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Judgment
PER MANISH AGARWAL, AM :
The present appeal is filed by the revenue against the order dated 21.08.2025 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“ld. CIT(A)”] in Appeal No. CIT (A), Delhi- 15/10728/2019-20 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 30.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18. Apart from this, assessee also filed Cross objection on 20.01.2026.
First we take the Cross objection filed by the assessee in C.O. No. 13/Del/2026 for Assessment Year 2017-18.
CO NO. 13/Del/2026 [Assessment Year 2017-18]
The C.O. filed by the assessee was delayed by 05 days for which an application for condonation of delay alongwith an affidavit of the assessee reaffirming the facts stated in the application are filed. It is stated that on 16.12.2025, appeal memo regarding the appeal filed by the revenue was served upon the assessee as per which hearing was fixed on 19.01.2026. Assessee engaged new counsel and on the fixed date the case was adjourned for 21.01.2026. Thereafter the counsel examined the records and on the advice of counsel, the Assessee filed the present Cross-Objections raising purely legal issues which goes to the root of the matter. It is further stated that the delay was neither intentional nor deliberate. It is thus requested that delay being bonafide, deserves to be condoned and cross objection filed be admitted for adjudication.
Per contra, Ld. Sr. DR opposed to the condonation of delay.
After considering the arguments of both the parties, we find that there is reasonable and sufficient cause with the assessee in filing the cross objection delayed by only 05 days. It must be remembered that in every case of delay there can be some lapses of the litigant concerned, that alone is not enough to turn down the plea of assessee and to shut the doors against it. When the explanation does not smack of mala fide or it is not put forth as a part of dilatory strategy, the Courts must give utmost consideration to such litigant and its right of hearing of the appeal on merit ought not to be shut. Considering the overall facts and circumstances of the case and in the larger interest of justice, delay in filling the cross objections is condoned and same is admitted for adjudication.
In the cross objection 1 & 2 raised by the assessee where the assessee has challenged the validity of assessment order for want of jurisdiction of the AO when the notice u/s 143(2) was issued by AO having no jurisdiction over the assessee.
Before us, Ld.AR for the assessee submits that return of income was filed on 09.11.2017 declaring total income of INR 20,03,060/-and in terms of CBDT Instruction No.1/2011, the jurisdiction lies with ACIT and not with ITO. However, notice u/s 143(2) of the Act dt. 22.09.2018 was issued by ITO, Ward-41(4), Delhi. Thereafter the impugned assessment order u/s 143(3) of the Act was passed by the ITO ward 45(3) Delhi dt. 30.12.2019 upon transfer of the case. It is thus, prayed by Ld.AR that the order being passed on the basis of notice u/s 143(2) issued by the assessing officer i.e. ITO ward 41(4), Delhi having no jurisdiction over the assessee and thus assessment order is bad in law and deserves to be quashed.
On the other hand, ld. Sr. DR vehemently supported the orders of the lower authorities. It was the submission that the Assessing officer has concurrent jurisdiction and the ITO was competent to issue notice even though notice is liable to be issued by ACIT, Circle Delhi.
Heard the contentions of both the parties at length and perused the material available on record. It is observed that the notice u/s 143(2) dt. 22.09.2018 was issued by the ITO ward 41(4) Delhi which is admitted by the AO in para 1 at page 1 of the assessment order.
As per CBDT Instruction No. 1/2011 dated 31.01.2011 issued u/s 119 of the Act, jurisdiction in case of the assessee who has filed the income upto Rs. 20,00,000/- is with the ITOs and anything above Rs. 20,00,000/-, jurisdiction lies with the ACs/DCs in the metro cities including Delhi. In the present case, since the assessee has declared total income of Rs. 20,03,060/-, the jurisdiction was with ACs/DCs, Circle Delhi however, the jurisdiction was assumed by the ITO Ward 41(4), Delhi for assessing the income of the assessee for impugned assessment year by issue of notice u/s 143(2) of the Act. Since the correct jurisdiction lies with ACs/DCs of Circle Delhi and it is beyond the jurisdiction of ITO ward 41(4), Delhi, to issue the notice u/s 143(2) of the Act to assess the income of the assessee, therefore, the jurisdiction assumed vide notice u/s 143(2) dt. 22.09.2018 is bad in law and the subsequent assessment order passed by the AO having no jurisdiction over the assessee is bad in law.
The Hon’ble Jurisdictional High Court in the case of PCIT Vs. Vimal Gupta reported in 2017 (10) TMI 1670 (Delhi) held the assessment order as invalid where the notice u/s 148 was issued by the authority having no jurisdiction over the assessee. The relevant observations of the hon’ble court are as under:
1.“This is an appeal filed by the Revenue against an order dated 23rd December 2015 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 1211/Del/2010 for the Assessment Year (‘AY’) 2006-07.
2.Although other grounds have been pressed by the Revenue regarding the validity of the impugned order of the ITAT holding the assessment order passed under Section 148 of the Income Tax Act, 1961 (‘Act’) to be invalid, a threshold ground urged is that the ITAT erred in holding in the impugned order that the assessment made by the Additional Commissioner of Income Tax (‘ACIT’) Circle 34 (1) was without jurisdiction. It has been noticed that the matter was transferred to the said ACIT by the Income Tax Officer (‘ITO’) Ward 34 (4), New Delhi without an appropriate order having been issued under Section 127 of the Act. Further that the ACIT did not himself issue the notice under Section 148 of the Act.
3.The ITAT has in para 13 of the impugned order specifically adverted to the above aspect and correctly held that “The ACIT, Circle 34(1), New Delhi has admittedly not recorded that he had reasons to believe that income chargeable to tax of the Assessee has escaped assessment. He continued reassessment proceedings initiated by the ITO, Ward 34(4) of the Act without independently recording reasons for reopening or issuing a fresh notice u/s 148 of the Act.” Further the ITAT noted that “There is no order u/s 127 of the Act transferring the jurisdiction of the case from ITO, Ward 34(4) to ACIT, Ward 34(1). Thus this order of reassessment passed by the ACIT u/s 34(1) of the Act is without jurisdiction and hence is bad in law.”
4.In the present memorandum of appeal no attempt has been made by the Revenue to aver whether in fact there was an order under Section 127 of the Act transferring the case to the ACIT, Circle 34(1). That being the position, the impugned order of the ITAT cannot be faulted. In view of the above conclusion, there is no occasion to examine the other questions urged by the Revenue in this appeal.
5.No substantial question of law arises. The appeal is dismissed.”
Similar view was expressed by the hon’ble Bombay High court in the case of Ashok Devichand Jain Vs. Union of India reported in 452 ITR 43 (Bombay). The Hon'ble Calcutta High Court in the case of Shree Shoppers Ltd in ITAT 39/2023 in IA No.GA/1/2023 dt. 15.03.2023, wherein, the Hon'ble Calcutta High Court has held as follows:
"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 Tax Officer, Ward No.9(4), Kolkata did not have jurisdiction and the jurisdiction was with the Deputy Commissioner of Income Tax. The following findings has been recorded by the Tribunal:
Therefore, the legal ground stands to be admitted and the same relates to invalid notice issued u/s. 143(2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. 143(3) of the Act, the statutory requirement of serving of valid notice u/s. 143(2) of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs.48,47,180/- in the e-return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143(2) of the Act was issued by ITO, Ward- 9(4), Kolkata dated 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No. 1/2011 (supra) revised the monetary limit for issuing notice by ITO/DCs/ACs. Through this instruction it stated that in case of metro cities in case of corporates declare 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-9(4), Kolkata. It is true that subsequently the assessment has been framed by DCIT, Circle-9(2), Kolkata but the point in dispute is that on date of issuing a notice u/s. 143(2) of the Act, whether the ITO, Ward-9(4), Kolkata was having a valid jurisdiction to issue such notice u/s. 143(2) of the Act. The above factual position recorded by the Tribunal is not in dispute. Therefore, we are of the clear view that the Tribunal rightly allowed the assessee's appeal and quashed the scrutiny proceedings as defect in issuance of notice is incurable as it goes to the root of the matter. Thus, we find no ground to differ with the findings recorded by the learned Tribunal."
The Co-ordinate Bench of Delhi Tribunal in the case of Sapna Rastogi Vs. ITO reported in 2024 (8) TMI 1517 (ITAT, Delhi) has held the reassessment order as invalid as the notice u/s 148 was issued by the AO having no jurisdiction over the assessee. The relevant observations are as under:
5.“We have given thoughtful consideration to the matter on record and the submissions. The assessee had filed a return of income on 07.07.2013 declaring the total income at Rs. 18,85,550/-. The assessee is an individual and, taking into consideration Instruction No. 01/2011 available at page 245 of the paper book, for non-corporate returns in case of non-metro cities (mofussil areas), the returns above Rs. 15 lakhs have to be assessed by the officers of the rank of Assistant Commissioners/Deputy Commissioners. The report which is filed by the AO dated 26.06.2024 and reproduced above categorically mentions the fact that it is only on 15.05.2024, the PAN of the assessee has been transferred to ACIT, Circle 1(1)(1), Meerut, from ITO, Ward 1(2)(5), Meerut, as per CBDT Instruction No. 05/2011 dated 31.01.2011 vide which jurisdiction of noncorporate returns above Rs. 15 lakhs lies with ACIT/DCIT and upto Rs. 15 lakhs lies with ITO.
5.1Now, admittedly, the notice u/s 148 dated 30.03.2021, copy of which is placed at page 7 of the paper book, is issued by ITO, Ward-1(2)(5), Meerut. Thus, certainly, this Revenue Officer did not have the pecuniary jurisdiction as vested by the Board vide CBDT Instructions No. 01/2011 dated 31.03.2011.
5.2In this context, the coordinate Bench order in the case of J. Mitra & Brothers vs. ACIT, ITA No. 3643/Del/2023 decided on 10.04.2024 has been relied by the ld. AR wherein the coordinate Bench, relying another decision in the case of Kelvin International vs. DCIT, ITA No. 5363/Del/2017, order dated 22.12.2023, has held that the exercise of jurisdiction of Revenue Officer who did not have the jurisdiction given by the CBDT Instructions cannot be sustained and the assessment order is vitiated. The Hon’ble Allahabad High Court in the case of PCIT-II, Lucknow vs. Mohd. Rizwan, Proprietor M/s M.R. Garments, in ITA No. 1000/2015, order dated 30.03.2017 has examined this aspect on the basis of numerous judicial pronouncements and while considering the question, if the notice u/s 148 of the Act, issued by an authority not having jurisdiction, would be valid by referring to section 292BB of the Act, has held that jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an assessee cannot confer upon any jurisdictional authority, some which he lack inherently. The Hon’ble Allahabad High Court has decided this issue against the Revenue holding that notice u/s 148 is not a procedural subject, but, a jurisdictional one as it is a condition precedent for initiation of proceedings. This judicial pronouncement squarely covers the issue in favour of the assessee.
5.3The judgments which the ld. DR has relied when taken into consideration, are not applicable to the facts and circumstances as the judgements in the cases of Home Finders Housing Ltd. (supra) and Sagar Developers (supra) are in the context of the non-disposal of the objections and the judgement in the cases of Abhishek Jain (supra) and S.S. Ahluwalia (supra) are primarily concerned with territorial jurisdiction in regard to which there may be instance of concurrent jurisdiction of the two assessing officers. However, the case before us concerns the pecuniary jurisdiction vested by the Board and if that is not complied, the invoking of jurisdiction is vitiated and, consequently, the assessment order is vitiated. The ground No. 1 with sub-grounds in regard to this issue are sustained.
6.In the result, the appeal of the assessee is allowed and the assessment order is quashed.”
In the present case, admittedly, the Assessing Officer who has issued the notice u/s143(2) of the Act, did not have the pecuniary jurisdiction in view of the Instruction No. 1 of 2011 issued by CBDT. This being so, by respectfully following judgement of hon’ble Bombay High court in the case of Ashok Devichand Jain (supra), of Hon'ble Calcutta High Court in the case of Shree Shoppers (supra) and hon’ble jurisdictional high court in the case of Vimal Gupta (supra) as also the decision of the Co-ordinate Bench of Delhi Tribunal in the case of Sapna Rastogi (supra), we hold that notice issued u/s.143(2) of the Act assuming the jurisdiction over the assessee is bad in law and consequential assessment order passed is invalid and thus quashed. The cross objections No. 1 & 2 raised by the assessee are allowed.
Since we have allowed assessee’s cross objection and quashed the assessment order, the appeal of the revenue become infructuous and thus, dismissed.
In the final result, appeal of the Revenue in ITA No.6339/Del/2025 [Assessment Year 2017-18] is dismissed and Cross-objection No.13/Del/2026 [Assessment Year 2017-18] filed by the assessee is allowed.