Section 148 Notice Invalidated by ITAT Delhi Due to Absence of Pecuniary Jurisdiction Under CBDT Instruction No. 1/2011

Overview of the Case

The Income Tax Appellate Tribunal (ITAT), Delhi, in the matter of DCIT Vs Alaka Mars Pvt. Ltd., delivered a significant ruling concerning the jurisdictional competence of an Assessing Officer who initiates reassessment proceedings under Section 147 read with Section 143(3) of the Income Tax Act, 1961. The Tribunal conclusively held that where the notice under Section 148 is issued by an officer who does not possess the requisite pecuniary jurisdiction as mandated by CBDT Instruction No. 1/2011 dated 31.01.2011, the entire reassessment exercise is rendered void and incapable of sustaining in law.

The Revenue's appeal, arising from the order of Commissioner of Income Tax (Appeals)-29, Delhi dated 07.08.2025, was ultimately dismissed after the Tribunal found the jurisdictional defect to be fatal to the proceedings.

Preliminary Issue: Condonation of Delay

Before embarking upon the substantive jurisdictional question, the Tribunal addressed the procedural aspect of the Revenue's appeal being filed with a 17-day delay. Drawing upon the settled principle enunciated in Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC), the Tribunal condoned the delay in the larger interest of justice and proceeded to examine the merits of the jurisdictional challenge raised by the assessee.

Factual Background

The central facts underpinning this dispute are straightforward yet decisive:

  • The assessee, Alaka Mars Pvt. Ltd., had declared an income of ₹4,75,478/- in its return of income for Assessment Year 2020-21.
  • A notice under Section 148 was issued on 31st March, 2024 by the Assistant Commissioner of Income Tax (ACIT), Circle-1, Delhi, initiating reassessment proceedings.
  • The assessee contended before the Tribunal that given the quantum of declared income, jurisdiction over the case was exclusively vested with the Income Tax Officer (ITO) and not with the ACIT, in terms of CBDT Instruction No. 1/2011.

The Tribunal found that this jurisdictional objection went to the very root of the reassessment proceedings and was required to be decided before any other ground could be examined.

CBDT Instruction No. 1/2011: The Governing Framework

CBDT Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31-1-2011 occupies the central position in this case. The instruction was issued to rationalise the assignment of cases between ITOs and ACs/DCs based on the income declared in the return. The relevant portion of the instruction reads as follows:

"References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and DCs/ACs is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the abovementioned hardship. An increase in the monetary limits is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under: