2023 (7) TMI 1503 - AT - Income Tax

ITO without jurisdiction issued invalid notice under section 143(2) for income above Rs. 10 lakhs making assessment void

Mickey Shrivastava Versus ACIT, Circle-3 (1), Raipur

ITAT Raipur quashed an assessment after finding that the notice under section 143(2) was issued by ITO-2(4) who lacked jurisdiction over the assessee. Per ... Validity of jurisdiction assumed by the ITO-2(4), Raipur who has issued notice u/s. 143(2) - HELD THAT:- Admittedly, the assessee has filed its return of income for the assessment year 2012-2013 with a returned income of Rs. 40,63,900/-, which is above Rs. 10 lakhs for non-corporate returns. As per the CBDT Instruction No. 1/2011, dated 31.01.2011 and Instruction No. 6/2011, dated 08.04.2011 and the Notification of the CCIT, Raipur, dated 30.05.2011, the jurisdiction over the case of the assessee located in mofussil areas i.e at Raipur, Chhattisgarh was vested with an officer in the rank of ACIT/DCIT, whereas the notice u/s. 143(2) of the Act was issued by the ITO-2(4), Raipur. Though, subsequently the case was transferred to DCIT-2(4), Raipur, however, the jurisdiction assumed by the ITO-2(4), Raipur, who has issued notice u/s. 143(2) of the Act was not in accordance with the CBDT Instruction No. 01/2011, dated 31.01.2011 and 06/2011, dated 08.04.2011. Therefore, the notice issued u/s. 143(2) of the Act was invalid in terms of non-following the binding instructions issued by the CBDT, consequently, the framing of assessment on the basis of such invalid notice was also void ab initio and needs to be struck down. This issue has already been settled in the case of Mata Road Carriers [2023 (7) TMI 1426 - ITAT RAIPUR] wherein the Tribunal following various judicial pronouncements, in para 18 has held that the Instructions/Circulars are binding on the revenue authorities. Further, the Tribunal in para 19 has quashed the assessment framed u/s. 143(3) of the Act upon a notice issued u/s. 143(2) of the Act by a non-jurisdictional officer. In the present case, notice u/s. 143(2) of the Act was issued by the ITO-2(4), Raipur, who had no jurisdiction over the assessee as per the CBDT Instructions and the Notification issued by the CCIT, Raipur dated 30.05.2011, which is not sustainable and void ab initio. When the notice u/s. 143(2) of the Act is not valid, the assessment so framed by the AO is also not maintainable and the same is hereby quashed. Appeal of the assessee is allowed. Issues Involved:1. Condonation of delay in filing the appeal.2. Validity of jurisdiction and notice issued under section 143(2).3. Admissibility of additional grounds raised by the assessee.Detailed Analysis:1. Condonation of Delay in Filing the Appeal:The appeal was delayed by 668 days. The assessee cited reasons such as business loss and family health issues, including the death of her mother, as causes for the delay. The Tribunal, referring to precedents from the Supreme Court, emphasized that justice should not be denied due to procedural delays if there is a sufficient cause. The Tribunal found the reasons provided by the assessee to be genuine and condoned the delay, allowing the appeal to be admitted for hearing.2. Validity of Jurisdiction and Notice Issued under Section 143(2):The assessee challenged the jurisdiction of the ITO-2(4), Raipur, who issued the notice under section 143(2), arguing that the officer lacked pecuniary jurisdiction as per CBDT Instruction No. 1/2011. The Tribunal noted that the notice was issued by an officer not having jurisdiction over the case, rendering the subsequent assessment void ab initio. The Tribunal relied on various judicial precedents, including CBDT instructions and notifications, which mandated that the jurisdiction should lie with an officer of a higher rank for the income declared by the assessee. Consequently, the Tribunal quashed the assessment order due to the invalidity of the notice.3. Admissibility of Additional Grounds Raised by the Assessee:The assessee raised an additional legal ground challenging the jurisdiction of the AO, which was not raised before the lower authorities. The Tribunal, guided by the Supreme Court's decision in NTPC Ltd., held that legal issues could be raised at any stage, even if not presented earlier. The Tribunal admitted the additional ground, emphasizing that it pertained to the jurisdictional validity, which goes to the root of the matter. The Tribunal rejected the Revenue's objection, allowing the assessee to raise this point.Conclusion:The Tribunal allowed the appeal, primarily on the basis of the jurisdictional challenge, rendering the assessment order invalid. The Tribunal did not address the other grounds related to additions made by the AO, as the jurisdictional issue was dispositive of the appeal. The decision underscores the importance of adhering to jurisdictional mandates as prescribed by CBDT instructions and highlights the Tribunal's willingness to entertain legal grounds at any stage to ensure justice.