Pecuniary jurisdiction under CBDT Instruction No. 1/2011 invalidated an ITO assessment where jurisdiction lay with ACIT/DCIT.

Assessment framed by an ITO was held to suffer from lack of pecuniary jurisdiction where the returned loss exceeded the monetary limit prescribed in CBDT Instruction No. 1/2011, placing jurisdiction with the ACIT/DCIT. In the absence of any transfer order under section 127, the ITO's notice under section 143(2) was treated as invalid and not curable because the defect went to the root of jurisdiction. The consequent assessment under section 143(3) read with section 147 was quashed, and once the jurisdictional objection succeeded, the merits of the addition did not survive.

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Issues: Whether the assessment framed by the Income-tax Officer was without jurisdiction for want of pecuniary jurisdiction under CBDT Instruction No. 1/2011, and whether the notice issued under section 143(2) of the Income-tax Act, 1961 and the consequent assessment under section 143(3) read with section 147 of the Act were liable to be quashed.

Analysis: The assessee had declared returned loss exceeding the monetary limit prescribed for ITOs under CBDT Instruction No. 1/2011, which placed jurisdiction with the ACIT/DCIT. The assessment, however, was completed by the ITO, and no transfer order under section 127 was shown. The defect went to the root of the assumption of jurisdiction, and the notice under section 143(2) issued by the ITO was held to be invalid and not curable. Once the jurisdictional ground succeeded, the merits of the addition ceased to survive.

Conclusion: The assessment was quashed for want of jurisdiction, and the assessee's challenge to the initiation and completion of proceedings was accepted.

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