CBDT Pecuniary Jurisdiction Mandate Is Binding: ITAT Kolkata Quashes Reassessment Initiated by Non-Jurisdictional DCIT
Overview of the Dispute
A fundamental question of income tax administration came before the Income Tax Appellate Tribunal, Kolkata in Bhinaswar Commercial Pvt. Ltd. Vs DCIT (ITAT Kolkata) for Assessment Year 2012-13: can a Deputy Commissioner of Income Tax lawfully initiate and complete a reassessment in a case where, by virtue of the CBDT's own monetary allocation framework, jurisdiction properly vests in an Income Tax Officer?
The Tribunal returned an unambiguous answer — it cannot. Applying CBDT Instruction No. 1/2011 [F. No. 187/12/2010-IT(A-I)], dated 31-1-2011, the Tribunal held that the notice issued under Section 148 by the DCIT was void at inception, and the consequential reassessment order framed under Section 143(3) read with Section 147 could not be sustained. The assessment was quashed in its entirety.
Background Facts
The assessee, Bhinaswar Commercial Pvt. Ltd., is a private limited company incorporated on 30.08.1994, holding a certificate of registration as a non-banking financial institution granted by the Reserve Bank of India. For Assessment Year 2012-13, the assessee filed its return of income under Section 139(1) of the Income Tax Act, 1961 on 31.08.2012, declaring total income of ₹17,75,550.
Subsequently, the case was selected for reopening. A notice under Section 148 of the Act dated 30.03.2019 was issued by the DCIT, Circle 14(1), Kolkata. This was followed by notices under Section 143(2) and Section 142(1) accompanied by a detailed questionnaire. The assessee did not comply with the requisitions raised.
The Assessing Officer proceeded to frame the assessment under Section 143(3) read with Section 147 on 27.12.2019, determining total income at ₹2,55,94,714.
The assessee carried the matter in appeal before the National Faceless Appeal Centre, Delhi. The CIT(A) partly allowed the appeal vide order dated 13.08.2025. The assessee then preferred a further appeal before the ITAT Kolkata.
Additional Ground on Jurisdictional Challenge
Before the Tribunal, the assessee raised an additional ground of appeal — one not agitated before the lower authorities — specifically contending that:
"FOR THAT in the facts and circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals)-N.F.A.C. acted unlawfully in not appreciating that none of the conditions precedent existed for and/or were fulfilled by the Ld. Deputy Commissioner of Income Tax. Circle 14(1). Kolkata for his specious action of framing the assessment order u/s. 143(3)/147 of the Income Tax Act, 1961 on 27-12-2019 in the instant case de hors any valid notice u/s. 148 of the Income Tax Act, 1961 since issued in contravention of the C.B.D.T. INSTRUCTION NO. 1/2011 (F. NO. 187/12/2010-IT(A-1). DATED 31-01-2011 and the impugned action on that account renders the assessment order framed ab initio void, ultra vires and null in law."
Admission of the Additional Ground
The Tribunal had no hesitation in admitting this ground. Since the objection raised was a pure question of law, and all material facts necessary for its determination were already part of the appeal record, no further factual inquiry was warranted. The Tribunal placed reliance on the following binding precedents for this purpose:
- Jute Corporation of India Ltd. v. CIT, 187 ITR 688 (SC) — authority for the proposition that a purely legal issue may be raised before an appellate forum for the first time.
- National Thermal Power Co. Ltd. v. CIT, 229 ITR 383 (SC) — affirming the power of the Tribunal to entertain and decide questions of law.
- PCIT v. Britannia Industries Ltd., 396 ITR 677 (Cal.) — jurisdictional High Court endorsement of the above principle.
The non-raising of the objection at the assessment or first appellate stage was therefore held to be no bar to its examination by the Tribunal.
The Jurisdictional Framework: CBDT Instruction No. 1/2011
The core of the assessee's objection rested on the CBDT's binding administrative instruction allocating cases between ITOs and ACITs/DCITs based on declared income and category of the assessee.