Case Law Details
Sperry International Pvt Ltd Vs DCIT (ITAT Delhi)
The assessee, a corporate entity, filed its return of income for Assessment Year 2013-14 declaring income of Rs. 9,94,049. Based on information alleging receipt of accommodation entries amounting to Rs. 1.55 crore, reassessment proceedings were initiated through a notice under Section 148 dated 27.03.2019 by the Assistant Commissioner of Income Tax (ACIT). The reassessment order dated 05.12.2019 resulted in an addition of Rs. 1.55 crore under Section 69B. The Commissioner of Income Tax (Appeals), NFAC, upheld the reassessment order.
Before the ITAT, the assessee contended that under CBDT Instruction No. 1/2011, jurisdiction for corporate assessees in metro cities is determined based on returned income. Cases where returned income does not exceed Rs. 30 lakh fall within the jurisdiction of the Income Tax Officer (ITO), while cases exceeding that threshold fall under the jurisdiction of the DCIT/ACIT. Since the assessee’s returned income was Rs. 9,94,049, jurisdiction vested with the ITO and not the ACIT. Therefore, the reassessment proceedings initiated by the ACIT were without jurisdiction.
The Revenue argued that the assessment was framed by a competent officer and that the assessee’s objection was merely technical in nature.
The Tribunal observed that the assessee’s returned income was below the Rs. 30 lakh threshold prescribed under the CBDT instruction. Accordingly, the ITO alone had jurisdiction to initiate reassessment proceedings under Section 148. Since the notice dated 27.03.2019 was issued by the ACIT, who lacked inherent jurisdiction over the assessee, the initiation of reassessment proceedings was invalid.
The ITAT accepted the assessee’s jurisdictional challenge, allowed Grounds Nos. 3 and 4, and set aside the reassessment order as well as the order of the CIT(A). Since the appeal was allowed on this issue, the remaining grounds were treated as infructuous.
The appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned Appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), New Delhi (‘Ld. CIT(A)’ for short) dated 20/11/2025 for the Assessment Year 2013-14 arising out of the reassessment order passed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (the Act) dt. 05.12.2019.
2. Brief facts of the case are that, based on the information that assessee has received accommodation entry of Rs. 1,55,00,000/-, the case of the assessee was reopened by issue of notice u/s 148 of the Act on 27.03.2019 by the ACIT, Circle 24(1), New Delhi. Reassessment orders came to be passed on 05.12.2019 for Assessment Year 2013-14 by making additions of Rs.1,55,00,000/- u/s 698 of the Act. As against the re-assessment Order, Assessee preferred Appeal before the Ld. CIT(A) who vide order dated 20/11/2025, dismissed the Appeal of the Assessee. As against the orders of the Ld. CIT(A), Assessee preferred the captioned Appeal.
3. In support of the Grounds of appeal Nos. 3 & 4, the Ld. Counsel for the Assessee vehemently submitted that the Assessee is a corporate entity situated in a Metro city and filed its return of income declaring income at Rs. 9,94,049/-, therefore, monetary limits prescribed by the CBDT under Instruction No.1/2011 dated 31/01/2011 is applicable which, stipulates that in respect of corporate Assessee’s in Metro Cities, the jurisdiction is bifurcated based on returned income. The cases involving returned income up to 30,00,000/- being assigned to the Income Tax Officer and other cases where the returned income exceeds 30,00,000/- falls with the jurisdiction of Deputy Commissioner of Income Tax/Assistant Commission of Income Tax. Further submitted that since the returned income of the Assessee for the year under appeal was Rs. 9,94,049/-, which is less than the threshold of Rs. 30,00,000/-, therefore, the jurisdiction over the Assessee vested with ITO and not with DCIT/ACIT. Thus, submitted that the initiating of reassessment proceedings u/s 147 of the Act by the ACIT, who for the year under appeal, lacked inherent jurisdiction over the Assessee. Thus, relying on the Judgment of Hon’ble High Court of Calcutta in the case of PCIT Vs. M/s Shree Shoppers Ltd., in ITA 39/2023 dated 15/03/2023, Ashok Devichand Jain Vs. Union of India reported in [2023] 151 taxmann.com 70 (Bombay) and other judicial precedents, sought for allowing the Ground No. 3 & 4 of the Assessee and also sought for setting aside the assessment order.
4. Per contra, the Ld. Departmental Representative for the Revenue submitted that the assessment proceedings were initiated by the Officer who is competent to frame the assessment and the assessment has been framed in accordance with law and the Ground No. 3 & 4 of the Assessee is a hyper technical which cannot be entertained by the Tribunal in this stage. Thus, relying on the orders of the Lower Authorities sought for dismissal of the Appeal.
5. We have heard both the parties and perused the material available on record. In the present case, the notice u/s 148 of the Act has been issued on 27/03/2019, which is for the relevant Financial year 2012-13 and the corresponding Assessment Year would be Assessment Year 2013-14. As observed above, the assessee for this assessment year has filed the return of income declaring total income at Rs. 9,94,049/- which is less than the threshold of Rs.30,00,000/- prescribed by the CBDT Instruction 1/2021 for a corporate entity, therefore, the Income Tax Officer shall have jurisdiction to initiate reassessment proceedings u/s 148 of the Act. Therefore, jurisdiction could not have been exercised by the Asstt. Commission of Income Tax by issue of notice u/s 148 of the Act on 27.03.2019 and ought to have been exercised only by the ITO. However, in the present case the proceedings have been initiated by the ACIT who lacks inherent jurisdiction of the Assessee to initiate proceedings u/s 147 of the Act.
6. In view of the above, we find merits in the Grounds of appeal No. 3 & 4 of the Assessee. Accordingly, the reassessment order passed by the A.O. which has been confirmed by the Ld. CIT(A) is hereby set aside.
7. Since, we have allowed assessee’s Grounds No. 3 & 4, other grounds of Appeal of the Assessee become in-fructuous.
8. In the result, Appeal of the Assessee is allowed.
Order pronounced in the open court on 27th May, 2026
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