Pecuniary jurisdiction defect in scrutiny notice under section 143(2) vitiates assessment; short cross-objection delay was condoned.

A short delay in filing the cross-objection was condoned because the explanation was supported by affidavit, arose after change of counsel, and showed no deliberate or mala fide conduct. The scrutiny notice under section 143(2) was issued by an Income-tax Officer despite the case falling within the pecuniary jurisdiction of the Assistant/Deputy Commissioner level, making the notice a jurisdictional defect. Because a valid notice under section 143(2) is a condition precedent for scrutiny assessment under section 143(3), the defect could not be cured by the later assessment. The consequential assessment order was quashed and the jurisdictional challenge succeeded.

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Issues: (i) Whether the delay of 5 days in filing the cross-objection deserved condonation. (ii) Whether the notice issued under section 143(2) of the Income-tax Act, 1961 by an officer lacking the prescribed pecuniary jurisdiction was valid, and whether the consequential assessment order could survive.

Issue (i): Whether the delay of 5 days in filing the cross-objection deserved condonation.

Analysis: The explanation for the short delay was supported by affidavit and showed that the cross-objection was filed after change of counsel and on advice raising legal grounds going to the root of the matter. The delay was neither deliberate nor mala fide, and no dilatory intent was found. In the interests of justice, a brief and satisfactorily explained delay merited liberal consideration.

Conclusion: The delay was condoned and the cross-objection was admitted.

Issue (ii): Whether the notice issued under section 143(2) of the Income-tax Act, 1961 by an officer lacking the prescribed pecuniary jurisdiction was valid, and whether the consequential assessment order could survive.

Analysis: The returned income placed the case within the jurisdiction of the Assistant/Deputy Commissioner level under CBDT Instruction No. 1/2011 dated 31.01.2011, whereas the scrutiny notice was issued by an Income-tax Officer who lacked the requisite jurisdiction. For a scrutiny assessment under section 143(3), a valid notice under section 143(2) is a condition precedent, and a notice issued by an lacking jurisdiction is a foundational defect. The subsequent framing of assessment could not cure the absence of jurisdiction at the stage of initiation.

Conclusion: The notice under section 143(2) was invalid and the consequential assessment order was quashed.

Final Conclusion: The assessee succeeded on the jurisdictional challenge, the revenue's appeal did not survive, and the assessment was annulled.

Ratio Decidendi: A scrutiny assessment is vitiated where the notice under section 143(2) is issued by an officer who lacks the prescribed pecuniary jurisdiction, because valid initiation of proceedings is a jurisdictional precondition and not a curable irregularity.

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