High Court dismisses Revenue's appeal under Income-tax Act, affirms Tribunal's jurisdictional power

The High Court of Allahabad dismissed the Revenue's application under section 256(2) of the Income-tax Act, 1961, as no statable question of law arose. The court held that the Income-tax Appellate Tribunal had the authority to allow the assessee to raise a jurisdictional plea for the first time during proceedings. Emphasizing the Tribunal's power under rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, the court found that the Tribunal provided adequate opportunity for both parties to present arguments on the jurisdictional issue. The court concluded that the application lacked merit, granting costs to the assessee.

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Issues involved: Application u/s 256(2) of the Income-tax Act, 1961 regarding the Tribunal's decision to permit the assessee to raise the plea of jurisdiction for the first time.

Judgment Summary:

The High Court of Allahabad, in the case under consideration, addressed an application filed by the Revenue u/s 256(2) of the Income-tax Act, 1961. The primary issue at hand was whether the Income-tax Appellate Tribunal had the legal authority to allow the assessee to raise a jurisdictional plea for the first time during the proceedings, a plea that was not previously raised before the Assessing Officer or the first appellate authority.

Upon hearing arguments from both parties, the court concluded that no statable question of law arose in this case. The court emphasized that the Tribunal, as per rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, possessed the power to permit a party to raise a jurisdictional question that goes to the root of the matter without delving into further factual investigations. It was noted that when such a plea is raised, the Tribunal is obligated by statute to entertain and decide on it after providing adequate opportunity for both sides to present their arguments.

The court highlighted that in the present case, there was no indication that the Tribunal had not given sufficient opportunity to the Revenue before allowing the assessee to challenge the validity of the reassessment proceedings based on the jurisdictional issue arising from the notice u/s 148 of the Act. As the proposed questions in the application did not contest the Tribunal's findings on merits, the court deemed that no statable question of law existed that warranted the Tribunal to submit a statement of the case to the court.

Consequently, the court dismissed the application, finding it lacking in merit. The assessee was granted costs amounting to Rs. 125.

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