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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-24, Delhi [Ld. CIT(A)] dated 24.10.2025 u/s 250 of the Income Tax Act, 1961 (“the Act” in short) arising out of the assessment order passed u/s 143(3) of the Act dated 21.03.2024 for Assessment Year 2022-23.
Brief facts of the case are that the assessee has filed his return of income on 06.10.2022 declaring total income at Rs.16,94,410/-. The assessee is engaged in the business of purchases and sale of Iron goods under the sole proprietorship Firm namely M/s Shri Ram Steels Syndicate. A search and seizure operation u/s 132 of the Act on 02.02.2022 in the case of Sakarni Group and Ors. and the assessee was also covered. During the search, cash and jewellery were found and seized from the possession of assessee. Thereafter, the notices u/s 143(2) was issued on 23.06.2023 and after considering the submissions made by the assessee, the AO has made additions of Rs.67,00,000/- being cash found during the course of search as unexplained money u/s 69A of the Act and further estimated the income at Rs. 55,75,428/- by applying G.P. rate of 3%. Accordingly, the total income of the assessee was assessed at Rs. 1,39,69,838/-.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) who vide impugned order dated 24.10.2025 has partly allowed the appeal of the assessee wherein both the additions made were confirmed.
Aggrieved by the said order, assessee preferred the present appeal before the Tribunal. During the course of hearing, vide application filed under Rule 11 of Income Tax Rules, 1963, the assessee has filed additional grounds of appeal which reads as under:
“That on the facts and in the circumstances of the case and in law, Ld.AO i.e. ACIT Circle 43(1) Delhi erred in assumption of jurisdiction instead of ITO and is purely in contravention to CBDT INSTRUCTIONS NO 1/2011 DT 31-01-2011 and accordingly whole of the assessment proceedings without prior valid notice u/s 143(2) by correct JAO are null and void, invalid and are liable to be quashed as such.”
Ld. AR for the assessee further stated that the additional ground of appeal so taken is legal ground wherein the assessee has challenged the jurisdiction and thus deserves to be admitted. For this reliance is placed on the judgment of the Hon’ble Supreme Court in the case of NTPC reported in 229 ITR 383 (SC) and PCIT-3, Pune Vs Sinhgad Technical Education Society reported in (2017) 397 ITR 344 (SC).
On the other hand, the Ld. CIT-DR strongly opposed the additional ground of appeal and submits that in the instant case, the additional ground of appeal requires verification on the part of the AO and, therefore, the said ground of appeal cannot be admitted for adjudication at this stage.
Heard both the parties and perused the materials available on record. Since, the additional ground of appeal taken by the assessee before us under Rule 11 of the ITAT Rules is with respect to the assuming the jurisdiction by the Assessing Officer without having jurisdiction in terms of CBDT Instruction 01/2011 dated 31.01.2011 and, accordingly, goes to the root of the matter, therefore same is hereby admitted for adjudication. It is further observed that no verification is required in this case and all the documents pertaining to this grounds of appeal are available in the PB filed by the assessee. Since, the additional grounds of appeal is legal in nature, therefore, the same is taken first for consideration.
Heard both the parties and perused the materials available on record. From the perusal of the records, it is observed that the assessee has filed the return of income on 06.10.2022 declaring total income at Rs.16,94,410/- and the case of the assessee was selected for scrutiny in terms of notice u/s 143(2) by the ACIT, Circle -43(1), Delhi in terms of the CBDT Instruction No.01/2011 prescribing peculiar jurisdiction in case of non-corporate returns filed under Metro Cities lies with ITO if the returned income is less than Rs. 30.00 lacs. According to this notification, notice u/s 143(2) in the instant case has to be issued by the ITO as the jurisdiction lies with him however, as observed above, it was issued by the ACIT, circle 43(1), Delhi. The Identical issue was came up for consideration before the Co-ordinate Bench of the Tribunal in the case of M/s Venetian LDF Projects LLP, in ITA No.3533/Del/2019 and ITA No.3534/Del/2019 wherein vide order dated 01.05.2025, the Co-ordinate Bench of the Tribunal had allowed the appeal of the assessee on the ground of jurisdiction being assumed by issue of notice u/s 143(2) in-contravention to the CBDT Instruction No.01/2011 dated 31.01.2011. Similar view was expressed by the hon’ble Bombay High court in the case of Ashok Devichand Jain Vs. Union of India. And by the Hon'ble Calcutta High Court in the case of Shree Shoppers Ltd in ITAT/39/2023 IA No.GA/1/2023 dated 15.3.2023.
The coordinate 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 view of the above, we are of the considered view that in the instant case, notice issued u/s 143(2) by the Assessing Officer having no jurisdiction over the assessee is bad in law and consequent order passed by the Assessing Officer without assuming jurisdiction by issue fresh notice u/s 143(2) is hereby quashed.
In the result, the additional ground of appeal of the assessee is allowed.
Since, we have already allowed the additional ground of appeal of the assessee, therefore, the other grounds of appeal become academic in nature and not adjudicated.
In the result, the appeal filed by the assessee is allowed.