DCIT Vs Alaka Mars Pvt. Ltd. (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi dismissed the Revenue’s appeal after holding that the reassessment proceedings initiated under Sections 147 read with 143(3) were invalid because the notice under Section 148 had been issued by an Assessing Officer who lacked pecuniary jurisdiction under CBDT Instruction No. 1/2011. The Tribunal first condoned the 17-day delay in filing the Revenue’s appeal in the interest of justice before examining the jurisdictional issue raised by the assessee.
The Tribunal noted that the assessee had declared an income of ₹4,75,478, which, under CBDT Instruction No. 1/2011 dated 31.01.2011, placed the case within the jurisdiction of the Income Tax Officer (ITO). However, the notice under Section 148 dated 31.03.2024 had been issued by the Assistant Commissioner of Income Tax (ACIT), Circle-1, Delhi. The assessee contended that the reassessment proceedings were void because the officer issuing the notice did not possess the requisite pecuniary jurisdiction.
The Tribunal relied extensively on its earlier decision in Durga Manikanta Traders v. ITO, which had examined the effect of CBDT Instruction No. 1/2011 governing the assignment of cases between ITOs and ACs/DCs based on the income declared by the assessee. That decision had held that the CBDT’s jurisdictional instructions are binding on the Income-tax Department, and any assessment or statutory notice issued in contravention of those instructions is without jurisdiction. The earlier decision had also relied on several judicial precedents, including decisions of the Bombay High Court, Gujarat High Court, Calcutta High Court, Chhattisgarh High Court, and the Supreme Court, which recognised that jurisdiction exercised contrary to binding CBDT instructions renders the proceedings invalid.
