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

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 CBDT Instructions No. 1/2011 and 6/2011, cases with returned income above Rs. 10 lakhs in mofussil areas required handling by ACIT/DCIT rank officers. Since the assessee's returned income was Rs. 40,63,900, the ITO had no authority to issue the notice. Following precedent in Mata Road Carriers, the tribunal held that CBDT instructions are binding on revenue authorities. The invalid notice rendered the entire assessment void ab initio, and the assessee's appeal was allowed.

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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.

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