Notice u/s 143(2) issued by ITO who lacked jurisdiction held valid as in substance it was in conformity with the intent & purpose of Income Tax Act 1961.
In a recent judgment, Guwahati High Court has held that in absence of ITAT finding that notice u/s 143(2) issued to the assessee by the ITO who lacked jurisdiction was not in substance or not in conformity with the intent and purpose of the Act, it cannot interfere with the notice or the assessment order issued against the assessee.
ABCAUS Case Law Citation:
4677 (2025) (08) abcaus.in HC
In the instant case, the Revenue had challenged the order passed by the ITAT in holding that the assessment order passed by the DCIT u/s 143(3) of the Income Tax Act, 1961 (the Act) was not valid as the DCIT had issued notice u/s 142(1) of the Act and did not issue notice u/s 143(2) of the Act which was issued by the Income Tax Officer (ITO) who did not had the pecuniary jurisdiction to issue notice.
The respondent assessee was an individual. As per CBDT Instruction No. 1/11 (F. No.187/ 12/2010-IT(AT) dated 31.01.2011 fixing new monetary limit his return was to be assessed by ACIT/DCIT.
Even though the assessee’s return of income is more than Rs. 20 Lakh, the ITO erroneously assumed jurisdiction and issued the mandatory scrutiny notice u/s 143(2) of the Act and after realizing the mistake had transferred the case file to the jurisdiction of DCIT who framed the assessment order u/s 143(3) of the Act.
The Tribunal held that only the AC/DC had the jurisdiction to assess the assessee. The Tribunal further observed that it is settled law that serving of notice u/s 143(2) of the Act is a sine qua non for an assessment to be made u/s 143(3) of the Act. In this case, notice u/s 143(2) of the Act was issued by ITO when he did not had the pecuniary jurisdiction to assume jurisdiction and issue notice.
The Tribunal noted that DCIT issued notice u/s 142(1) of the Act and did not issue notice u/s 143(2) of the Act within the time limit prescribed for issuance of notice u/s 143(2) of the Act for the relevant assessment year. Thus, the DCIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s 143(2) of the Act notice became coarum non judice after the limitation prescribed by the statute was crossed by him.
Therefore, the Tribunal held that the omission/non-issuance of notice by the DCIT, went to the root of the case because the DCIT gets jurisdiction to frame assessment order u/s 143(3) of the Act only thereafter.
As a result, the Tribunal held that the assessment order passed by the DCIT u/s 143(3) of the Act was not valid in the eyes of law and, therefore, was null and void in the eyes of law, and consequently it was quashed.
Before the Hon’ble High Court the Revenue contended that the Tribunal was not justified in not taking note that the intent of Instruction No. 1/2011 is to reduce hardship to the taxpayers in respect of transfer to AC/DC at different station and that the issuance of notice u/s 143(2) and assessment u/s 143(3) by assessing officer at same station of same Range with same supervisory joint commissioner is complete fulfillment of all conditions and assessment procedure as whole.
The Hon’ble High Court observed that the ITAT had altogether ignored the provisions of Section 292B as well as the provisions of Section 292BB of the Act, which limits the right of an assessee of challenging a notice issued under the provisions of the Act.
The Hon’ble High Court observed that Section 292B provides that notice as well as return of income, assessment, summons, etc., issued under the provisions of the Act cannot be treated as invalid merely by reason of any mistake, defect or omission in such notice, etc., if the same is in substance and effect in conformity with or according to the intent and purpose of the Act.
The Hon’ble High Court further observed that the ITAT had interfered with the order passed by the CIT (Appeals) and the assessment order mainly on the ground that there was omission on the part of the DCIT in not issuing notice under Section 143(2) of the Act to the assessee. However, the ITAT had not gave any finding whether the notice issued to the assessee by the Income Tax Officer under Section 143(2) was not in substance or not in conformity with the intent and purpose of the Act. Therefore, in the absence of such finding, the ITAT could not have interfered with the notice or the assessment order issued against the assessee.
Also, the Hon’ble High Court opined that in the light of the provisions of Section 292BB of the Act, the assessee was also debarred from challenging the assessment proceedings for the first time before the ITAT on the ground of issuance of notice under Section 143(2) of the Act as the said section provides that where an assessee has appeared in the proceedings relating to assessment or reassessment before the authority concerned without raising any objection before completion of assessment or reassessment, it is not open for him to raise such objection after passing of the assessment order.
The Hon’ble High Court observed that in the present case, the notice under Section 143(2) was issued the Income Tax Officer and was duly served upon the assessee, who, in turn, had appeared before the DCIT, to which the proceedings were transferred by the Income Tax Officer, without raising any objection till the assessment order was passed. Even in the appeal preferred by the assessee before the CIT (Appeals), no such ground was ever raised by the assessee. In such circumstances, the assessee was not within his right to raise the objection regarding issuance of notice by the Income Tax Officer under Section 143(2) of the Act or questioning the authority of the DCIT in passing the assessment order while exercising powers under Section 143(3) of the Act before the ITAT.
As a result, the appeal was allowed. The matter was remanded to the ITAT for deciding the appeal afresh on other grounds raised by the assessee.
Download Full Judgment Click Here >>
- Fraud & deception not trade and business and money accumulated is proceeds of crime
- ICAI extends last date to submit MEF for FY 2025-26 to 10th October, 2025
- ICAI defers Guidance Note on Financial Statements of Non-Corporate entities/LLPs
- Delhi Govt. to help persons with benchmark disabilities with high support need
- Placing Genset in steel container fitted with additional parts amounts to manufacture
 by ITO who lacked jurisdiction held valid being in conformity with intent of Act){kind=link}