Pecuniary jurisdiction for scrutiny notice: notice by an incompetent officer vitiated the assessment and it was quashed.

A scrutiny assessment was treated as jurisdictionally invalid where the notice under section 143(2) was issued by an officer not competent under CBDT Instruction No. 1/2011 read with section 119 of the Income-tax Act, 1961. The instruction allocated jurisdiction by pecuniary limits, and on the stated facts the declared income fell below the threshold for the Assistant Commissioner, so the power to issue the notice vested in the Income-tax Officer. The additional ground was entertained as a pure question of law, and the defect was treated as distinct from concurrent territorial jurisdiction. The assessment under section 143(3) was therefore quashed.

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Issues: Validity of the assessment on the ground that the notice under section 143(2) of the Income-tax Act, 1961 was issued by an officer not competent to do so under CBDT Instruction No. 1/2011, resulting in a jurisdictional defect.

Analysis: The additional ground was entertained as a pure question of law requiring no fresh factual investigation. The assessment was tested against CBDT Instruction No. 1/2011 issued under section 119 of the Income-tax Act, 1961, which governs allocation of jurisdiction on the basis of pecuniary limits. On the facts, the declared income was below the threshold prescribed for the Assistant Commissioner, so the power to issue the notice under section 143(2) vested in the Income-tax Officer. Since the notice initiating assessment was issued by an officer lacking such competence, the assumption of jurisdiction for the assessment under section 143(3) was held to be invalid. The objection raised in relation to pecuniary jurisdiction was treated as materially different from a mere issue of concurrent territorial jurisdiction.

Conclusion: The additional ground was allowed and the assessment was quashed.

Ratio Decidendi: Where jurisdiction to issue a notice for scrutiny assessment is allocated by a binding CBDT instruction under section 119 of the Income-tax Act, 1961, a notice issued by an officer lacking such pecuniary competence vitiates the assessment proceedings.

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