ITAT Delhi Invalidates Assessment Order Due to Lack of Pecuniary Jurisdiction by ITO for Income Exceeding Rs. 30 Lakh

The Income Tax Appellate Tribunal (ITAT) has consistently emphasized that adherence to jurisdictional limits is not merely a procedural formality but a fundamental legal requirement. In the landmark decision of Inderpreet Singh Jhelumi Vs ACIT, the ITAT Delhi delivered a crucial ruling regarding the pecuniary jurisdiction of assessing officers. The Tribunal concluded that a scrutiny notice issued by an Income Tax Officer (ITO) for an assessee whose returned income exceeds the prescribed monetary threshold is legally invalid, rendering the entire subsequent assessment void ab initio.

This comprehensive summary explores the factual matrix, the legal arguments presented by both the assessee and the Revenue, and the judicial precedents that guided the Tribunal's ultimate decision to quash the assessment.

Factual Matrix of the Dispute

The legal controversy originated from the income tax return filed by the assessee for the Assessment Year 2015-16.

  1. Filing of Return: On 30.08.2015, the assessee submitted their return of income, declaring a total income of Rs. 99,47,310.
  2. Initiation of Scrutiny: The case was subsequently picked up for limited scrutiny under the Computer Assisted Scrutiny Selection (CASS) system.
  3. Issuance of Initial Notice: A statutory notice under Section 143(2) of the Income Tax Act 1961, dated 19.09.2016, was issued by the ITO, Ward-7(1), Kolkata.
  4. Transfer and Assessment: Later, the jurisdiction was transferred, and the final assessment proceedings were conducted in New Delhi. The Assistant Commissioner of Income Tax (ACIT), Circle-70(1), New Delhi, finalized the assessment via an order dated 26.12.2017 under Section 143(3). This order introduced a massive addition of Rs. 3.92 crore under the head of Long-Term Capital Gains (LTCG).
  5. First Appeal: The assessee challenged this addition before the Commissioner of Income Tax (Appeals), who dismissed the appeal through an order dated 18.03.2019, thereby confirming the AO's additions.

Aggrieved by the appellate order, the assessee escalated the matter to the ITAT Delhi, introducing critical additional grounds concerning the foundational jurisdiction of the assessing authorities.