AI Drafter 
TaxTMI 
TaxTMI 
2024 (6) TMI 557
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....the assessment order is invalid in the eyes of law. 3. Facts in brief are that the assessee filed return of income on 26.03.2013 declaring total income of Rs. 2,70,140/-. The case of the assessee was selected for scrutiny under CASS and accordingly notice u/s 143(2) was issued by ACIT, Circle-47, Kolkata which was duly served upon the assessee. Thereafter the assessment proceedings were attended from time to time and the details as called for were also furnished before the AO. Finally the assessment was framed by ACIT, Circle-47, Kolkata by passing an order u/s 148, 144 & 147 of the Act dated 22.10.2019 by making some additions to the income of the assessee. 4. At the outset the ld. Counsel for the assessee stated that the notice u/s 143(2) has been issued by ACIT, Circle-47, Kolkata in violation of Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31.01.2011 which provides for issuance of notice in metro cities by ITO if the returned income is up to Rs. 20.00 lacs and beyond that the jurisdiction is with ACIT/DCIT. The Ld. A.R submitted that in the present case the returned income of the assessee is Rs. 2,70,140/- and therefore the notice u/s 143(2) & 142(1) of the ....
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....f the Co-ordinate Bench in the case of M/s Rupasi Bangla Agro Industries Pvt. Ltd. vs. ITO in ITA No. 909/Kol/2023 for AY 2013-14 dated 14.12.2023 and observe that the coordinate bench has decided the issue of notice u/s 143(2) of the Act in favour of the assessee after distinguishing the decision of Hon'ble Apex Court in the case of DCIT(Exemption) & Another vs. Kalinga Institute of Industrial Technology; Special Leave to Appeal (C ) No(s). 29304/2019 and WP(C ) No. 898/2017 which was relied by the Ld. D.R. to defend his arguments that the notice u/s 143(2) of the Act if issued by wrong AO then the assessee is at liberty to take objection to raise the issue within one month of the issuance of the notice in the assessment proceedings. The Coordinate Bench held that the facts of the case of Kalinga Institute of Industrial Technology (supra) are distinguishable and not applicable. The operative part of the decision in the case of M/s Rupasi Bangla Agro Industries Pvt. Ltd. vs. ITO (supra)is extracted below: "8. We have heard rival contentions and carefully gone through the decisions relied upon by both the sides. 9. Through the additional grounds, assessee has chall....
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....pha National Trading Co. vs. ACIT in ITA No. 686/KOL/2023 order dated 27.09.2023 wherein the coordinate bench has decided the issue in favour of the assessee after following the above decision of the Hon'ble Jurisdictional High Court. The operative part of the decision is extracted as under: "5. The ld. Counsel for the assessee in this respect has invited our attention to the opening paras of the assessment framed to submit that the returned income of the assessee was 17,51,940/-, which was less than Rs.30,00,000/- and that the jurisdiction to issue notice u/s 143(2) of the Act and to frame the assessment u/s 143(3) of the Act in case of an assessee, wherein, the returned income is Rs.30,00,000/- or less, was lying with the ITO. He has further submitted that however the assessment in this case has been framed by Assistant Commissioner of Income Tax, Circle-29, Kolkata (ACIT) who did not have jurisdiction to frame the assessment in question. The ld. Counsel has submitted that the issue is squarely covered by the recent decision of the jurisdictional Calcutta High Court in the case of PCIT vs. Shree Shoppers Ltd. in ITAT/39/2023 in IA No.GA/1/2023 dated 15.03.2023. The l....
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....2) by the concerned Assessing Officer of competent jurisdiction was sine qua non to assume jurisdiction to frame assessment u/s 143(3) of the Act. He, in this respect, has relied upon the decision of the Hon'ble Supreme Court in the case of ACIT vs. M/s Hotel Blue Moon (supra). The ld. counsel, therefore, has submitted that in this case the concerned DCIT did not issue any notice u/s 143(2) of the Act before proceeding to frame assessment u/s 143(3) of the Act. He has submitted that since the concerned ITO, Ward-1(1) did not have jurisdiction to issue notice u/s 143(2) of the Act as such the said notice issued by him did not have any legal sanctity. He, therefore, has submitted that the assessment framed by the DCIT, in this case, was bad in law for want of issue of notice u/s 143(2) of the Act. The ld. DR could not rebut the aforesaid legal position based on aforesaid factual aspect put by the ld. counsel for the assessee. However, she has relied upon the findings given by the Assessing Officer in the assessment order. 5. We have considered the rival contentions of ld. representatives of both the parties and gone through the records. Before proceeding further, it....
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....g hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: Income Declared (Mofussil reas) Income Declared (Metro cities) ITOs ACs/DCs ITOs DCs/ACs Corporate returns Upto Rs. 20 lacs Above Rs. 20 lacs Upto Rs. 30 lacs Above Rs. 30 lacs Non-corporate returns Upto Rs. 15 lacs Above Rs. 15 lacs Upto Rs. 20 lacs Above Rs. 20 lacs Metro charges for the purpose of above instructions shall be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune. The above instructions are issued in supersession of the earlier instructions and shall be applicable with effect from 1-4-2011." 7. ....
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....by DCIT, Circle-11(1), Kolkata, is valid as admittedly, he did not issue a notice u/s 143(2) of the Act, to the assessee. This issue is no more res-integra. This Bench of the Tribunal in the case of Soma Roy vs. ACIT in ITA No. 462/Kol/2019; Assessment Year 2015-16, order dt. 8th January, 2020, under identical circumstances, held as under:- "5. After hearing rival contentions, I admit this additional ground as it is a legal ground, raising a jurisdictional issue and does not require any investigation into the facts. The ld. Counsel for the assessee submitted that as per Board Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dt. 31/01/2011, the jurisdiction of the assessee is with the Assistant Commissioner of Income Tax, Circle-1, Durgapur, as the assessee is a noncorporate assessee and the income returned is above Rs.15,00,000/- and whereas, the statutory notice u/s 143(2) of the Act, was issued on 29/09/2016, by the Income Tax Officer, ward-1(1), Durgapur, who had no jurisdiction of the case. He submitted that the assessment order was passed by the ACIT, Circle-1(1), Durgapur, who had the jurisdiction over the assessee, but he had not issued the notice u/s 143(2) of ....
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....income of Rs.50,28,040/- in his return of income cannot be assessed by the ITO as per the CBDT circular (supra). From a perusal of the assessment order, it reveals that the statutory notice u/s. 143(2) of the Act was issued by the then ITO, Ward-1, Haldia on 06.09.2013 and the same was served on the assessee on 19.09.2013 as noted by the AO. The AO noted that since the returned income is more than Rs. 15 lacs the case was transferred from the ITO, Ward-1, Haldia to ACIT, Circle-27 and the same was received by the office of the ACIT, Circle-27, Haldia on 24.09.2014 and immediately ACIT issued notice u/s. 142(1) of the Act on the same day. From the aforesaid facts the following facts emerged: i) The assessee had filed return of income declaring Rs.50,28,040/-. The ITO issued notice under section 143(2) of the Act on 06.09.2013. ii) The ITO, Ward-1, Haldia taking note that the income returned was above Rs. 15 lacs transferred the case to ACIT, Circle-27, Haldia on 24.09.2014. iii) On 24.09.2014 statutory notices for scrutiny were issued by ACIT, Circle-27, Haldia. 6. We note that the CBDT Instruction is dated 31.01.2011 and the assessee has filed the return ....
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....per CBDT instruction, jurisdiction for scrutiny assessment vested in Income-tax Officer and notice under section 143(2) must be issued by Income-tax Officer, Ward-I, Haldia and none other - But, notice was issued by Asstt. Commissioner, Circle Haldia much after CBDT's instruction and knowing fully well that he had no jurisdiction over assessee - Whether, therefore, notice issued by Asstt. Commissioner was invalid and consequently assessment framed by Income-tax Officers becomes void since issue of notice under section 143(2) was not done by Income-tax Officers as specified in CBDT instruction No. 1/2011." 9.2. The Hon'ble High Court of Calcutta in the case of West Bengal State Electricity Board vs. Deputy Commissioner of Income Tax, Special Range - I, reported in [2005] 278 ITR 218 (Cal.) has held as follows:- "Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment years 1983-84 to 1987-88 - Whether a question of law arising out of facts found by authorities and which went to root of jurisdiction can be raised for first time before Tribunal - Held, yes Whether jurisdiction of Assessing Authority is not dependent on date of accrua....
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....ntended to cure complete absence of notice itself." 10. Respectfully following the propositions of law laid down in all these case-law and applying the same to the facts of the case, we hold that the assessment order is bad in law for the reason that the Assessing Officer having jurisdiction over the assessee, has not issued a notice u/s 143(2) of the Act as required by the statute. Notice issue by the officer having no jurisdiction of the assessee is null and void. When a notice is issued by an officer having no jurisdiction, Section 292BB of the Act, does not comes into play. Coming to the argument of the ld. D/R that objection u/s 124(3) of the Act has to be taken by the assessee on rectifying notice u/s 143(2) of the Act from a non-jurisdictional assessing officer, I am of the view that I need not adjudicate this issue, as I have held that non-issual of statutory notice/s 143(2) of the Act by the jurisdictional Assessing Officer makes the assessment bad in law. Under these circumstances, we allow this appeal of the assessee." 6. Respectfully following the propositions of law laid down in these orders stated above, we hold that the orders are bad in law for the....
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....ct is issued only once at the time of initiating of the scrutiny assessment, thereafter mere change of jurisdictional Assessing Officer within the same Range and/or Pr.CIT cannot affect the assessment proceedings?" 5. On the above substantial questions of law, the Hon'ble Court held that Tribunal rightly allowed the assessee's appeal and quashed the scrutiny proceedings as effect of non-issuance of notice is incurable since it goes to the root of the matter. The Hon'ble Court noted that "we find no ground to differ with the findings recorded by the Ld. Tribunal. In the result, the appeal filed by the revenue is dismissed and the substantial question of law are answered against the revenue." 5.1. While giving this judgment, the Hon'ble Court noted the factual findings of the Tribunal which is reproduced as under: "The short issue which falls for consideration in the instant case is whether there is valid notice issued under Section 143 (2) of the Act for commencing the Scrutiny assessment. The Tribunal has noted the facts and rendered a finding that on the date when the case was selected for scrutiny, the authority who issued the notice namely, the Income ....
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....arrying out an assessment proceedings u/s. 143(3) of the Act, statutory requirement of serving a valid notice u/s. 143(2) of the Act is a must and in absence of which the subsequent proceedings become invalid. In the present case before us, it is a fact that assessee has reported total income of Rs.43,53,620/- which exceeds the threshold prescribed in the CBDT Instruction no. 1/2011 read with revised monetary limit for issuing notice by ITO/DCs/ACs. Through this instruction, it stated that in case of metro cities, in case of corporate declared income above Rs. 30 lakh, the jurisdiction of such corporate assessee will lie with the DCs/ ACs. It is not in dispute that as on the date of selecting the case for scrutiny, the very basis for having jurisdiction over the assessee is the returned income which was more than Rs. 30 lakhs and the same was lying with the DCs/ACs but the notice u/s. 143(2) of the Act has been issued by ITO, Ward 49(1), Kolkata. It is true that subsequently the assessment has been framed by ACIT, Circ1e-49, Kolkata but the point in dispute is that on the date of issuing a notice u/s. 143(2) of the Act, whether the ITO, Ward-49(1), Kolkata was having a valid jurisd....
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....ed by the AO is hereby quashed." 10. Perusal of the above decision indicates that issuance of notice u/s 143(2) of the Act by the Assessing Officer not having jurisdiction over the assessee renders the assessment proceedings as a nullity. However, the case of the assessee before us is on a much stronger footing because leaving aside the issuance of notice u/s 143(2) of the Act, even the final assessment order has been framed by the Assessing Officer not having jurisdiction over the assessee. Though the ld. D/R has referred to the judgment of the Hon'ble Apex Court in the case of Kalinga Institute of Industrial Technology (supra), we notice that the facts before the Hon'ble Supreme Court were that the assessee participated in the assessment proceedings in response to the notice u/s 143(2) of the Act and the assessee did not challenge the jurisdiction within 30 days of issuance of notice and, therefore, in light of the provisions of Section 124(3) of the Act since the assessee did not object within 30 days of the receipt of notice u/s 143(2) of the Act, the assessee could not question the jurisdiction of the AO. But since the issue before us relates to the jurisdiction of th....