ITO Lacking Pecuniary Jurisdiction Cannot Frame Reassessment: ITAT Kolkata

Indovision Commodities Ltd. Vs ITO (ITAT Kolkata)

Summary: The Income Tax Appellate Tribunal, Kolkata Bench allowed the appeal of M/s Indovision Commodities Ltd. for AY 2012-13 and quashed the reassessment framed under section 143(3) read with section 147 of the Income Tax Act by ITO, Ward-6(4), Kolkata, holding that the officer lacked the requisite pecuniary jurisdiction. The assessee had returned a current year loss of Rs.80,27,527/-. It challenged the reassessment both on jurisdictional grounds and on merits, including additions of Rs.26,18,726/- received from M/s Abhiman Distributors and Rs.75,00,000/- received from A N Commutiy Broking Pvt. Ltd. under section 68. The assessee, however, first pressed the legal issue concerning the pecuniary jurisdiction of the Assessing Officer.

The assessee relied upon section 120 read with CBDT Instruction No.1/2011 dated 31.01.2011 and contended that jurisdiction of income-tax authorities is determined not merely territorially but also with reference to the income or class of income. It was submitted that, under the CBDT Instruction applicable from 01.04.2011, in metro cities the jurisdiction over corporate returns with declared income exceeding Rs.30 lakh vested with the concerned ACIT/DCIT. Since the assessee had returned a loss of Rs.80,27,527/-, which constituted negative income, the assessee contended that jurisdiction vested with the concerned ACIT/DCIT and not with ITO, Ward-6(4), Kolkata. Nevertheless, the notice under section 148, notice under section 143(2) and the reassessment order were all issued/passed by the ITO.