Pecuniary jurisdiction defect in scrutiny notice cannot be cured by participation or section 292BB, assessment held void.

A scrutiny notice issued by an Income-tax Officer without the requisite pecuniary jurisdiction was held void where the assessee's returned income fell within the CBDT-prescribed range for assessment by an Assistant or Deputy Commissioner and no section 127 transfer order was shown. The jurisdictional defect went to the root of the proceedings, so the consequential assessment could not be sustained. Participation in the proceedings did not cure the defect, and section 292BB was held inapplicable because it does not validate a notice issued without jurisdiction. The jurisdictional challenge succeeded, and the additions and disallowance were not examined on merits.

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Issues: Whether the scrutiny notice and assessment were invalid for want of pecuniary jurisdiction, and whether the jurisdictional defect could be cured by participation in proceedings.

Analysis: The assessee's returned income placed the case within the monetary limit requiring assessment by an Assistant or Deputy Commissioner under the applicable CBDT instruction, whereas the scrutiny notice under section 143(2) of the Income-tax Act, 1961 was issued by an Income-tax Officer. No order transferring jurisdiction under section 127 of the Income-tax Act, 1961 was shown. In these circumstances, the notice was issued by an lacking the requisite jurisdiction, and the defect went to the root of the proceedings. The plea that the defect was cured by section 292BB of the Income-tax Act, 1961 was not accepted, since that provision does not validate a notice issued without jurisdiction.

Conclusion: The notice was bad in law and the consequential assessment could not be sustained; the issue was decided in favour of the assessee.

Final Conclusion: The jurisdictional challenge succeeded, and the additions and disallowance were not examined on merits.

Ratio Decidendi: A scrutiny notice issued by an officer lacking pecuniary jurisdiction is a foundational jurisdictional defect that cannot be cured by participation or by section 292BB of the Income-tax Act, 1961, and the resulting assessment is void.

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