Assessment Void Ab Initio: ITAT Delhi Quashes Order Where Section 143(2) Notice Was Issued by Authority Without Pecuniary Jurisdiction

Case Overview

Case: Kshitiz Sachdeva Prop. Alert International Vs ITO (ITAT Delhi)
Assessment Year: 2017–18
Forum: Income Tax Appellate Tribunal, Delhi
Date of Order: 08.04.2026

A significant ruling has emerged from the Income Tax Appellate Tribunal (ITAT), Delhi, reinforcing the binding nature of CBDT Instructions on the exercise of assessment jurisdiction. The Tribunal held that an assessment completed under Section 143(3) of the Income Tax Act, 1961 stands entirely vitiated when the foundational notice under Section 143(2) is issued by an Assessing Officer who lacks pecuniary jurisdiction as mandated by CBDT Instruction No. 1/2011 dated 31.01.2011 issued under Section 119 of the Income Tax Act, 1961.

Background and Facts of the Case

The assessee, M/s Kshitiz Sachdeva Prop. Alert International, filed its return of income for Assessment Year 2017–18 declaring a gross total income of approximately ₹14,16,120, with the net declared income standing at approximately ₹12,29,680.

The sequence of events that gave rise to the jurisdictional challenge was as follows:

  1. A notice under Section 143(2) dated 21.09.2018 was issued by the ACIT, Circle 41(1), initiating scrutiny assessment proceedings.
  2. Subsequent notices under Section 142(1) dated 26.07.2019 and 04.09.2019, as well as a further notice dated 10.11.2019, were issued by the ITO, Ward 44(7).
  3. The final assessment order under Section 143(3) dated 30.11.2019 was also passed by the ITO, Ward 44(7).
  4. The assessee challenged the assessment before the National Faceless Appeal Centre (NFAC), Delhi, which passed its appellate order on 08.08.2025. Aggrieved by the same, the assessee preferred an appeal before the ITAT.

The Additional Ground Raised Before the Tribunal

Before the ITAT, the assessee's counsel sought permission to raise an additional ground under Rule 11 of the Income Tax Appellate Tribunal Rules, 1963, which had not been included in the original memorandum of appeal filed before the CIT (Appeals). The additional ground read as under:

"That the assessment order passed by the ITO Ward 44(7), Delhi was invalid, as the initiation of assessment proceedings itself was invalid, having been initiated by Asstt. Commissioner of Income Tax, Circle 41(1) by issuing notice under section 143(2) of the Income Tax Act, 1961, who was not competent to issue the same in view of Instruction no. 1/2011 dated 31/01/2011 issued by CBDT as the income declared by the assessee was Rs. 12,29,680."

The assessee submitted that this ground was inadvertently omitted from the memorandum of appeal and that no tactical advantage was sought by its exclusion. Crucially, it was argued that the ground was a purely legal issue requiring no fresh factual investigation and was hence admissible as an additional ground.