ITAT Delhi Quashes Assessment for Invalid Section 143(2) Notice by Incompetent Authority

Suman Devi Vs ITO (ITAT Delhi)

The appeal before the Income Tax Appellate Tribunal (ITAT) arose from the order dated 08.05.2024 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre for Assessment Year 2016-17 in proceedings under Section 144 of the Income-tax Act, 1961.

During the hearing, the assessee raised an additional legal ground challenging the validity of the assessment order dated 17.12.2018 on the ground that the Section 143(2) notice had not been issued by the competent jurisdictional authority. The Revenue referred to paragraph 1 of the assessment order and submitted that the notice under Section 143(2) had been issued by the ACIT, Circle-4(1), Gurgaon on 17.08.2017. The assessee contended that the return declaring income of Rs. 2,66,730 had been filed on 07.09.2016, and under CBDT Instruction No. 1/2011 issued under Section 119 dated 31.01.2011, jurisdiction in metro cities for returns up to the prescribed monetary limit vested with the Income Tax Officer (ITO) and not the ACIT.

The Revenue argued that the assessee was barred by Section 124(3) of the Act from questioning the jurisdiction of the ACIT, having failed to challenge it earlier. The Tribunal rejected this contention. It observed that the assessee’s case was covered by the binding CBDT Instruction No. 1/2011 governing pecuniary jurisdiction and referred to the decision of the coordinate bench in YKM Holdings Pvt. Ltd. Vs. ACIT dated 29.04.2024, which had rejected a similar argument advanced by the Revenue.