2024 (8) TMI 1517 - AT - Income Tax

ITO lacks jurisdiction to issue Section 148 reassessment notice for income above Rs 15 lakhs under CBDT Instruction 01/2011

The ITAT Delhi held that a reassessment notice u/s 148 issued by ITO Ward 1(2)(5), Meerut was invalid due to lack of jurisdiction. The assessee had ... Initiation of proceedings by issuance of notice u/s 148 by the non-jurisdictional officer - notice has been issued by Income-tax Officer, Ward 1(2)(5), Meerut who did not have the requisite jurisdiction To issue the notice for reassessment - HELD THAT:- The assessee had filed a return of income on 07.07.2013 declaring the total income. The assessee is an individual and, taking into consideration Instruction No. 01/2011, for non-corporate returns in case of non-metro cities (mofussil areas), the returns above Rs. 15 lakhs have to be assessed by the officers of the rank of Assistant Commissioners/Deputy Commissioners. The report which is filed by the AO dated 26.06.2024 and reproduced above categorically mentions the fact that it is only on 15.05.2024, the PAN of the assessee has been transferred to ACIT, Circle 1(1)(1), Meerut, from ITO, Ward 1(2)(5), Meerut, as per CBDT Instruction No. 05/2011 dated 31.01.2011 vide which jurisdiction of noncorporate returns above Rs. 15 lakhs lies with ACIT/DCIT and upto Rs. 15 lakhs lies with ITO. If the notice u/s 148 of the Act, issued by an authority not having jurisdiction, would be valid by referring to section 292BB of the Act, has held that jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, some which he lack inherently. Notice u/s 148 is not a procedural subject, but, a jurisdictional one as it is a condition precedent for initiation of proceedings. Now, admittedly, the notice u/s 148 dated 30.03.2021 is issued by ITO, Ward-1(2)(5), Meerut. Thus, certainly, this Revenue Officer did not have the pecuniary jurisdiction as vested by the Board vide CBDT Instructions No. 01/2011 dated 31.03.2011. Decided in favour of assessee. ISSUES PRESENTED and CONSIDEREDThe core legal issue in this case revolves around the jurisdictional validity of the notice issued under Section 148 of the Income Tax Act, 1961. Specifically, the question is whether the Income Tax Officer (ITO), Ward 1(2)(5), Meerut, had the requisite pecuniary jurisdiction to issue the notice for reassessment, given the financial threshold set by the Central Board of Direct Taxes (CBDT) Instruction No. 01/2011.ISSUE-WISE DETAILED ANALYSIS1. Jurisdictional Validity of Notice under Section 148Relevant Legal Framework and Precedents: The legal framework involves Section 148 of the Income Tax Act, which pertains to the issuance of notice for reassessment. The CBDT Instruction No. 01/2011 delineates the pecuniary jurisdiction for assessing officers, specifying that non-corporate returns above Rs. 15 lakhs should be handled by Assistant Commissioners/Deputy Commissioners, while those up to Rs. 15 lakhs fall under the jurisdiction of Income Tax Officers.Court's Interpretation and Reasoning: The Tribunal examined whether the ITO, Ward 1(2)(5), Meerut, had the authority to issue the notice given the pecuniary limits. It was established that the notice was issued without the requisite jurisdiction as the assessee's income exceeded the threshold for the ITO's jurisdiction.Key Evidence and Findings: The Tribunal considered the report dated 26.06.2024, which confirmed that the PAN of the assessee was only transferred to the appropriate jurisdiction (ACIT, Circle 1(1)(1), Meerut) on 15.05.2024, well after the notice was issued on 30.03.2021. This transfer was in accordance with the CBDT Instruction No. 01/2011.Application of Law to Facts: The Tribunal applied the legal principle that jurisdiction cannot be conferred by consent or participation in proceedings. The issuance of the notice by an officer without jurisdiction renders the notice and subsequent proceedings void ab initio.Treatment of Competing Arguments: The Revenue argued that the assessee's participation in the assessment proceedings precluded them from challenging jurisdiction at a later stage, citing various judgments. However, the Tribunal distinguished these cases, noting that they dealt with territorial jurisdiction or non-disposal of objections, not pecuniary jurisdiction.Conclusions: The Tribunal concluded that the notice under Section 148 was issued without proper jurisdiction, thus invalidating the entire assessment process. The Tribunal relied on precedents, including the Allahabad High Court's decision in PCIT-II, Lucknow vs. Mohd. Rizwan, which emphasized that jurisdictional requirements are not procedural but substantive.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: The Tribunal stated, 'Jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, some which he lack inherently.'Core Principles Established: The Tribunal reinforced the principle that jurisdictional prerequisites are fundamental and cannot be circumvented by participation in proceedings. The issuance of a notice by an officer without the requisite jurisdiction is a substantive defect that invalidates the proceedings.Final Determinations on Each Issue: The Tribunal allowed the appeal of the assessee, quashing the assessment order due to the lack of jurisdiction of the officer who issued the notice under Section 148.