Kshitiz Sachdeva Prop. Alert International Vs ITO (ITAT Delhi)
The primary issue was whether an assessment under section 143(3) is legally sustainable when the notice under section 143(2), which is foundational for assuming jurisdiction, was issued by an Assessing Officer not having pecuniary jurisdiction as per binding CBDT Instructions issued under section 119 of the Income-tax Act, 1961.
Facts: The assessee declared income of about ₹12.29 lakh for AY 2017–18. The notice under section 143(2) was issued by the ACIT, Circle 41(1), whereas as per CBDT Instruction No. 1/2011 dated 31.01.2011, cases with returned income below ₹20 lakh in metro cities fall within the jurisdiction of the ITO. Subsequent notices under section 142(1) and the assessment order under section 143(3) were issued by the ITO, Ward 44(7). The assessee raised an additional legal ground before the Tribunal challenging the validity of jurisdiction on the basis that initiation itself was done by an incompetent authority.
Finding of ITAT: The Tribunal held that CBDT Instructions issued under section 119 are binding and determine pecuniary jurisdiction of Assessing Officers. Since the income declared was below ₹20 lakh, the ACIT was not competent to issue notice under section 143(2). Such defect was not procedural but went to the root of jurisdiction, rendering the entire assessment void ab initio. Accordingly, the Tribunal allowed the additional ground and quashed the assessment.
