Where Notice is issued by officer having no jurisdiction of assessee is null and void

Fact and Issue of the case

In all these cases, the assessees filed e-return of income. Thereafter, the assessments in all these four cases were selected for scrutiny. The ld. DCIT, Circle-1, Kolkata issued notices u/s 143(2) of the Act to each of these companies. The assessees objected and submitted that DCIT, Circle-1, Kolkata has no jurisdiction of the assessee. Thereafter, the file of the assessee was transferred to DCIT-13(1), Kolkata as the assessee companies are located in Howrah. The DCIT-13(1), Kolkata did not issue fresh notice u/s 143(2) of the Act to any of these companies. He completed the assessment u/s 143(3) of the Act inter alia making certain additions u/s 68 of the Act. Aggrieved, all these companies carried the matter in appeal before the ld. CIT(A). They submitted that the assessment order was bad in law as the ld. DCIT-13(1), Kolkata did not issue any notice u/s 143(2) of the Act as statutorily required. He argued that the notice u/s 143(2) of the Act by DCIT, Circle-1, Kolkata, was without jurisdiction and hence the assessment order passed u/s 143(3) of the Act by the AO having jurisdiction of the assessee i.e. DCIT-13(1), Kolkata without issue of notice u/s 143(2) of the Act is bad in law.

He further submitted that the assessee’s income in each of these four cases is ₹1,15,850/- in the case of Bhagyalaxmi Conclave Pvt. Ltd., ₹29,210/- in the case of Dhanlaxmi Conclave Pvt. Ltd., ₹1,04,990/- in the case of Bindhyawasini Developers Pvt. Ltd. and ₹13,240/- in the case of Bhubaneshwari Developers Pvt. Ltd. and that as per the CBDT Instruction No. 1/2011 the jurisdiction of all these four assessees fall under the jurisdiction of the ITO and not ACIT or DCIT. As the DCIT passed the assessment order it was argued that the assessment is bad in law. The reliance was placed on a number of case laws.

The ld. CIT(A) rejected his contentions of the assessees by holding that, from a perusal of the records, a notice u/s 143(2) of the Act has been issued by the Department and hence this ground of Revenue fails. He has not stated that notice u/s 143(2) of the Act was issued by the DCIT-13(1), Kolkata. On the issue of the ITO having jurisdiction over these assessee companies and not the DCIT, Circle-1, Kolkata as per the CBDT Circular, the ld. CIT(A) held that monetary limits are not sacrosanct. He held that discretion vests with the Pr. CIT or DIT to adjust the monetary limit by up to ₹5 lakhs. He held that violation of administrative direction would call for administrative action against the concerned officer but by itself cannot be taken as a ground to nullify the assessment.

On merits, the assessee raised a number of contentions and these were also rejected by the ld. CIT(A) for the reasons given in his order. Aggrieved, the assessee filed the appeal.

Observation of the Tribunal

Rival contentions heard. On a careful consideration of the facts and circumstances of the case and a perusal of the case law cited as well as the orders of the authorities below, Tribunal hold as follows.

In the remand report, the AO clearly stated that notice u/s 143(2) of the Act was issued by DCIT, Circle-1, Kolkata. The ld. D/R could not controvert the contention of the assessee that no notice u/s 143(2) of the Act was issued by the DCIT-13(1), Kolkata, who completed the assessment.

Further, the income of each of all these four assessee companies which are in appeal before us is below ₹2 lakhs. Thus, as per the CBDT Instruction No. 1/2011, the jurisdiction of these assessees, based on monetary limits lies with the ITO and not with the DCIT. This fact could not be controverted by the ld. D/R. CBDT instructions are binding on all the Income Tax Authorities.

The assessee relied on the recent decision of this Tribunal in the case of Hillman Hosiery Mills Pvt. Ltd. vs. DCIT, in ITA No. 2634/Kol/2019, order dated 12.01.2021. We find that the issues that arise in this appeal are clearly covered in favour of the assessee. This order followed the principles of law laid down in a number of other decisions of the ITAT, Kolkata Bench on this issue.

Respectfully following the propositions of law laid down in these orders stated above, we hold that the orders are bad in law for the reason that the assessing authority passed the order u/s 143(3) of the Act i.e. DCIT-13(1), Kolkata has not issued a notice u/s 143(2) of the Act and also for the reason that the jurisdiction of these cases lies with the ITO and not the DCIT. Hence all the orders passed by the ld. CIT(A) in these four cases are hereby quashed and the appeals of the assessees are allowed.