2025 (7) TMI 1375 - AT - Income Tax

Assessment framed when no notice u/s 143(2) as been issued by the jurisdictional AO - HELD THAT - We find that in this case the notice u/s 143(2) specifies only computer aided scrutiny selection which neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny. Thus the said notice has been issued in violation of the instruction issued by CBDT as noted above. In our opinion the revenue authorities have to follow the instruction issued by CBDT and violation thereto would certainly render the notice as invalid with the result all the consequential proceedings would also be invalid. The case of the assessee find support from the decision of Tapas Kumar Das 2025 (3) TMI 1481 - ITAT KOLKATA wherein a similar issue has been decided in favour of the assessee. Thus the notice issued u/s 143(2) of the Act is invalid notice and accordingly the assessment framed consequentially is also invalid and is hereby quashed. Second limb of the argument of the ld. AR that notice u/s 143(2) of the Act dated 10.08.2018 was issued by the ITO Ward 34(2) Kolkata which is in violation of pecuniary jurisdiction of the CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-1) Dated 31.01.2011 - We note that notice u/s 143(2) was issued by ITO ward 34(2) Kolkata which is in violation of the CBDT Instruction No.1/2011 (F. No. 187/12/2010-IT(A-1) Dated 31.01.2011. Therefore the said notice has been issued by non-jurisdictional AO while the assessment was framed u/s 143(3) of the Act dehors the mandatory notice u/s 142 of the Act which is invalid and cannot be sustained. The case of the assessee find support from the decision of M/s Shree Shoppers Ltd. 2022 (11) TMI 1242 - ITAT KOLKATA as decided the issue in favour of the assessee by upholding the order of the Tribunal as held that notice issued by ITO Ward 39(4) Kolkata u/s 143(2) of the Act was without valid jurisdiction and therefore the consequent assessment framed by the DCIT circle 9(2) Kolkata is invalid. The Hon ble Tribunal followed the decision of Nopany Sons 2022 (2) TMI 399 - CALCUTTA HIGH COURT while passing the order. Therefore even on this count the assessment framed by the ACIT Circle 34 Kolkata is bad in law as no notice u/s 143(2) was issued by the said authority. Assessee appeal allowed.

Summary

ISSUES:

Validity of notice issued under section 143(2) of the Income-tax Act when not issued in conformity with CBDT instructions.Effect of issuance of notice under section 143(2) by a non-jurisdictional Assessing Officer in light of pecuniary jurisdiction rules prescribed by CBDT Instruction No.1/2011.Whether assessment framed consequential to an invalid notice under section 143(2) is itself valid.

RULINGS / HOLDINGS:

The notice under section 143(2) that "neither mentioned it either to be a limited or a complete scrutiny nor compulsory manual scrutiny" and was not in the prescribed format as per CBDT instructions is an invalid notice, rendering all consequential proceedings invalid.The notice issued under section 143(2) by an ITO who lacked pecuniary jurisdiction as per CBDT Instruction No.1/2011 is invalid, and consequently, the assessment framed by the ACIT Circle without a valid notice under section 143(2) is also invalid.Following precedent decisions, the assessment framed consequential to such invalid notices under section 143(2) is quashed as void ab initio.

RATIONALE:

The Court applied the statutory framework of the Income-tax Act, specifically sections 142, 143(2), and 143(3), alongside binding CBDT instructions-namely CBDT Instruction No.1/2011 and CBDT Instruction F.No.225/157/2017/ITA-II dated 23.06.2017.The Court relied on the principle that CBDT circulars issued under section 119 of the Income-tax Act are "mandatory and binding on the Income tax authorities," as affirmed by the Apex Court, and failure to comply renders the proceedings invalid.The Court followed consistent precedent from coordinate Benches and High Court rulings holding that notices issued without adherence to prescribed formats or by officers lacking jurisdiction are invalid, resulting in invalid assessments.No dissent or doctrinal shift was noted; the judgment aligns with established jurisprudence emphasizing strict compliance with procedural mandates and jurisdictional limits to uphold fairness and legality in tax assessments.