Notice issued u/s 143(2) by Non-Jurisdictional AO, ITAT Quashes Consequent Assessment order u/s 143 (3) for want of Valid Assumption of Jurisdiction [Read Order]

The Raipur Bench of Income Tax Appellate Tribunal (ITAT) has quashed the consequent assessment order passed under Section 143(3) of the Income Tax Act 1961 for want of vald assumption of jurisdiction as the notice under Section 143(2) of Income Tax Act was issued by a non-jurisdictional officer.

The assessee, Bharat Bhushan Verma who was engaged in the business as that of a transporter and mining contractor, had e-filed his return of income with the Income Tax Officer (ITO) Raipur for A.Y.2015-16 on 28.09.2015. Subsequently, the case of the assessee was selected for scrutiny assessment. Notice under Section 143(2) of the Income Tax Act dated 19.09.2016 was issued by the ACIT, Raipur.

During assessment proceedings, it was, inter alia, observed by the A.O that the assessee had in his “balance sheet” for the immediately preceding year, i.e. A.Y.2014-15 showed Chhattisgarh WareHousing Corporation (CGWHC) as a debtor . On a perusal of the records, it was observed by the A.O. that the assessee had raised a bill. However, the A.O. observed that in the assessee’s balance sheet for the year under consideration, the party mentioned above i.e. CGSWC was not reflected as a debtor.

The A.O concluded that the difference in the amounts,was the unaccounted/short receipt of the assessee for the year under consideration. Accordingly, the A.O. vide his order passed under Section 143(3) of the Income Tax Act dated 28.11.2017 determined the assessee’s income.

Assessee, assailed the validity of the jurisdiction that was assumed by the A.O, i ITO-1(2), Raipur, for framing the impugned assessment under Section 143(3) of the Income Tax Act.

Sunil Kumar Agrawal, on behalf of the assessee submitted that the assessee had filed his return of income for the year under consideration, i.e. A.Y.2015-16 declaring an income, therefore, the pecuniary jurisdiction over his case remained vested with the ITO-1(3), Raipur with whom the return of income was filed.

He further submitted that in pursuant to the CBDT Instruction No.1/2011 dated 31.01.2011 read with CBDT instruction No.6/2011 dated 08.04.2011, the jurisdiction in case of non-corporate assessees residing in the mufassil areas and declaring income up to Rs.10 lacs was exclusively vested with the ITOs.

As the jurisdiction over the case of the assessee remained with ITO-1(3), Raipur, therefore, the impugned assessment framed under Section 143(3) of the Income Tax Act dated 28.11.2017 by the ITO-1(2), Raipur based on notice under Section 143(2) of the Income Tax Act dated 19.09.2016 issued by the ACIT-1(1), Raipur, i.e. non-jurisdictional officer, could not be sustained and was liable to be struck down for want of valid assumption of jurisdiction for framing the assessment.

Satya Prakash Sharma, who appeared on behalf of the revenue, relied on the orders of the lower authorities.

A Single Bench of Ravish Sood, (Judicial Member) relying upon the claim of the assessee that as the A.O i.e., ITO-1(2), Raipur having jurisdiction over the case of the assessee, had framed the assessment vide his order passed under Section 143(3) of the Income Tax Act dated 28.11.2017 without issuing notice under Section 143(2) of the Income Tax Act; held that , the same could not be sustained and was liable to be quashed at the very threshold for want of valid assumption of jurisdiction for framing the said impugned assessment.

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