, 2025 Sd/- Sd/- (M. BALAGANESH) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25th April, 2025. RK/- Copy forwarded to: ITA No.2817/Del/2024 7 | P a g e 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "