Notice u/s 148 by ACIT invalid for non-corporate assessee with returned income below Rs.20 lakhs in metro city per CBDT Instruction No.1/2011; quashes reassessment proceedings for lack of pecuniary jurisdiction.

ORDER

PER GEORGE MATHAN:

This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no.NFAC/2016-17/10098752 dated 16.09.2025 for the assessment year 2017-18.

2. Shri Sunil Surana, A.R represented on behalf of the assessee and Shri Pankaj Pandey, Sr. DR represented on behalf of the revenue.

3. It was submitted by the ld. AR by filing additional ground that in this case, the notice u/s 148 of the Act dated 30.03.2021 was issued by ACIT, Circle-29, Kolkata. It was also submitted that the assessment order has been passed by the ACIT, NFAC. It was the submission that the returned income declared by the assessee was Rs.10,85,540/-. It was further submitted that the notice u/s 148 could not have been issued by the ACIT in so far as the monetary limit for non-corporate returns in Metro cities upto 20 lacs is ITO and above 20 lacs is DC/ACs. It was the submission that the returned income in the case of the assessee is below 20 lacs, therefore, the notice was required to be issued by ITO and not ACIT, Circle-29, Kolkata. The ld. AR placed reliance on the CBDT Instruction No.1/2011 dated 31.01.2011. The ld. AR therefore submitted that the notice u/s 148 in this case is required to be quashed. The ld. AR further submitted that assessment order has been passed on 02.02.2022 by NFAC whereas the power to pass assessment order by NFAC came into effect on 29.03.2022. It was the submission that on this ground also, the assessment order passed by NFAC is liable to be quashed.

4. In reply, the ld. DR summitted that the income escaped assessment is Rs.25,00,000/-, therefore, the notice issued u/s 148 by the ACIT, Circle-29, Kolkata is a valid one. He vehemently supported the order of the Assessing Officer and also the order of the ld. CIT(A).

5. We have considered the rival submissions. A perusal of the notice u/s 148 of the Act dated 30.03.2021 clearly shows that the said notice was issued by ACIT, Circle-29, Kolkata. The returned income of the assessee as mentioned in the assessment order itself is Rs.10,85,540/-. We find that under similar circumstances, the Coordinate Bench of this Tribunal in the case of APE Power Pvt. Ltd. vs. DCIT in ITA No.1646/Kol/2025 has held as under:

“5.2 After hearing the rival contentions and perusing the materials available on record, we find merit in the argument of the ld. AR that notice u/s 143(2) of the Act dated 11.04.2016, was issued by the ITO, Ward 7(1), 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. According to the said instruction, the ITO has pecuniary jurisdiction where the income is upto 20 lacs in the Metro Cities and 15 lacs in Mofussil areas whereas the DC/AC have jurisdiction above 20 lacs in Metro cities and above 15 lacs in the Mofussil areas. The said instructions reads as under:-

5.3 In the present case, the assessee filed the return of income u/s 139(1) of the Act on 29.09.2015, disclosing total income of ₹49,24,210/-. We note that notice u/s 143(2) was issued on 11.04.2016 by ITO, Ward 7(1), 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 and cannot be sustained. The case of the assessee find support from the decision of the Hon'ble Calcutta High Court in the case of PCIT vs. M/s Shree Shoppers Ltd. in ITAT 39/2023, IA No. GA/1/2023, dated 15.03