Court quashes assessment order for not deciding jurisdictional objections first.

The court held that the failure to decide the petitioner's jurisdictional objections under Section 124(4) before finalizing the assessment vitiated the order dated 2nd May 1967. Consequently, the writ petition was accepted, and the order was quashed. The Commissioners were directed to decide the jurisdictional matter first, and then the revenue authorities were to decide the matter under Section 132(5) afresh in accordance with the law. The writ petition was accepted with no order as to costs.

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Issues Involved:
1. Validity of the search and seizure warrant issued under Section 132 of the Income-tax Act.
2. Compliance with Section 124(4) of the Income-tax Act regarding jurisdictional objections.

Issue-wise Detailed Analysis:

1. Validity of the Search and Seizure Warrant:
The petitioner contested the search and seizure warrants issued under Section 132 of the Income-tax Act, arguing that the Commissioner lacked precise and definite information to reasonably believe that the money recovered was unexplained. The court referred to the precedent set in H. L. Sibal v. CIT [1975] 101 ITR 112 (P & H) which emphasized that the information must be such that a reasonable and prudent mind could form a conclusion in favor of issuing the warrant. However, the court distinguished this case from H. L. Sibal's case, noting that in the present case, the customs authorities had already recovered a sizable amount of money from the petitioner, which justified the Income-tax authorities' actions to ask the petitioner to explain the source of the money. The court concluded that even if the warrant did not fully comply with the law, the revenue authorities were within their rights to seize the money and ask for an explanation, as this aligns with the general policy governing revenue statutes in the country.

2. Compliance with Section 124(4) of the Income-tax Act:
The petitioner argued that the mandatory provisions of Section 124(4) were not complied with, as his jurisdictional objections were not decided before the assessment was finalized. The respondents contended that the petitioner had submitted to the jurisdiction and only raised objections to delay the case. The court examined the provisions of Sections 124 and 132 extensively. It was noted that Section 124(4) mandates that jurisdictional questions be determined by the Commissioner, and this provision applies unless specifically excluded. The court found that Section 124(5), which limits the time to question jurisdiction, does not apply to Section 132(5) proceedings, as Section 132 is a self-contained code with its own procedures for search, seizure, and determination of tax liability.

The court rejected the argument that the petitioner had lost the right to question jurisdiction by not raising it within one month, as Section 124(5) does not encompass Section 132(5). The court emphasized that the petitioner's applications challenging jurisdiction should have been decided expeditiously by the concerned authorities before finalizing the assessment. The court also dismissed the argument that the petitioner's previous address submissions bound him permanently to that jurisdiction, stating that individuals can change addresses and raise jurisdictional objections based on statutory provisions.

Conclusion:
The court held that the failure to decide the petitioner's jurisdictional objections under Section 124(4) before finalizing the assessment vitiated the order dated 2nd May 1967. Consequently, the writ petition was accepted, and the order was quashed. The Commissioners were directed to decide the jurisdictional matter first, and then the revenue authorities were to decide the matter under Section 132(5) afresh in accordance with the law. The writ petition was accepted with no order as to costs.

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