Jurisdictional objection and reassessment of dissolved firm invalid where statutory determination was not made and wrong assessee was assessed.

A timely jurisdictional objection to a section 148 notice had to be referred for determination under section 124(4); because no effective jurisdictional determination was shown, the reassessment was invalid. The Tribunal also held that income of a dissolved firm had to be assessed in the name and manner prescribed for that firm under section 189. Reassessment framed on the wrong assessee, by an officer lacking proper territorial jurisdiction over the original business, could not be sustained. The assessment was therefore held invalid on both jurisdictional and identity grounds, in favour of the assessee.

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Issues: (i) Whether the notice under section 148 and the reassessment made by the Income-tax Officer at Scindia House were without jurisdiction because the assessee had raised a specific objection and the Commissioner had not determined jurisdiction under section 124(4); (ii) Whether the reassessment was illegal because it was made on the wrong assessee and not on the dissolved firm in accordance with section 189.

Issue (i): Whether the notice under section 148 and the reassessment made by the Income-tax Officer at Scindia House were without jurisdiction because the assessee had raised a specific objection and the Commissioner had not determined jurisdiction under section 124(4).

Analysis: The assessee had objected at the earliest stage and gave detailed reasons why the officer having jurisdiction over Scindia House could not assess income of the dissolved Chandni Chowk firm. In such a situation, the statutory scheme required the objection to be referred to the Commissioner for determination. The record did not show any effective determination of jurisdiction under section 124(4). A prior communication from the Commissioner did not decide the jurisdictional dispute but merely directed proceedings to continue. The absence of a proper jurisdictional determination was therefore a fatal defect.

Conclusion: The notice under section 148 and the reassessment were without jurisdiction and invalid, in favour of the assessee.

Issue (ii): Whether the reassessment was illegal because it was made on the wrong assessee and not on the dissolved firm in accordance with section 189.

Analysis: The business for the relevant year had been carried on by the firm at Chandni Chowk, which was later dissolved. On dissolution, reassessment in respect of that year had to proceed against the dissolved firm as if discontinuance had not occurred. Instead, the assessment was framed on the Scindia House firm by an officer lacking jurisdiction over the place where the original business existed. That course was contrary to section 189 and could not be sustained as a valid assessment of the income of the old firm.

Conclusion: The reassessment was illegal because it was made on the wrong assessee and by the wrong assessing officer, in favour of the assessee.

Final Conclusion: The assessment could not stand, as the jurisdictional objection was valid and the reassessment was not made in the manner required for a dissolved firm's income.

Ratio Decidendi: Where an assessee raises a specific and timely jurisdictional objection, the matter must be determined by the Commissioner under the statutory jurisdiction provision; absent such determination, reassessment is invalid, and income of a dissolved firm must be assessed only in the name and manner prescribed for that firm.

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