A.H. Chemicals Pvt. Ltd. Vs DCIT (ITAT Kolkata)
Notice from the Junior, Order by the Senior – But Law Says: ‘No Valid 143(2), No Tax Review- ITAT Kolkata Quashes Assessment for Jurisdictional Defect – Wrong Officer Issued 143(2) Notice
Assessee had filed return of income of ₹64,26,560/- for AY 2015-16. The case was selected for scrutiny through CASS. However, the scrutiny notice u/s 143(2) was issued by ITO, Ward 11(2), Kolkata on 08.04.2016, while the final assessment order u/s 143(3) was passed by the DCIT, Circle 10(1), Kolkata.
Assessee argued that as per CBDT Instruction No. 1/2011 dated 31.01.2011, in corporate cases in metro cities, jurisdiction lies as follows:
- ITO – up to ₹30 lakh
- AC/DC – above ₹30 lakh
Since Assessee declared income of ₹64.26 lakh (above ₹30 lakh), only the DCIT had jurisdiction from the very beginning, including issuance of notice u/s 143(2). Therefore, the notice issued by the ITO was invalid, & any assessment framed on the basis of such invalid notice is void ab initio. To support this, reliance was placed on Raghvendra Mohta v. ACIT (ITA 2416/KOL/2017), which was affirmed by the Calcutta High Court in PCIT v. Raghvendra Mohta (ITAT/51/2025). The High Court held that if the officer issuing the notice or passing the assessment lacks inherent jurisdiction, the entire proceedings are illegal & non-est, & such defects are not curable.
Tribunal held that the 143(2) notice issued by an ITO who had no jurisdiction is invalid, & since issuance of a valid 143(2) notice is mandatory, the subsequent assessment order by DCIT is also bad in law. Accordingly, the ITAT quashed the assessment on the ground of lack of inherent jurisdiction & allowed the assessee’s appeal in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
