Shah Dilip Sankarchand Vs ACIT (ITAT Ahmedabad)
ITO vs DCIT Jurisdiction Clash – ITO’s Notice invalid where DCIT alone had authority; Assessment collapses if ITO Issues Notice in DCIT’s domain – ITAT Ahmedabad.
Assessee contested the validity of the assessment framed u/s 144 on the ground that the m & atory notice u/s 143(2) was issued by a non-jurisdictional ITO. The returned income of Assessee being above ₹25 lakhs, the pecuniary jurisdiction to frame assessment vested with DCIT. However, the notice was issued by the ITO, who did not have jurisdiction. Based on non-participation, the AO passed a best judgment order u/s 144.
CIT(A), while dealing with the appeal, observed that the order was an ex-parte assessment & remanded the matter to AO for fresh consideration. However, CIT(A) did not adjudicate the legal grounds challenging the jurisdiction & validity of the notice itself. Assessee contended before tribunal that the legal issue should have been decided at the first appellate stage as it goes to the root of the matter & strikes at the validity of the entire assessment proceedings.
Dept relied upon the order of CIT(A), but tribunal found merit in the submissions of assessee. It observed that legal issues contesting the very jurisdiction of AO can always be raised at the appellate stage. If the notice u/s 143(2) has been issued by a non-jurisdictional officer, the assessment framed thereafter would not be valid in law. Hence, CIT(A) was not justified in simply remanding the matter to AO without deciding the jurisdictional issue.
