ACIT vs Ravi Sherwani: ITAT Raipur on Invalid Section 143(2) Notice

This case study examines an ITAT Raipur order in Assistant Commissioner of Income Tax vs. Ravi Sherwani, Raipur, arising out of a Revenue miscellaneous application that sought to reopen an earlier Tribunal finding that a Section 143(2) notice issued by an officer lacking pecuniary jurisdiction rendered the resulting assessment invalid. The order is significant for how it was finally resolved — through a Third Member reference after the Division Bench members disagreed — and for what it says about the durability of a jurisdictional-notice challenge once accepted by the Tribunal.

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

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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 AY 2013-14 declaring total income of Rs. 19,12,120/-. His case was selected for scrutiny through CASS, and a notice under Section 143(2) was issued by ITO-1(3), Raipur on 08.09.2014. Following a reallocation of jurisdiction, the case was transferred to a different officer, and after further correspondence the assessing officer eventually completed the assessment, determining total income at Rs. 2,30,14,131/- after re-computing long-term capital gains and adding Rs. 1 crore on account of unexplained cash credit.

The assessee's first appeal to the CIT(Appeals) challenged these additions on merits but was unsuccessful. Before the Tribunal (in the underlying appeal, ITA No.64/RPR/2020), an additional ground was raised contending that the assessment was invalid because the original Section 143(2) notice had been issued by an officer without pecuniary jurisdiction over the assessee, per CBDT Instruction No.1/2011, and that the assessing officer who eventually passed the assessment order had not himself issued a valid notice under that provision. The Tribunal accepted this additional ground and quashed the assessment for want of valid assumption of jurisdiction, without going into the merits of the additions.

The Revenue subsequently filed a miscellaneous application seeking to recall that quashing order, relying on the Supreme Court's ruling in DCIT(Exemption) v. Kalinga Institute of Industrial Technology, where a similarly jurisdiction-based challenge to a notice was held not to survive because the assessee had participated in proceedings without objecting to jurisdiction in time. The miscellaneous application was first heard by a Division Bench, but the Judicial Member and the Accountant Member disagreed, leading to a reference to a Third Member.

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Issues raised

• Whether an assessment framed by one assessing officer could stand when the underlying Section 143(2) notice had been issued by a different officer lacking pecuniary jurisdiction over the assessee.
• Whether the facts of the case were parallel to the Kalinga Institute precedent relied on by the Revenue, where an assessee's participation in proceedings without raising a timely jurisdictional objection was held to preclude a later challenge.
• Whether the Tribunal had erred in admitting, and then deciding in the assessee's favour, an additional jurisdictional ground raised for the first time before it.
• Whether the Revenue's miscellaneous application seeking recall of the quashing order should succeed, given the divergence of opinion between the two members who first heard it.

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What the court held

The order under review records the resolution of that divergence. The Third Member, to whom the matter was referred on account of the difference of opinion between the Division Bench members, "concurred with the findings recorded by the Judicial Member in dismissing the miscellaneous application filed by the Revenue." Giving effect to that majority opinion, the Tribunal held: "In view of the majority opinion, the miscellaneous application filed by the Revenue is dismissed," and concluded, "In the result, the miscellaneous application of the Revenue is dismissed."

The practical effect of this dismissal is that the earlier Tribunal finding — that the assessment order was "devoid and bereft of any force of law" because it flowed from a Section 143(2) notice issued by a non-jurisdictional officer — was left undisturbed. The Revenue's attempt to invoke the Kalinga Institute precedent to have that finding recalled did not succeed at the miscellaneous-application stage, notwithstanding that the Revenue had pointed to case-record details (including that Ravi Sherwani had complied with subsequent notices without objecting to jurisdiction) said to parallel the facts of that Supreme Court case.

Because the original quashing was made on the jurisdictional ground and the additions on merits — the recomputed capital gains and the unexplained cash credit addition — were never adjudicated by the Tribunal on that occasion, they remained academic once the assessment itself was held bad in law, and that position stood confirmed by the dismissal of the Revenue's miscellaneous application.

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Strategy observations

1. The assessee raised the jurisdictional challenge to the Section 143(2) notice as an additional ground before the Tribunal rather than only contesting the additions on merits, and that ground proved decisive — the Tribunal quashed the assessment on this basis alone.
2. The jurisdictional argument was framed around the identity and pecuniary competence of the officer who issued the Section 143(2) notice, as distinct from the officer who ultimately passed the assessment order, per the case record referenced in the order.
3. The Revenue's subsequent reliance on the Kalinga Institute Supreme Court ruling — invoked to argue that participation without objection cured the jurisdictional defect — did not succeed in reopening the Tribunal's finding at the miscellaneous-application stage.
4. The eventual outcome was reached only after a Third Member resolved a genuine split of opinion between the two members who first heard the Revenue's application, illustrating that even a seemingly settled jurisdictional finding can be contested through further internal Tribunal process before it becomes final.
5. Because the assessment stood quashed on the jurisdictional ground, the merits of the capital-gains recomputation and the cash-credit addition were never independently tested by the Tribunal in this proceeding.

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Why this case matters

The case illustrates how a challenge to the jurisdictional validity of a Section 143(2) notice — specifically, whether the officer issuing it had pecuniary jurisdiction over the assessee at the relevant time — can be raised as an additional ground even at the appellate stage and can be outcome-determinative, overriding the need to examine substantive additions. It also shows that a Tribunal's quashing of an assessment on such a ground is not automatically undone merely because the Revenue can point to a Supreme Court precedent addressing broadly similar facts; the miscellaneous-application route to recall that finding failed here, and it took a Third Member reference to finally settle the point after the original Division Bench could not agree.

For researchers tracking jurisdictional challenges to scrutiny notices, this order is a useful illustration of the procedural life-cycle such a challenge can go through — from the original quashing, through a Revenue miscellaneous application, to a split Division Bench and finally a Third Member's concurrence — before the taxpayer's position is conclusively vindicated.

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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/