ITAT Kolkata Invalidates DCIT's Assessment Order for Exceeding Pecuniary Jurisdiction: Sagarmal Mall vs DCIT

Case Overview

A significant ruling has emerged from the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) concerning the foundational question of pecuniary jurisdiction in assessment proceedings. In Sagarmal Mall Vs DCIT (ITAT Kolkata), the Tribunal struck down a scrutiny assessment completed by a Deputy Commissioner of Income Tax (DCIT) on the ground that the assessee's returned income fell below the monetary threshold prescribed for DCIT-level officers under CBDT Instruction No. 1/2011 dated 31 January 2011. The order offers critical guidance on how jurisdictional allocation operates under the Income Tax Act, 1961, and the consequences that flow when a higher-ranking officer assumes jurisdiction that properly vests in a lower-ranking authority.

Procedural Background and Delay Condonation

Before addressing the core jurisdictional dispute, the Tribunal was required to deal with a preliminary procedural matter. The Registry's report indicated that the appeal had been filed with a delay of 16 days beyond the prescribed limitation period. The assessee submitted an affidavit explaining the circumstances responsible for the delayed filing. After examining the contents of the affidavit, the Tribunal was satisfied with the explanation offered and condoned the delay, permitting the appeal to be heard on its merits.

This aspect of the order, though brief, serves as a reminder that genuine and satisfactorily explained delays can be condoned at the threshold, allowing substantive legal issues — including those of jurisdiction — to receive judicial consideration.

The Core Dispute: Which Officer Had Jurisdiction?

Factual Matrix

The assessment for Assessment Year 2013-14 was completed by the DCIT, Circle-32, Kolkata under Section 143(3) of the Income Tax Act, 1961. The assessee's Authorised Representative (AR) raised a preliminary legal ground challenging the very authority of the DCIT to frame the assessment, contending that it violated CBDT Instruction No. 1/2011.

The AR placed on record the ITR acknowledgement for AY 2013-14, which reflected the assessee's total returned income as ₹19,80,100/-. This figure was crucial because the assessment order itself contained an erroneous recital — it stated that the assessee had filed a return on 09.10.2010 declaring income of ₹89,00,420/-. The Tribunal noted that this entry was plainly a mistake, given that the date mentioned (09.10.2010) did not correspond to AY 2013-14 at all.

Erroneous Income Figure in the Assessment Order

The Tribunal examined both the assessment order and the ITR acknowledgement and arrived at the conclusion that the figure of ₹89,00,420/- recorded in the order was the result of an incorrect entry by the Assessing Officer, apparently relating to a different year or return altogether. The correct returned income for AY 2013-14, as established through the acknowledgement, was ₹19,80,100/-.

This factual correction carried decisive weight. Under CBDT Instruction No. 1/2011, the allocation of cases between ITOs and ACITs/DCITs is determined on the basis of the income declared in the relevant return. Once it was established that the actual returned income was ₹19,80,100/-, the question of which officer held jurisdiction had to be answered by reference to that figure — not the erroneous one appearing in the assessment order.

CBDT Instruction No. 1/2011: The Governing Framework

Statutory Foundation Under Section 120

The Tribunal's jurisdictional analysis begins with Section 120 of the Income Tax Act, 1961, which governs how income tax authorities exercise their powers:

"120.(1) Income tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities."

Section 120(3) further provides that the Board or any authorised income tax authority may allocate jurisdiction having regard to:

• Territorial area
• Persons or classes of persons
• Incomes or classes of income
• Cases or classes of cases

It is on this statutory foundation that CBDT Instruction No. 1/2011 operates — the Board has exercised its power under Section 120 to allocate cases on the basis of income declared in returns.

The Monetary Thresholds Under CBDT Instruction No. 1/2011