PCIT-1 Vs Shree Shoppers Ltd. (Calcutta High Court)
The Calcutta High Court dismissed the Revenue’s appeal filed under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2012-13. The central issue before the Court was whether a valid notice under Section 143(2) had been issued for initiating scrutiny assessment proceedings.
The Revenue argued that the notice under Section 143(2) had been validly issued by the jurisdictional Assessing Officer before departmental restructuring and that a subsequent change in jurisdiction within the same range or under the same Principal Commissioner should not invalidate the assessment proceedings. It was also contended that a notice under Section 143(2) is required to be issued only once at the initiation of scrutiny proceedings.
The Tribunal had recorded a factual finding that the assessee had declared an income of ₹48,47,180 in its return filed on 26 September 2012. Under CBDT Instruction No. 1/2011, in metro cities, corporate assessees declaring income exceeding ₹30 lakh fell within the jurisdiction of Deputy Commissioners or Assistant Commissioners. Despite this, the notice under Section 143(2) dated 23 September 2013 had been issued by the Income Tax Officer, Ward-9(4), Kolkata.
The Tribunal held that service of a valid notice under Section 143(2) is a mandatory statutory requirement for completing an assessment under Section 143(3). Since the notice had been issued by an officer lacking jurisdiction on the relevant date, the scrutiny proceedings were invalid. Although the assessment was subsequently completed by the Deputy Commissioner of Income Tax, the Tribunal observed that the crucial question was whether the officer issuing the initial notice possessed lawful jurisdiction at that stage.
