Case Law Details
Bulk Trade Pvt. Ltd. Vs ITO (ITAT Kolkata)
Kolkata ITAT Quashes Assessment as Notice under Section 143(2) Was Issued by Officer Lacking Pecuniary Jurisdiction
The Kolkata Bench of the ITAT held that an assessment framed under Section 143(3) was void ab initio where the notice under Section 143(2) had been issued by an Income Tax Officer (ITO) who lacked pecuniary jurisdiction under CBDT Instruction No. 1/2011 dated 31.01.2011. The Tribunal noted that the assessee, being a corporate assessee having returned income exceeding the prescribed monetary threshold of ₹30 lakh applicable to metro cities, fell within the jurisdiction of the Deputy Commissioner/Assistant Commissioner of Income Tax (DC/AC) and not the ITO. Therefore, the very initiation of scrutiny proceedings by the ITO was without authority of law.
Relying on the judgment of the Calcutta High Court in PCIT v. Shree Shoppers Ltd., the Tribunal reiterated that the issuance of a valid notice under Section 143(2) by the jurisdictional Assessing Officer is a mandatory jurisdictional requirement for framing an assessment under Section 143(3). The fact that the assessment was subsequently completed by a competent officer did not cure the initial defect, as jurisdiction must exist on the date of issuance of the notice. Since the notice was issued by an officer who lacked the requisite pecuniary jurisdiction, it was held to be invalid, rendering the entire assessment proceedings non est in law. Accordingly, the Tribunal quashed the assessment and allowed the assessee’s appeal.
Cases Discussed
- PCIT vs. M/s Shree Shoppers Ltd. (Calcutta High Court), ITAT/39/2023
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal filed by the assessee against the order of the NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no. CIT(A), Kolkata-1/10233/2016-17 dated 19.02.2026 for the assessment year 2013-14.
2. Shri A. K. Tirewal, FCA represented on behalf of the assessee and Shri Raman Garg, CIT DR represented on behalf of the revenue.
3. It was submitted by the ld. AR that the returned income of the assessee for the impugned assessment year is Rs.(-)43,91,566/-. The ld. AR drew our attention to the notice issued u/s 143(2) which is placed at page 28 of the paper-book which reads as follows:
4. It was the submission that the notice u/s 143(2) has been issued by ITO, Ward-5(3), Kolkata. It was the submission that the assessee is a corporate assessee and income declared above 30 lakh, the jurisdiction lies with the DCs/ACs. The Ld AR further drew our attention to the Instruction issued by CBDT No.1/2011 [F. NO. 187/12/2010-IT(A-D] dated 31.01.2011, which read as follows:
5. The submission of the ld. AR is that the returned income of the assessee is Rs.(-)43,91,566/- which is above the threshold limit of Rs.30,00,000/- for the “CORPORATE RETURNS” and notice 143(2) was issued by ITO, Ward-5(3), Kolkata which is invalid as the competent authority to issue such notices lies with DCs/ACs of Income Tax. It was the submission that notice u/s.143(2) of the Act has been issued by the ITO, Ward-5(3), Kolkata did not have the pecuniary jurisdiction and consequently notice u/s.143(2) of the Act is invalid and consequential assessment order is liable to be quashed. The ld. AR in this respect has drawn our attention to decision of the Hon’ble Calcutta High Court in ITAT/39/2023 in the case of PCIT vs. M/s Shree Shoppers Ltd., wherein it was held as under:
“The short issue which falls for consideration in the instant case is whether there is valid notice issued under Section 143 (2) of the Act for commencing the Scrutiny assessment. The Tribunal has noted the facts and rendered a finding that on the date when the case was selected for scrutiny, the authority who issued the notice namely, the Income Tax Officer, Ward No.9 (4), Kolkala did not have jurisdiction and the jurisdiction was with the Deputy Commissioner of Income Tax. The following factual finding has been recorded by the Tribunal :
“Therefore, the legal ground stands to be admitted and the same re1ates to invalid notice issued u/ 143(2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. 143(3) of the Act, the statutory requirement of serving of valid notice u/s. 143(2) of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs.48,47,180/- in the e-return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143(2) of the Act as issued by ITA, Ward-9(4), Kolkata dated 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No.1 /2011 supra) revised the monetary limit for issuing notice by ITO/DCs/ACs. Through this instruction it stated that in case of metro cities in case of corporate declare income above Rs.30 1akh the jurisdiction of such corporate assessee will lie with the DCs/ACs. It is not in dispute chat as on the date of selecting the case for scrutiny, the very basis for having jurisdiction over the assessee is the returned income which was more than Rs.30 1akhs and the same was lying with the DCs/Acs but the notice u/s. 143(2) of the Act has been issued by ITO, Ward-9(4), Ko1kata. It is true that subsequently the assessment has been framed by DCIT, Circle-9(2), Kolkata but the point in dispute is that on date of issuing a notice u/s. 143(2) of the At, whether the ITO, ward-9(4), Kolkata was having a valid jurisdiction to issue such notice u/s. 143(2) of the Act.”
6. In reply, ld. Sr DR vehemently supported the order of the Assessing Officer and ld. CIT(A).
7. We have considered the rival submissions. CBDT vide its instruction No.1/2011 (supra) has issued specific instruction in regard to pecuniary jurisdiction. In the present case, admittedly, the Assessing Officer who has issued the notice u/s.143(2) of the Act did not have the pecuniary jurisdiction in view of the instruction issued by CBDT (supra). This being so, respectfully following the principles laid down by Hon’ble Calcutta High Court in the case of Shree Shoppers (supra), it is held that notice issued u/s.143(2) of the Act is without jurisdiction and the same is invalid and consequential assessments are also held as bad in law.
8. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15/07/2026.
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