ACIT vs Ravi Sherwani: ITAT Raipur on Section 143(2) Jurisdictional Validity

In Assistant Commissioner of Income Tax-4(1), Raipur v. Ravi Sherwani, the Income Tax Appellate Tribunal at Raipur delivered a consequential order on 20 February 2026, dismissing a miscellaneous application filed by the Revenue. The order confirmed the earlier quashing of a scrutiny assessment framed under section 143(3) on the ground that the initiating notice under section 143(2) had been issued by an Assessing Officer who did not hold pecuniary jurisdiction over the assessee at the relevant time. The case is significant for its treatment of jurisdictional validity of a section 143(2) notice and the circumstances under which an assessment premised on such a notice can be struck down.

This page is a research summary of one specific Indian tax judgment, NOT legal advice. Always verify against the full judgment and consult a professional for case-specific guidance.

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The case at a glance

• Parties: Assistant Commissioner Of Income Tax vs Ravi Sherwani, Raipur
• Bench: Income Tax Appellate Tribunal - Raipur
• Date: 20 February 2026
• Court level: Tribunal (ITAT)
• Sections engaged: 143(2)
• Outcome: Taxpayer succeeded — the miscellaneous application filed by the Revenue was dismissed, confirming the quashing of the assessment order for want of valid jurisdiction.

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Facts of the case

Ravi Sherwani, an individual engaged in wholesale and retail trading of tiles and marbles, filed his return of income for Assessment Year 2013-14 on 29 March 2014, declaring a total income of Rs. 19,12,120/-. The case was selected for scrutiny through CASS (Computer Assisted Scrutiny Selection), and a notice under section 143(2) was automatically generated and issued by ITO-1(3), Raipur on 08 September 2014. Subsequently, jurisdiction over the assessee was reallocated vide an order dated 15 November 2014, transferring the case from ITO-1(3) to ACIT-3(1), Raipur. A further notification dated 14 November 2014 confirmed that the assessee's address fell within the jurisdiction of Range-4, Raipur. Additional notices under section 143(2) were thereafter issued by ACIT-3(1), Raipur on 12 June 2015 and by ACIT-4(1), Raipur on 11 January 2016.

The Assessing Officer — ACIT, Circle 4(1), Raipur — completed the assessment under section 143(3) on 29 March 2016, determining total income at Rs. 2,30,14,131/- by re-computing capital gains at Rs. 1,22,61,461/- on account of long-term capital gain and making an addition of Rs. 1 crore on account of unexplained cash credit. The assessee appealed before the CIT(A) on merits without success. Before the Tribunal, an additional ground was raised challenging the validity of the entire assessment on the basis that the initial section 143(2) notice had been issued by ITO-1(3), Raipur, who did not hold pecuniary jurisdiction over the assessee as per CBDT Instruction No. 1/2011 dated 31 January 2011, given that the returned income was Rs. 19,12,120/-.

The Tribunal decided the additional ground in favour of the assessee, holding that the assessment framed by ACIT, Circle 4(1), Raipur under section 143(3) on the basis of a notice issued by a non-jurisdictional Assessing Officer was devoid of legal force and liable to be quashed. The merits were not adjudicated. The Revenue then filed the present miscellaneous application (MA No. 107/RPR/2023) seeking recall of that order, which is the subject of the 20 February 2026 judgment.

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Issues raised

• Whether the initial section 143(2) notice issued by ITO-1(3), Raipur — an officer alleged to lack pecuniary jurisdiction over the assessee — rendered the subsequent assessment under section 143(3) invalid and liable to be quashed.
• Whether the Revenue's miscellaneous application, grounded on the Supreme Court's ruling in DCIT (Exemption) v. Kalinga Institute of Industrial Technology, disclosed any error apparent on the face of the record in the Tribunal's earlier order quashing the assessment.
• Whether the assessee's participation in proceedings and non-objection to jurisdiction — specifically pursuant to notices under section 142(1) — could cure the defect of the initial section 143(2) notice having been issued by a non-jurisdictional officer.

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What the court held

The miscellaneous application filed by the Revenue was dismissed. The operative disposition, as recorded in the order, reads: "In the result, the miscellaneous application of the Revenue is dismissed." This consequential order gives effect to the majority opinion — the Third Member (the Hon'ble Vice-President, P/Z, sitting as Third Member under section 255(4)) concurred with the findings of the Judicial Member and dismissed the Revenue's miscellaneous application.

The background to this outcome was a divided Division Bench. When the MA was first heard on 09 May 2025, the Judicial Member and the then Accountant Member differed in opinion, necessitating a reference to the President under section 255(4) for appointment of a Third Member. The Third Member, vide order dated 04 February 2026, sided with the Judicial Member's position of dismissing the MA. The consequential order of 20 February 2026 — the present judgment — formally implements the majority view.

The Revenue's MA had rested heavily on the Supreme Court's ruling in DCIT (Exemption) v. Kalinga Institute of Industrial Technology, arguing that the facts of Ravi Sherwani's case were similar: the assessee had participated in assessment proceedings in compliance with notices and had never objected to the jurisdiction of the Assessing Officer. The Revenue contended that under those circumstances, the assessee was precluded from raising a jurisdictional challenge. The Third Member, agreeing with the Judicial Member, did not accept this reasoning as a ground to recall the Tribunal's earlier order — thereby confirming that the quashing of the assessment for want of valid jurisdiction under section 143(2) stood.

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Strategy observations

1. An additional ground challenging the jurisdictional validity of the section 143(2) notice was raised before the Tribunal for the first time — the initial appeal before the CIT(A) had been confined to merits. The Tribunal entertained this additional ground and decided it in the assessee's favour, rendering the merits academic.

2. The jurisdictional ground was anchored on CBDT Instruction No. 1/2011 dated 31 January 2011, which allocates pecuniary jurisdiction based on returned income thresholds. Per the source, ITO-1(3), Raipur issued the original section 143(2) notice despite the returned income of Rs. 19,12,120/- falling, under that instruction, outside that officer's pecuniary range.

3. The Revenue's reliance on DCIT (Exemption) v. Kalinga Institute of Industrial Technology — a Supreme Court ruling — as the basis for the miscellaneous application was the Revenue's primary argument that the assessee's non-objection to jurisdiction during proceedings should have precluded the jurisdictional challenge. The Third Member did not find this sufficient to constitute an error apparent on the face of the record in the original Tribunal order.

4. The procedural route of the case — original Tribunal order, MA before a Division Bench, difference of opinion, Third Member reference under section 255(4), Third Member order, and finally a consequential order — illustrates the multi-tier internal review mechanism available within ITAT proceedings under the Income Tax Act, 1961.

5. The fact that notices under section 143(2) were subsequently issued by both ACIT-3(1) and ACIT-4(1) after the jurisdictional reallocation, and that the assessee complied with those notices, did not alter the Tribunal's conclusion that the foundational infirmity — the original section 143(2) notice by ITO-1(3) — vitiated the assessment.

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Why this case matters

This order reinforces the principle that the validity of a section 143(2) notice issued by the Assessing Officer who holds jurisdiction at the time of issuance is a foundational requirement for a valid assessment under section 143(3). Where the initial scrutiny notice emanates from an officer who does not hold pecuniary jurisdiction, the assessment premised on that notice is liable to be quashed, notwithstanding subsequent participation by the assessee or later notices from the correct jurisdictional officer. The Tribunal's refusal to recall its original order — even in the face of a Supreme Court ruling relied upon by the Revenue — underscores that the Revenue's MA did not disclose any error apparent on the face of the record.

The case also illustrates the significance of CBDT instructions on pecuniary jurisdiction in the context of CASS-generated notices. Where scrutiny notices are auto-generated by systems and may not automatically reflect jurisdictional reallocation orders, taxpayers and practitioners may find the factual matrix of this case — particularly the timeline of jurisdictional transfer relative to the date of the initial notice — to be a reference point in similar disputes. The Third Member reference mechanism under section 255(4) and the subsequent consequential order also demonstrate the procedural completeness of the ITAT framework for resolving intra-bench differences.

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Source

This case is drawn from the TaxNoticeAI structured legal corpus (16,101 Indian tax judgments, CBIC circulars, ITAT rulings, AAR rulings, GSTAT rulings), sourced from indiankanoon.org and official court portals. Original document: https://indiankanoon.org/doc/43575806/