2001 (1) TMI 914 - HC - Income Tax

Validity of Assessment Order Upheld Despite Jurisdiction Transfer

Commissioner of Income-tax Versus British India Corporation Ltd.

The High Court held that the assessment order by the Income-tax Officer (ITO) was valid despite the transfer of jurisdiction. The Court emphasized that ... Assessment order made by the AO in the case was void ab initio for want of jurisdiction. held that:- the assessment proceedings commenced and a draft assessment order was submitted to the Inspecting Assistant Commissioner. Subsequent change in the jurisdiction if any unless brought to the notice of the authority concerned, will not in any manner vitiate the assessment order in the absence of any objection with regard to lack of jurisdiction by the assessee. It is a case where both the Assessing Officer and the assessee proceeded as if there is no transfer order transferring jurisdiction. decided against Assessee & restored back to the Tribunal. Issues Involved:1. Jurisdiction of the Assessing Officer.2. Validity of the assessment order post-transfer of jurisdiction.3. Authority of appellate bodies to entertain jurisdictional objections not raised before the Assessing Officer.4. Prejudice caused by the assessment order due to alleged lack of jurisdiction.Detailed Analysis:1. Jurisdiction of the Assessing Officer:The primary issue was whether the Income-tax Officer (ITO), Central Circle-I, Kanpur, had jurisdiction to pass the assessment order after the case was transferred to the Inspecting Assistant Commissioner, B-Range, Kanpur, effective July 1, 1977. The Tribunal held that the assessment order made by the ITO was void ab initio due to lack of jurisdiction. However, the High Court disagreed, emphasizing that the jurisdictional question should be determined by the Commissioner or the Board as per Section 124 of the Income-tax Act, and not by the appellate authorities. The Court noted that the Act treats the allocation of functions to various authorities as administrative and procedural, not as a matter of substance affecting the validity of the assessment order.2. Validity of the Assessment Order Post-Transfer of Jurisdiction:The Tribunal concluded that the assessment order was invalid due to the transfer of jurisdiction. The High Court, however, found that the Tribunal misdirected itself by assuming the transfer order was not communicated to the assessee and by failing to establish when the assessee became aware of the transfer. The Court held that the burden was on the assessee to disclose the date of communication of the transfer order, which it failed to do. Consequently, the assessment order was deemed valid despite the transfer, as there was no evidence of prejudice caused to the assessee.3. Authority of Appellate Bodies to Entertain Jurisdictional Objections:The Tribunal allowed the assessee to raise the jurisdictional objection for the first time in appeal, which was not raised before the Assessing Officer. The High Court ruled that such objections should be raised within one month from the date of filing the return or within the time allowed for making the return, as specified in Section 124(3). The Court emphasized that the appellate authority or Tribunal does not have the jurisdiction to entertain such objections post-assessment, reinforcing the administrative nature of jurisdictional assignments under the Act.4. Prejudice Caused by the Assessment Order:The High Court noted that there was no allegation or evidence of prejudice caused to the assessee due to the assessment order being passed by the ITO, Central Circle-I. Citing precedents, the Court highlighted that procedural defects in jurisdiction do not invalidate an assessment order unless prejudice is shown. The Court referenced the Supreme Court's distinction between subject-matter jurisdiction and territorial or pecuniary jurisdiction, asserting that the latter does not render a judgment null and void in the absence of demonstrated prejudice.Conclusion:The High Court held that the assessment order made by the ITO, Central Circle-I, was valid despite the transfer order dated July 1, 1977. The Tribunal's decision to annul the assessment order was overturned, and the matter was remitted back to the Tribunal to decide the appeals on the merits of the case, excluding the jurisdictional issue. The appeals were allowed in favor of the Department, and no costs were awarded.