2024 (4) TMI 1130 - AT - Income Tax

Notice u/s 143(2) issued by wrong AO - Jurisdiction of Income Tax Authorities - Validity of Assessment Orders without Proper Notice - HELD THAT - Undisputedly the income returned by the assessee during the year was Rs. 16,44,900/- and the assessee is in metro city of Kolkata. Therefore the notice u/s 143(2) of the Act was to be issued by ITO concerned and ACIT, Circle-40, Kolkata as has been done in this case. The notice u/s 143(2) of the Act was to be issued by ITO concerned and ACIT, Circle-40, Kolkata as has been done in this case. We note that even the assessment was framed by ACIT, Circle-40, Kolkata which is in clear contravention of in violation of Instruction No. 1/2011 F. No. 187/12/2010-IT(A-I) , dated 31.01.2011 and therefore the assessment has been framed without jurisdiction. We have perused the decision of M/s Rupasi Bangla Agro Industries Pvt. Ltd. 2023 (12) TMI 930 - ITAT KOLKATA and observe that the coordinate bench has decided the issue of notice u/s 143(2) of the Act in favour of the assessee after distinguishing the decision of Kalinga Institute of Industrial Technology 2023 (6) TMI 1076 - SC ORDER which was relied by the Ld. D.R. to defend his arguments that the notice u/s 143(2) of the Act if issued by wrong AO then the assessee is at liberty to take objection to raise the issue within one month of the issuance of the notice in the assessment proceedings. The Coordinate Bench held that the facts of the case of Kalinga Institute of Industrial Technology (supra) are distinguishable and not applicable. We are inclined to quash the assessment framed by the AO and the appeal of the assessee is allowed.

Summary

Issues Involved:
1. Validity of assessment order framed by non-jurisdictional Assessing Officer (AO).
2. Issuance of notice u/s 143(2) by non-jurisdictional AO.

Summary:

1. Validity of Assessment Order Framed by Non-Jurisdictional AO:

The assessee filed a return of income on 28.11.2014 declaring a total income of Rs. 16,44,900/-. The case was selected for scrutiny, and notice u/s 143(2) was issued by ACIT, Circle-40, Kolkata. The assessment was framed by ACIT, Circle-40, Kolkata, by passing an order u/s 143(3) dated 29.12.2016. The assessee contended that the notice and assessment were invalid as they were issued and framed by a non-jurisdictional AO, violating Instruction No. 1/2011, which mandates that for income up to Rs. 20 lakhs in metro cities, the jurisdiction lies with the ITO and not ACIT/DCIT. The Tribunal noted that the assessment framed by ACIT, Circle-40, Kolkata, was in clear contravention of Instruction No. 1/2011 and thus without jurisdiction. The Tribunal referred to the decision in M/s Rupasi Bangla Agro Industries Pvt. Ltd. vs. ITO, where it was held that an assessment framed by an AO not having jurisdiction over the assessee is a nullity.

2. Issuance of Notice u/s 143(2) by Non-Jurisdictional AO:

The Ld. Counsel for the assessee argued that the notice u/s 143(2) should have been issued by the ITO as per Instruction No. 1/2011, and not by ACIT, Circle-40, Kolkata. The Ld. D.R. contended that the transfer of the case was within the jurisdiction of the concerned CIT, and the assessee had no locus standi to question it. The Tribunal observed that the notice u/s 143(2) issued by ACIT, Circle-40, Kolkata, was invalid as it was not issued by the competent authority as mandated by Instruction No. 1/2011. The Tribunal distinguished the decision of the Hon'ble Apex Court in DCIT(Exemption) & Another vs. Kalinga Institute of Industrial Technology, noting that the facts of the present case were different. The Tribunal concluded that the assessment order was a nullity and quashed it.

Conclusion:

The Tribunal allowed the appeal of the assessee, quashing the assessment order framed by ACIT, Circle-40, Kolkata, on the grounds of being framed by a non-jurisdictional AO and issuance of notice u/s 143(2) by an unauthorized officer. The issues raised on merit were left open to be decided at a later stage if needed.

Order Pronounced:

The order was pronounced in the open court on 5th April, 2024.