Facts of the Case

The assessee filed its return of income declaring nil taxable income. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued by the Deputy Commissioner of Income Tax (DCIT). Subsequently, an assessment was completed making additions to the income.

The assessee contended that the notice under Section 143(2) had been issued by an officer who did not possess jurisdiction in terms of CBDT Instruction prescribing pecuniary limits for different officers. According to the assessee, jurisdiction in such cases lay with the Income Tax Officer (ITO) and not with the DCIT.

Issues Involved

  1. Whether a notice under Section 143(2) issued by a non-jurisdictional Assessing Officer is valid.
  2. Whether violation of CBDT instructions regarding pecuniary jurisdiction renders the assessment void.
  3. Whether such jurisdictional defect can be cured under Section 292BB.

Petitioner’s Arguments (Assessee)

  • The returned income being nil, the pecuniary jurisdiction lay with the ITO as per CBDT Instruction.
  • The DCIT lacked authority to issue notice under Section 143(2).
  • Service of notice by an incompetent officer vitiates the entire assessment proceedings.
  • Jurisdictional defects go to the root of the matter and cannot be treated as mere procedural irregularities.

Respondent’s Arguments (Revenue)

  • The assessment was completed following due process, and the assessee participated in proceedings.
  • Transfer of jurisdiction was within administrative powers of the department.
  • The defect, if any, is procedural and cured by Section 292BB. 

Court Order / Findings (ITAT)

  • Jurisdiction to issue notice under Section 143(2) must be exercised by the competent Assessing Officer.
  • CBDT instructions issued under Section 119 are binding on tax authorities.
  • A notice issued by an officer lacking jurisdiction is invalid and cannot form the basis of assessment.
  • Such defect is not a mere procedural irregularity but a substantive illegality.
  • Participation by the assessee does not cure lack of jurisdiction.

Important Clarification

Service of a valid notice under Section 143(2) by the jurisdictional Assessing Officer is a mandatory condition for a lawful scrutiny assessment.

Failure to comply with jurisdictional requirements renders the entire assessment proceedings void ab initio. 

Link to download the order - https://itat.gov.in/public/files/upload/1622716417-abc%20final%20upload.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.