Assessment Order Found Irregular, Not Illegal - Jurisdiction Issue Remanded for Fresh Assessment

The Tribunal found the Assessing Officer's assessment order to be irregular but not illegal regarding the jurisdiction issue. The matter was remanded for a de-novo assessment by a competent officer, either an ACIT or DCIT. The Tribunal held that the ITO lacked competence to assess income exceeding the specified limit, setting aside the assessment order and directing a fresh assessment by a competent officer. The assessee's appeal was allowed for statistical purposes, and the Revenue's appeal was dismissed. Other grounds raised did not require separate adjudication in light of the decision on jurisdictional issues.

---

---

Issues:
Cross-appeals filed against CIT(A) order for assessment year 2009-10.

Analysis:
1. The first issue raised in the appeal relates to the jurisdiction of the Assessing Officer (AO) in passing the assessment order. The appellant argued that the AO, an Income Tax Officer (ITO), did not have the authority to assess the income declared by the assessee, which exceeded the limit specified in CBDT Instruction No.1/2011. The appellant contended that as per the Board's instructions, assessments in metro cities with income over Rs. 30 lakhs should be framed by Deputy Commissioner of Income Tax (DCIT) or Assistant Commissioner of Income Tax (ACIT). However, the AO passed the assessment order. The appellant relied on the instructions issued under section 119 of the IT Act, 1961, to support their argument. The Revenue, on the other hand, cited a judgment of the Delhi High Court to assert that objections to jurisdiction should have been raised within one month after assessment completion. The Revenue also argued that the CBDT instructions applied only to returns filed under section 139(1), not those filed after a survey under section 133A. The Tribunal found that the AO's assessment order was irregular but not illegal, and decided to remand the matter for a de-novo assessment by a competent officer, either an ACIT or DCIT.

2. The second issue involved a comparison with a judgment of the Delhi High Court in the case of Kapil Jain. The Tribunal distinguished the facts of that case, where objections to jurisdiction were raised after the expiration of the one-month period following the notice served under section 143(2) of the IT Act. The Tribunal noted that the restriction on raising objections about jurisdiction under section 124(3) pertained to territorial jurisdiction, not the competence of the assessing officer. In the present case, the question was whether the ITO had the competence to assess income exceeding the specified limit, which, according to the CBDT instructions, required assessment by an ACIT or DCIT. The Tribunal rejected the Revenue's contention that the circular applied only to returns filed under section 139(1) and not after a survey under section 142(1). The Tribunal held that the ITO was not competent to assess returns exceeding the specified limit, regardless of the filing section. Therefore, the Tribunal set aside the assessment order and directed a de-novo assessment by a competent officer.

3. In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal. The Tribunal found the assessment order by the ITO to be invalid due to lack of jurisdiction and ordered a fresh assessment by a competent officer. Other grounds raised by the parties did not require separate adjudication in light of the decision on jurisdictional issues.

---