TaxTMI 
TaxTMI 
2008 (6) TMI 263
X X X X Extracts X X X X
X X X X Extracts X X X X
....ught to have been passed by the AO latest by 31st Aug., 2001, but the same was passed on 29th Sept., 2001 i.e., beyond limitation therefore. the same is illegal, bad in law and void ab initio hence, be ordered to be quashed. 2. Without prejudice to above, the alleged consequential warrant of authorization of search signed by the Addl. Director of IT (Inv.) dt. 13th Aug., 1999, in the name of Dr. D.P. Agarwal, for search of locker at Bahraich executed on 7th Sept., 1999 is illegal, bad in law and void ab initio, as the learned Addl. Director of IT (Inv.) was not authorized after 30th Sept., 1998 to sign the warrant of search and/or authorize any IT authority for carrying out any search within the meaning of s. 132(1) of the IT Act, 1961, therefore, the whole proceedings being illegal and void ab initio were non est for the purpose of extension of limitation provided under s. 158BE of the IT Act, 1961, hence the block assessment passed on 29th Sept., 2001 under s. 158BC of the IT Act, 1961, be ordered to be quashed." 3. It was submitted in the petition that the ground raised by the assessee in cross-objection is purely legal in nature and, therefore, the same deserves to be adm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uted on 13th Aug., 1999 was signed by Director of IT (Inv.). Assessee's main grievance is regarding limitation for passing the assessment order as per the provisions of s. 158BE. In this regard, learned counsel submitted that the Tribunal has to examine whether the warrant of authorizations, issued subsequent to initiation of proceedings were valid or not. He pointed out that in paras 67 and 68, the Tribunal in the case of Promain Ltd. has observed as under: "67. It is well settled that, as a general rule, the issue of validity of exercise of power by an authority can be raised in any proceedings including a collateral proceeding. However, it is also well settled that the validity of exercise of power by an authority can be set up in the collateral proceedings only when there is lack of inherent jurisdiction on the part of the authority exercising the power. If the authority possesses the necessary power but while exercising the power exceeds or abuses the power, then it cannot be said that the authority lacks inherent jurisdiction. In the first category of case, challenge to the validity of the exercise of power can be raised in collateral proceedings also. In the second catego....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the decision of the Special Bench in the case of Promain Ltd. was primarily concerned with the initiation of search proceedings and not with the issue of examining the question of limitation being extended or not on account of subsequent alleged warrant of authorization not being executed by the competent authority. We, therefore, proceed to decide this issue. 8. As far as the two warrants of authorization signed and executed on 23rd Aug., 1999 by the Addl. Director of IT (Inv.) are concerned, learned counsel for the assessee has referred to the decision of the Hon'ble Allahabad High Court in the case of Raghuraj Pratap Singh & Ors. vs. Asstt. CIT (Writ Petn. No. 5731 of 2004) [reported at (2009) 222 CTR (All) 153-Ed.], wherein, it was held that warrant of authorization issued by the Addl. Director of IT (Inv.) was invalid. Therefore, in view of the decision of the Hon'ble Allahabad High Court in the case of Raghuraj Prasad, both the warrants of authorization were invalid. However, these warrants of authorization are of little consequence in the present context because limitation for passing the block assessment order is to be decided with reference to the date of execution....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nks fit to become IT authorities. He, therefore, submitted that since the post of "Jt. CIT" came into force w.e.f. 1st Oct., 1998, a separate authorization from CBDT was required as per s. 132. 11. As against the above, learned Departmental Representative referred to Circular No. 772 dt. 23rd Dec., 1998 (cl. 5) reported in (1999) 151 CTR (St) 9 : (1998) 235 ITR (St) 42 to submit that it is a case of re-designation of authority and not of fresh appointment. He submitted that since it was a case of re-designation only, the CBDT Circular F. No. 286/343/1989-IT (Inv.) II, dt. 11th Oct., 1990, authorizing all Dy. Director of IT (Inv.), posted under Directors General of IT (Inv.), all Dy. Directors of IT (Inv.), posted under Directors of IT (Inv.) and all Dy. CIT in charge of income-tax ranges including special ranges to carry out the search, continued to be applicable with reference to Jt. CIT as he was only re-designated in place of Dy. CIT and, therefore, the Jt. CIT was fully authorized to sign the warrant* of authorization. In this regard, he referred to p. 4430 from Chaturvedi & Prithisaria's Income-tax Law (Fifth Edition) and pointed out that the authority that is authorized to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; To ------------------------------------------------- Asstt. CIT Asstt. CIT or Dy. CIT ------------------------------------------------- Asstt. Director Asstt. Director or Dy. Director ------------------------------------------------- Dy. CIT Jt. CIT ------------------------------------------------- Dy. Director Jt. Director ------------------------------------------------- 5.3 Clause (7A) of s. 2 of the IT Act contained the definition of AO has been amended to include the re-designated authorities as above. 5.4 Clause (9A) of s. 2 of the IT Act has been amended to include Dy. CIT in the definition of Asstt. CIT. 5.5 Clauses (19A) and (19C) of s. 2 of the IT Act have been amended to exclude the authorities of the Addl. CIT and Addl. Director of IT from the definitions of the Dy. CIT and the Dy. Director. 5.6 Two new clauses, namely, (28C) and (28D) have been inserted in s. 2 of the IT Act, to define Jt. CIT and Jt. Director. 5.7 Sec. 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., namely: (a) The Central Board of Revenue- (b) Directors of Inspection. (c) CITs. (d) Asstt. CITs, who may be either AACs or IACs. (e) ITOs, and (f) Inspectors of IT. 1963-In cl. (a), the words 'CBDT constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)' were substituted for 'the Central Board of Revenue' by the Central Boards of Revenue Act, 1963 w.e.f. 1st Jan., 1964. 1970-The words 'and Addl. CITs' were added by the Finance Act, 1970 w.e.f. 1st April, 1970. 1977-In cl. (c) at the end, the words 'CIT(A)' were inserted by the Finance (No. 2) Act, 1977, w.e.f. 10th July, 1978. 1987-The section, as originally enacted, and amended from time to time, was substituted by the present one by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1988. 1994-Clause (cc), as at present, was inserted by the Finance Act, 1994 w.e.f. 1st June, 1994, consequent upon the creation of a new class of IT authorities, Addl. Directors of IT, Addl. CITs and Addl. CIT(A). 1998-The Finance (No. 2) Act, 1998 inserted cl. (cca) w.e.f. 1st Oct., 1998, consequent upon the creation of the posts of Jt. Directors of IT or Jt. CITs. If we analyse the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; Dy. CIT(A) ---------------------------------------------------------- ITO AO: ---------------------------------------------------------- Provided that nothing contained in this section shall apply to the references to 'CIT' occurring in ss. 245D, 253, 256, 263 and 264." By virtue of this section, erstwhile authorities upto 31st March, 1988 got substituted with the corresponding authorities given in column 2. Similarly by s. 3 of Finance (No. 2) Act, 1998 [reported in (1998) 148 CTR (St) 5 : 1998) 232 ITR (St) 34] the following substitution took place: "3. Substitution of new authorities : In the IT Act, save as otherwise expressly provided in this Act, and unless the context otherwise requires, the references to any authority specified in column (1) of the Table below shall be substituted w.e.f. the 1st day of October, 1998, by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e same cases or classes of cases, they shall have concurrent jurisdiction subject to any orders which the Central Board of Revenue may make for the distribution and allocation of work to be performed. (3) The Central Government may appoint as many appellate or IACs and ITOs of class I service as it thinks fit regulating the conditions of service of persons in public service and posts, appoint as many ITOs of class II service and Inspectors of IT as may, from time to time, be sanctioned by the Central Government. (3A) Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, an IT authority may appoint such executive or ministerial staff as may be necessary to assist it in the execution of its function." 1961-Sec. 117 was originally couched thus: "Appointment of IT authorities. (1) The Central Government may appoint as many Directors of Inspections, CITs, appellate or IACs and ITOs of class I service, as it thinks fit. (2) The CIT may, subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, appoint as many ITOs o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ations: The Central Government has issued the following notifications relevant for the purposes of the provisions contained in this section": 1. In exercise of the powers conferred by sub-s. (1) of s. 117 of the IT Act, 1961 (43 of 1961), the Central Government hereby appoints the officers mentioned in column (1) of the Table below as IT authorities specified in the corresponding entry in column (2) of the said Table with effect from the 1st day of April, 1988. ----------------------------------------------------- Director General Director General of IT ----------------------------------------------------- Director of Inspection Director of IT ----------------------------------------------------- Dy. Director of Inspection Dy. Director of IT ----------------------------------------------------- IAC Dy. CIT ----------------------------------....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... For this, we have to refer to sub-s. (2) of s. 117 by which, Dy. CIT was inserted at the end of s. 117(2) by Finance (No. 2) Act, 1998. Thus, this was a newly appointed authority and not the earlier Dy. CIT. Therefore, the plea of learned counsel that erstwhile Dy. CIT still is there in s. 116 is devoid of any merit. 12.3 In view of aforementioned discussion it is concluded that Jt. CIT substituted erstwhile Dy. CIT who had duly been appointed as per Government notification and, therefore, Jt. CIT was not appointed afresh. It was a case of only re-designation and not of fresh appointment. 13. Now we come to second issue. When a new provision is substituted in place of old existing provision, then the result is of repealing of the earlier provision and its replacement by the new provision. Substitution thus combines repeal and fresh enactment. Thus, when Jt. CIT substituted Dy. CIT as per s. 3 of the Finance (No. 2) Act, 1998, the effect of this section was that the post of erstwhile Dy. CIT was repealed and in its place the post of Jt. CIT came into existence. Further, by amendment in s. 117(2) the Dy. CIT was inserted. Thus, this post was a newly constituted post and, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s or not in view of s. 24 of General Clauses Act. Sec. 24 of the General Clauses Act deals with continuation of orders, etc, issued under enactments repealed and re-enact. The subject-matter of s. 24 is the effect of repeal and re-enactment of an Act on statutory instruments issued under the repealed Act. The main object of the section is to preserve the continuity of such instruction unless a different intention appears. The principle under s. 24 operates subject to the condition that the statutory instrument issued under the repealed act could have been issued under the re-enacted Act or to put it in different words continuity of the statutory instrument is preserved if harmony between the statutory instrument and the new law is not affected thereby. (Ref.: AIR Manual). 16. Learned counsel for the assessee vehemently submitted that s. 24 of the General Clauses Act can be invoked only where an Act was repealed and in its place new Act was re-enacted. However, he submitted that the present case is a case of insertion of cl. (cca) in s. 116 and, therefore, a case of amendment only, and hence, s. 24 of the General Clauses Act is not applicable. However, this plea of learned counse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vesting of jurisdiction. In order to properly appreciate the argument of learned counsel, it is necessary to refer to the facts of the case. In this case the facts were that an election was held on 3rd Sept., 1948 under the Jhalawar Municipal Election Rules dt. 29th March, 1943. Objections were filed against the election in the Court of the First Class Magistrate, Bhawani Mandi, on 10th Sept., 1948. In the meantime the United States of Rajasthan passed on 16th Feb., 1949, an Ordinance repealing the Jhalawar Municipal Election Rules, and applied the UP Municipalities Act, 1916. to the territories of the Rajasthan State. Under the Jhalawar Municipal Election Rules, petitions relating to objections against elections were to be heard and decided by the First Class Magistrate having jurisdiction at the place, but under the new ordinance those petitions were to be heard by the District Judge having jurisdiction in the place. Consequently, the First Class Magistrate, Bhawani Mandi, transferred the case to the District Judge, Bhawani Mandi. The question for decision was whether the District Judge was competent to hear the objections or not and it was held that he was competent to do so. It....