1974 (2) TMI 26 - HC - Income Tax

Court Invalidates Tax Assessment, Emphasizes Jurisdiction Limits Under Section 155

The court ruled in favor of the petitioner, holding that the Income-tax Officer lacked jurisdiction under Section 155 for assessment. The court emphasized ... Provisional Assessment Issues:1. Jurisdiction of the Income-tax Officer under section 155 for assessment.2. Validity of the assessment under section 143 read with section 271(1)(c).3. Impact of petitioner's submission to jurisdiction on disputing assessment.Detailed Analysis:1. Jurisdiction under Section 155:The case involved a challenge to an assessment order dated February 2, 1970, made by the Income-tax Officer under section 143(3)/155 of the Income-tax Act, 1961. The petitioner contended that the assessment was without jurisdiction as there was no completed assessment earlier. The court agreed, stating that Section 155 allows amendment of an assessment order only if a completed assessment had been made previously. The court emphasized that the term 'completed assessment' signifies a positive act of completion, distinct from the lapse of authority due to the expiry of the limitation period. The court held that the Income-tax Officer, by attempting to amend the assessment under section 155, was actually making the assessment for the first time, which was beyond the scope of the provision.2. Validity of Assessment under Section 143 read with Section 271(1)(c):The respondent argued that the assessment could be supported under section 143 itself, with the extended limitation period of eight years under section 153(b) due to alleged concealment of income falling under section 271(1)(c). However, the court rejected this argument, noting that the Income-tax Officer had not made the assessment under section 143 read with section 271(1)(c). Furthermore, the court highlighted that to apply section 271(1)(c), the Income-tax Officer must establish that the assessee concealed income or furnished inaccurate particulars, which was not demonstrated in this case. The court concluded that the assessment could not be upheld under the proposed interpretation.3. Impact of Petitioner's Submission to Jurisdiction:The respondent contended that the petitioner's lack of objection to the assessment amounted to submission to jurisdiction, barring any dispute. However, the court held that the Income-tax Officer lacked jurisdiction under section 155, rendering any consent ineffective in conferring jurisdiction. Therefore, the court dismissed the argument that the petitioner's submission to jurisdiction precluded challenging the assessment.In conclusion, the court found in favor of the petitioner, quashing the impugned orders and demand. The court issued a writ of certiorari to reflect this decision, with no order for costs and a stay on the operation of the order for six weeks.