2008 (2) TMI 358 - HC - Income Tax

Assessment upheld despite assessing officer's jurisdiction lapse where assessee failed to challenge within one month under section 124(3)

CIT-I, Lucknow Versus M/s Sohan Lal Sewa Ram Jaggi, Prop. Raghav Jaggi

High Court allowed the Revenue's appeal, holding that ITAT erred in annulling the assessment solely because the assessing officer who completed it lacked ... ITAT annulled the assessment - transfer of jurisdiction from Income Tax Officer, Ward-I (2) to Ward-I (3) - assessee had not challenged the jurisdiction of the subsequent assessing officer within one month of the receipt of notice u/s 143(2)/142(1) as required u/s 124(3) – Tribunal was not justified in annulling the assessment mere on the ground that the assessing officer completing the assessment did not had the jurisdiction over the case- Revenues’ appeal is allowed by way of remand Issues:Jurisdictional challenge based on transfer of jurisdiction between Income Tax Officers and the timeline for raising objections under Section 124(3) of the Income Tax Act, 1961.Jurisdictional Challenge and Timeliness of Objections:The appeal arose from an order by the Income Tax Appellate Tribunal regarding the assessment year 1993-94. The respondent-assessee had initially filed the income tax return under Section 139(1) of the Act. Following a transfer of jurisdiction from one Income Tax Officer to another, a notice under Section 143(2) was served on the assessee. The assessee raised a jurisdictional objection after the assessment was completed, contending that the assessing officer lacked jurisdiction due to the transfer. The Tribunal held the assessment null and void due to the lack of jurisdiction. The key issue revolved around the timeliness of raising objections as per Section 124(3) of the Act, which mandates objections to jurisdiction to be raised within 30 days of notice. The Tribunal's decision was challenged on the grounds that the objection was raised beyond the stipulated period, rendering it invalid.Legal Interpretation and Decision:The High Court analyzed the provisions of Section 124(3) of the Act, emphasizing the mandatory requirement for objections to jurisdiction to be raised within 30 days of notice. The Court highlighted the importance of strict adherence to statutory timelines in tax laws, emphasizing that factual misunderstandings or lack of knowledge do not exempt parties from complying with legal requirements. The Court ruled that the Tribunal erred in annulling the assessment solely based on jurisdictional grounds due to the untimely objection raised by the assessee. The Court reiterated the principle that equity has no place in tax laws, emphasizing the significance of procedural compliance within the specified timeframes.Remittance for Further Consideration:The High Court set aside the Tribunal's order annulling the assessment and remitted the matter back to the Tribunal for a decision on the merits of the appeal. The Court held in favor of the Revenue, concluding that the substantial question of law raised in the appeal favored the Revenue and went against the respondent-assessee. The appeal was allowed with each party bearing its own costs, signaling a partial victory for the Revenue based on procedural compliance and jurisdictional considerations.