Territorial jurisdiction in income-tax assessment depends on statutory procedure; unilateral rejection of a timely objection cannot cure invalid assessment.

Territorial jurisdiction for income-tax assessment must be determined under Sections 120 and 124, not by PAN allotment alone. Where an assessee raises a timely jurisdictional objection, the Assessing Officer cannot decide it unilaterally; if not satisfied, the objection must be referred to the competent higher authority under Section 124(2) before completion of assessment. The later refusal to transfer the case after assessment does not cure non-compliance with this statutory procedure. On the stated facts, the assessee was based in New Delhi, filed returns there since inception, and no valid Section 127 transfer displaced Delhi jurisdiction, so the Kolkata Assessing Officer lacked jurisdiction and the assessment was void.

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Issues: Whether the Assessing Officer at Kolkata had territorial jurisdiction over the assessee and whether the assessment made after rejection of the jurisdictional objection without reference to the higher authority was valid.

Analysis: The assessee was incorporated at New Delhi, had its registered office and business activity at New Delhi, and had been filing returns at Delhi since inception. Jurisdiction under the Income-tax Act is governed by the statutory scheme under Sections 120 and 124, not by PAN allotment alone. Where an assessee raises a timely objection to jurisdiction, Section 124(4) requires the Assessing Officer, if not satisfied, to refer the matter for determination by the competent higher authority under Section 124(2) before completing the assessment. The Assessing Officer could not decide the jurisdictional objection on his own, and the later refusal to transfer the case after completion of assessment did not cure the defect. The record also did not establish that Delhi jurisdiction was ever displaced by a valid transfer order under Section 127.

Conclusion: The Kolkata Assessing Officer lacked jurisdiction over the assessee, the statutory procedure for deciding the jurisdictional objection was not followed, and the assessment made by him was without jurisdiction and void.

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