Validity of assessment framed u/s 143(3) vis a vis issuance of notice U/s 143(2) by non- jurisdictional ITO




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Validity of assessment framed u/s 143(3) vis a vis issuance of notice U/s 143(2) by non- jurisdictional ITO

 

Here is one of the interesting case on the jurisdiction of the assessing officer vis a vis monetary limit as per return of income.

The case details is as under:

YKM HOLDINGS PVT. LTD. VERSUS ACIT CIRCLE – 4 (1) NEW DELHI . No.- ITA No. 1020/Del/2019

Dated.- April 29, 2024

Let us have a short overview of the case along with the observation of the court:

  1. In this case, notice under section 143(2) of the Act stood issued to the assessee on 12.04.2016 by ITO Ward 27(4), Delhi.
  1.  In July, 2016, the 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/.
  1. After the transfer of jurisdiction from ITO to DCIT, no fresh notice under section 143(2) of the Act was issued by ACIT, Circle 4(1), Gurgaon.
  1.  The assessment was ultimately framed under section 143(3) of the Act for A.Y. 2015-16 on 14.12.2017 by ACIT, Circle 4(1), Gurgaon.
  1. It is pertinent to note that assessment for the A.Y. 2014-15 of the assessee was completed under section 143(3) of the Act on 30.11.2016 by DCIT, Circle 27(2), New Delhi. Hence, it was argued that the notice under section 143(2) of the Act dated 12.04.2016 issued by the ITO selecting the return of assessee for A.Y. 2015-16 for scrutiny is without jurisdiction and consequently, the assessment framed under section 143(3) of the Act dated 14.12.2017 required to be quashed as void ab initio.
  1. When this was confronted to learned DR, he pointed out to the provisions of section 124(3) of the Act wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice.
  1. In the instant case, nowhere up to learned CIT(A), the assessee has challenged the jurisdiction of the learned AO.
  1. In our considered opinion, this argument of the learned 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. Further, the provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice under section 143(2) of the Act has been issued by the Revenue.
  1. In the instant case, notice issued under section 143(2) of the Act 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.
  1. We find that the issue in dispute is no longer res integra by the decision of Hon’ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom ). In this case, very same issue was addressed in the light of CBDT Instruction No.1/2011[F. No.187/12/2010-IT(A-I)] Dated 31.01.2011.

In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019.

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The copy of the order is as under:

 

1714392299-ITA No.1020-Del-2019-YKM Holdings Pvt. Ltd. vs. ACIT




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