Delhi ITAT Nullifies Assessment Order Due to Invalid Section 143(2) Notice Issued by Non-Jurisdictional Officer

The foundational pillar of any valid tax assessment under the Income Tax Act 1961 is the lawful assumption of jurisdiction by the assessing authority. When a statutory notice is issued by an officer lacking the requisite pecuniary or territorial jurisdiction, the subsequent assessment proceedings are rendered void ab initio. This cardinal legal principle was recently reaffirmed by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in the landmark case of Avian Remedies Ltd Vs ITO.

The Tribunal categorically quashed an assessment framed under Section 143(3) because the mandatory scrutiny notice under Section 143(2) was issued by an Assistant Commissioner of Income Tax (ACIT) instead of the jurisdictional Income Tax Officer (ITO), blatantly violating the pecuniary limits established by the Central Board of Direct Taxes (CBDT).

Before delving into the specifics of the case, it is crucial to understand the statutory provisions and administrative guidelines that govern the issuance of scrutiny notices.

The Mandate of Section 143(2)

Under the Income Tax Act 1961, if the Revenue department wishes to subject an assessee's return to a detailed scrutiny assessment under Section 143(3), the issuance of a notice under Section 143(2) is a non-negotiable prerequisite. This notice serves as the legal gateway for the Assessing Officer to assume jurisdiction over the assessee's case. Indian judicial precedents have consistently held that the absence of a valid Section 143(2) notice, or a notice issued by an incompetent authority, is not a mere procedural irregularity curable under the Act, but a fatal jurisdictional defect.