Shri Manish Mittal vs Deputy Commissioner Of Income Tax, Central Circle-26, Delhi

PER MAHAVIR SINGH, VP:

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals), Delhi-29 ('the CIT(A)') in Appeal No. CIT(A), Delhi-29/10046/2020-21 dated 13 Jan 2026, passed under section 250 of the Income Tax Act, 1961 ('the Act'). The assessment was framed by the Deputy Commissioner of Income Tax, Central Circle-26, Delhi ('the AO') for the Assessment Year 2021-22 under section 143(3) of the Act vide order dated 31 Dec 2022.

Briefly stated, the facts are that the Assessee filed his return of income for the Assessment Year 2021-22 declaring a total income of Rs 9,85,210. The case was selected for scrutiny and the assessment was completed under section 143(3) of the Act by making an addition of Rs 8,00,000 in respect of cash deposited in the Assessee's bank account. The appeal of the Assessee before the CIT(A) was dismissed. Aggrieved, the Assessee is in appeal before us.

Apart from challenging the addition on merits, the Assessee has raised a legal ground going to the root of the matter, contending that the initiation of the scrutiny proceedings and the consequent order of assessment passed under section 143(3) of the Act are null and void, the same having been made in violation of Instruction No. 1/2011 dated 31 Jan 2011 issued by the Central Board of Direct Taxes ('CBDT') under section 119 of the Act, prescribing the monetary limits for assignment of cases between Income Tax Officers ('ITOs') and Assistant Commissioners / Deputy Commissioners of Income Tax ('ACs/DCs').

The Learned Counsel for the Assessee contended before us that, in terms of the said Instruction, with effect from 1 Apr 2011, in the case of non-corporate returns filed in metro charges (which include Delhi), the jurisdiction in respect of a declared income of up to Rs 20,00,000 vests with the ITO, and it is only where the declared income exceeds Rs 20,00,000 that the jurisdiction vests with the ACs/DCs. Since the Assessee had declared an income of Rs 9,85,210, i.e., below the threshold of Rs 20,00,000, the jurisdiction over the case vested exclusively with the ITO. Consequently, the Deputy Commissioner of Income Tax, Central Circle-26, Delhi had no jurisdiction to issue the notice under section 143(2) of the Act or to pass the impugned assessment order. In support, reliance was placed, inter alia, on the judgment of the Hon'ble Bombay High Court in Ashok Devichand Jain v. Union of India in Writ Petition no. 3489 of 2019 decided in 08.03.2022 and on the decisions of the Co-ordinate Benches of this Tribunal in Anita Vs Assessing Officer [ITA No. 931/Del/2025, order dated 16 Feb 2026] and Vipul Mittal v. DCIT [ITA No. 2850/Del/2019, order dated 15 Jan 2025].

Per contra, the Learned Senior Departmental Representative ('DR') relied on the orders of the authorities below.

We have heard the rival submissions, gone through the orders of the authorities below and perused the material placed before us.

It is not in dispute that the income declared by the Assessee in his return of income, as recorded in the assessment order itself, is Rs 9,85,210, and that the notice under section 143(2) of the Act was issued, and the assessment order passed, by the Deputy Commissioner of Income Tax, Central Circle-26, Delhi. By Instruction No. 1/2011 dated 31 Jan 2011, the CBDT, in supersession of its earlier instructions and with effect from 1 Apr 2011, revised the monetary limits for assigning cases between ITOs and ACs/DCs. In respect of non-corporate returns filed in metro charges (Ahmedabad, Bengaluru, Chennai, Delhi, Kolkata, Hyderabad, Mumbai and Pune), cases with declared income of up to Rs 20,00,000 are assigned to ITOs, and cases with declared income above Rs 20,00,000 are assigned to ACs/DCs. Delhi being a metro charge and the declared income of the Assessee being below Rs 20,00,000, the pecuniary jurisdiction over the case of the Assessee for the year under consideration vested with the ITO and not with the AC/DC.

The issuance of a valid notice under section 143(2) of the Act by the Assessing Officer vested with jurisdiction is a sine qua non for framing an assessment under section 143(3) of the Act. Section 292BB of the Act cures only infirmities in the service of a notice upon the participating assessee, and a jurisdictional defect of this nature goes to the root of the matter and cannot be cured by the participation or acquiescence of the assessee.

The view that an assessment framed pursuant to a notice under section 143(2) of the Act issued by an officer lacking pecuniary jurisdiction under the said Instruction is bad in law also finds support in the judgment of the Hon'ble Bombay High Court in Ashok Devichand Jain (supra).

We have also considered whether the position would be different because the assessment in the present case has been framed by an officer of a Central Circle. Jurisdiction of a Central Circle over the case of an assessee is ordinarily conferred by an order of transfer/centralisation passed by the competent authority under section 127 of the Act, or by a specific order or notification issued under section 120 of the Act. No order under section 127 of the Act, nor any order or notification under section 120 of the Act, conferring jurisdiction over the case of the Assessee upon the Deputy Commissioner of Income Tax, Central Circle-26, Delhi, has been produced before us or is discernible from the assessment records. In the absence of any such order, the assumption of jurisdiction by the said officer cannot be sustained on the strength of his designation alone, and the matter has to be tested with reference to the pecuniary limits laid down in the binding CBDT Instruction No. 1/2011.

In the light of the foregoing discussion, since the declared income of the Assessee was Rs 9,85,210, the assessment for the year under consideration could have been framed only by the ITO in terms of CBDT Instruction No. 1/2011. The notice under section 143(2) of the Act having been issued, and the assessment having been framed, by the Deputy Commissioner of Income Tax, Central Circle-26, Delhi, in contravention of the said binding Instruction and without any valid conferment of jurisdiction being demonstrated, the initiation of the proceedings and the consequent assessment order dated 31 Dec 2022 passed under section 143(3) of the Act are without jurisdiction and are hereby quashed. The legal ground raised by the Assessee is accordingly allowed.

Since the assessment itself has been quashed on the legal ground, the remaining grounds raised by the Assessee on the merits of the addition of Rs 8,00,000 have been rendered academic and are left open without adjudication.

In the result, the appeal of the Assessee is allowed.