2024 (6) TMI 557 - AT - Income Tax

Jurisdiction of Income Tax Authorities - Issuance of Notice by Non-Jurisdictional Officer - Validity of notice u/s 143(2) 142(1) not issued by ITO concerned - HELD THAT - Undisputedly the income returned by the assessee during the year was Rs. 2,70,140/- and the assessee is in metro city of Kolkata. Therefore the notice u/s 143(2) 142(1) of the Act was to be issued by ITO concerned and ACIT, Circle-47, 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. Thus issuance of notice u/s 143(2) of the Act by the Assessing Officer not having jurisdiction over the assessee renders the assessment proceedings as a nullity. Appeals of the assessee are allowed.

Summary

Issues Involved:

1. Validity of the assessment order due to jurisdictional error.
2. Issuance of notice u/s 143(2) by a non-jurisdictional AO.
3. Applicability of CBDT Instruction No. 1/2011.
4. Relevance of the assessee's objection timing to the notice.

Summary:

1. Validity of the assessment order due to jurisdictional error:
The assessee challenged the appellate order on the grounds that the assessment was framed by a non-jurisdictional AO, making the assessment order invalid. The Tribunal found that the assessment was indeed framed without proper jurisdiction, as the notice u/s 143(2) and 142(1) should have been issued by the ITO, not the ACIT, due to the returned income being Rs. 2,70,140/-. The Tribunal quashed the assessment order, deeming it invalid for want of jurisdiction.

2. Issuance of notice u/s 143(2) by a non-jurisdictional AO:
The Tribunal noted that the notice u/s 143(2) was issued by ACIT, Circle-47, Kolkata, which violated CBDT Instruction No. 1/2011. The instruction mandates that in metro cities, the ITO should issue notices if the returned income is up to Rs. 20 lacs. The Tribunal referenced several decisions, including M/s Rupasi Bangla Agro Industries Pvt. Ltd. vs. ITO and Jigna Chetan Mehta vs. ACIT, which supported the assessee's contention that the notice issued by a non-jurisdictional AO renders the assessment invalid.

3. Applicability of CBDT Instruction No. 1/2011:
The Tribunal emphasized the importance of CBDT Instruction No. 1/2011, which delineates the jurisdiction based on the returned income. The instruction specifies that in metro cities, the ITO should handle cases where the returned income is up to Rs. 20 lacs. The Tribunal found that the ACIT's issuance of the notice and subsequent framing of the assessment violated this instruction, thus invalidating the assessment.

4. Relevance of the assessee's objection timing to the notice:
The Revenue argued that the assessee did not object to the issuance of the notice by the ACIT within one month, as required by the decision in DCIT(Exemption) & Another vs. Kalinga Institute of Industrial Technology. However, the Tribunal distinguished the facts of the present case from the Kalinga Institute case, noting that the issue at hand was the jurisdiction of the AO framing the assessment order, not merely the timing of the objection. The Tribunal held that the assessment order was a nullity due to the lack of jurisdiction, regardless of the timing of the objection.

Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the assessment orders for AY 2012-13 and 2013-14 due to the jurisdictional error and improper issuance of notices by a non-jurisdictional AO, in violation of CBDT Instruction No. 1/2011. The Tribunal's decision in ITA No. 1099/Kol/2023 was applied mutatis mutandis to ITA No. 1100/Kol/2023.