Income Tax Appellate Tribunal cancels assessment order due to invalid jurisdictional notice

The Income Tax Appellate Tribunal (ITAT) set aside a completed tax assessment after finding that the statutory notice under Section 143(2) of the Income Tax Act was issued without valid jurisdictional authority. The taxpayer challenged the validity of the assessment proceedings, arguing that the officer who issued the scrutiny notice lacked proper territorial or functional jurisdiction. The tribunal examined the administrative transfer and assignment records to verify the legality of the notice.

Tax administration rules mandate that scrutiny proceedings must be initiated by the designated jurisdictional assessing officer assigned to the specific taxpayer file. The historical departmental practice occasionally involved issuing notices from unassigned or transferred units without completing formal jurisdiction transfer procedures, leading to legal infirmities. The tribunal's decision upholds procedural safeguards, ensuring that taxpayers are scrutinized only by lawfully empowered revenue authorities.

Tax practitioners and chartered accountants should thoroughly examine assessment files to verify whether the initiating Section 143(2) notice was issued by the correct jurisdictional authority. When handling disputed scrutiny cases, professionals should raise preliminary objections regarding invalid notices before arguing the merits of additions. Monitor judicial pronouncements on jurisdictional defects to effectively challenge irregular tax scrutiny orders.