2024 (5) TMI 92 - AT - Income Tax

Validity of assessment framed u/s 143(3) by Non- jurisdictional ITO - Jurisdiction of AO based on income threshold / monetary limits as per the return of income - ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/- - jurisdiction will be that of DCIT or ITO - DR pointed out to the provisions of section 124(3) wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice - HELD THAT - This argument of the DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice u/s 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued u/s 143(2) on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Ashok Devichand Jain 2022 (3) TMI 1466 - BOMBAY HIGH COURT as held where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC. Thus we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Decided in favour of assessee.

Summary

Issues Involved:
The issues involved in the judgment are jurisdictional challenges u/s 143(3) of the Income Tax Act, 1961, and the validity of the assessment based on the jurisdiction of the Assessing Officer.

Jurisdictional Challenge:
The appeal in ITA No.1020/Del/2019 for A.Y. 2015-16 arises from the order by Commissioner of Income Tax (Appeals)- 1, Gurgaon against the order of assessment passed u/s 143(3) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax. The assessee challenged the disallowance of expenses and depreciation, enhancement of income, and jurisdictional issues.

Additional Grounds Raised:
The assessee raised additional grounds challenging the jurisdiction of the Assessing Officer based on the returned income exceeding Rs. 30,00,000 for A.Y. 2015-16. The assessee argued that the transfer of proceedings lacked a valid jurisdictional basis, rendering the assessment illegal.

CBDT Instruction No.1/2011:
The judgment refers to CBDT Instruction No.1/2011, which stipulates revised monetary limits for assigning cases to Income Tax Officers and Deputy Commissioners/Assistant Commissioners based on the income declared. The jurisdictional challenge was based on this instruction and the alleged lack of proper jurisdiction for the Assessing Officer.

Legal Precedent and Decision:
The judgment cited legal precedents and decisions to support the jurisdictional challenge raised by the assessee. It highlighted the importance of proper jurisdiction in issuing notices under section 143(2) of the Act and emphasized that any defect in jurisdiction renders the notice invalid and not curable.

Quashing of Assessment:
Based on the jurisdictional challenge and legal precedents, the Tribunal held that the assessment framed under section 143(3) of the Act was without jurisdiction. The initial scrutiny notice issued by the Income Tax Officer was deemed void ab initio due to the lack of jurisdiction, leading to the quashing of the assessment.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashed the assessment under section 143(3) of the Act, and upheld the additional ground challenging the jurisdictional issues. The original grounds of appeal and other additional grounds were deemed academic due to the quashing of the assessment.