Sudhir Kumar Agrawal Vs ITO (ITAT Raipur)
The Income Tax Appellate Tribunal (ITAT), Raipur, considered an appeal arising from an assessment order passed under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2012-13. Apart from challenging various additions relating to long-term capital gains, deduction under Section 54F, house property income, cost of acquisition, stamp duty, and ownership share, the assessee raised an additional legal ground questioning the jurisdiction of the Income Tax Officer (ITO), Ward-2(2), Bhilai, to complete the assessment. The Tribunal admitted the additional ground, holding that it involved a pure question of law requiring no further investigation of facts.
The assessee had filed a return declaring income of ₹19,07,440. The scrutiny proceedings were initially commenced by the Deputy Commissioner of Income Tax (Dy. CIT), Circle-1, Bhilai, who issued notices under Sections 143(2) and 142(1). However, the final assessment under Section 143(3) was completed by the ITO, Ward-2(2), Bhilai. The assessee contended that, in view of CBDT Instruction No. 1/2011 dated 31 January 2011, the ITO lacked pecuniary jurisdiction because the assessee was a non-corporate taxpayer located in a mofussil area with returned income exceeding ₹15 lakh. According to the Instruction, such cases were required to be handled by Assistant Commissioners or Deputy Commissioners.
The Tribunal examined the CBDT Instruction and observed that it revised the pecuniary jurisdiction of assessing authorities with effect from 1 April 2011. Since the assessee had declared income above ₹15 lakh and belonged to a non-metro (mofussil) area, jurisdiction for the assessment vested with the AC/DC and not with the ITO. While the Tribunal found that the initial notice issued by the Dy. CIT was valid, it held that the subsequent assessment completed by the ITO was contrary to the binding CBDT Instruction. Consequently, the assessment was held to have been made without valid jurisdiction and was therefore invalid and non est.
