AI Drafter 
TaxTMI 
TaxTMI 
2018 (6) TMI 211
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....rom assessment year 2014-15 with the Income-Tax Officer, Ward No. 58(2), Delhi. 3.The second contention raised by the petitioner is that transfer of case/proceedings by Income-tax Officer, Ward No.1(1), Noida to Income tax Officer Ward 58(2), Delhi, pursuant to notice under Section 148 of the Act for the assessment year 2009-10 issued by the former, is void and bad in law as (i) Income-tax Officer, Ward No.1(1), Noida did not have jurisdiction and (ii) the procedure prescribed for transfer of case as per section 127(2)(a) of the Act was not followed since the Chief Commissioner having jurisdiction over the Income-tax Officer Ward No.1(1), Noida had not passed any order for transfer of the case. 4. To decide the legal controversy, we would first refer to the facts and while doing so we would also examine certain disputed facts. Petitioner, as stated above is an individual who has been filing returns with the Income tax Officer Ward No.36(1) Delhi and thereafter from the assessment year 2013-14 with the Income-tax Officer, Ward No.58(2) Delhi. For the assessment year 2009-10, the petitioner had filed return with Income-Tax officer, Ward No. 36(1) Delhi on 29th....
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....uding filing of return for the assessment year 2009-10 and furnishing of information and documents regarding cash deposits. 10. The petitioner belatedly responded vide letter dated 19th May, 2016 stating that he was regularly assessed and had filed return of income for assessment year 2009-10, with the Income-tax Officer Ward No.36(1) Delhi. Accordingly, notice dated 27th April, 2016 under Section 142(1) and "alleged" notice dated 18th February, 2016 under Section 148 of the Act were illegal and without jurisdiction. Without prejudice, the petitioner had enclosed a copy of his return filed on 29th March, 2010 with the Income-tax Officer, Ward No.36(1) Delhi with the request to treat this return as filed in response to the notice. Request was made to furnish a copy of the reasons to believe to enable the petitioner to file detailed objections. This letter did not specifically state that the petitioner had not been served with the notice dated 1st February, 2016 under Section 148 of the Act for the assessment year 2009-10 at the Noida address. 11. Petitioner in his objections filed on 15th November, 2016 did not again specifically dispute service of notice under Sec....
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....erved by affixture at the Laxmi Nagar, Delhi address. (v) In the aforesaid circumstances the Income-Tax Officer, Ward 1(1), Noida recorded reasons to believe and had issued notice dated 18th February, 2018 under Section 148 of the Act. (vi) This notice dated 18th February, 2018 under Section 148 of the Act was sent by speed post on 19th February, 2018. (vii) Petitioner did not respond or file his return of income in response to this notice. (viii) The Income-tax Officer Ward No.1 (1), Noida, had then issued notice under Section 142(1) of the Act dated 27th April, 2016 requiring the petitioner to comply with the directions contained therein including filing of return. (ix) The petitioner thereafter responded and wrote to the Income Tax Officer Ward No.1 (1), Noida for the first time on 19th May, 2016. (x) The petitioner in his response dated 19th May, 2016 did not specifically dispute receipt of the notice under Section 148 of the Act, though the word "alleged" was used. (xi) Petitioner in his objections dated 15th November, 2016, had stated that the alleged notice under Section 148 had not been served on him till 31st M....
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....e directions or orders referred to in subsections (1) and (2), the Board or other income-tax authority authorised by it may have regard to any one or more of the following criteria, namely :- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. (4) Without prejudice to the provisions of sub-sections (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein,- (a) authorise any Director General or Director to perform such functions of any other income-tax authority as may be assigned to him by the Board; (b) empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by a 25[Joint] Commissioner 26[or a 25[Joint] Director], and, wh....
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.... situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. (2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or where the question is one relating to areas within the jurisdiction of different Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify. (3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-sectio....
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....eft to the Board to issue directions for exercise of power and functions taking into consideration territorial area, class/types of persons, income and case, and Board have been given wide power and latitude. The said Section by necessary implication postulates and acknowledges that multiple or more than one Assessing officer could exercise jurisdiction over particular assessee. Concurrent jurisdictions are therefore not an anathema but an accepted position under the Act. The term "jurisdiction" in Section 120 of the Act has been used loosely and not in strict sense to confer jurisdiction exclusively to a specified and single assessing officer, to the exclusion of others with concurrent jurisdiction. It would refer to "place of assessment", a term used in the Income Tax Act, 1922. Sub-section (5) to Section 120 of the Act again affirms and accepts that there can be concurrent jurisdiction of two or more assessing officers who would exercise jurisdiction over a particular assessee in terms of the four-fold criteria stated in sub-section (3) to Section 120. Second part of sub-section (5) states that where powers and functions are exercised concurrently by Asse....
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....s of the claim, he shall refer the matter for determination as per subsection (2) of Section 124, however, this should be done before the assessment was made. The aforesaid Section, therefore, postulates waiver of objection to assumption of jurisdiction by the Assessing Officer. Time limit for raising the objection stands stipulated. Principle of deemed waiver applies. This could only happen when the authority does not lack or suffer from inherent lack of subject matter jurisdiction. When there is inherent lack of subject matter jurisdiction, principle of waiver does not apply. The principle being simple that by consent one cannot confer jurisdiction on authority which lacks inherent subject matter jurisdiction. The provisions ensure that conflict between Assessing Officers having concurrent jurisdictions is avoid and curtailed and the assessment proceeding do not get misdirected on side issues. Such deviation should be avoided. It is also clear that question of jurisdiction cannot be made subject matter of appeal, as the issue has to be decided on the administrative side by the Commissioner/Commissioners/ Board. Appeal can, however, be filed questioning the action of the Assessing....
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.... getting it done by the appropriate authority. The appellate order will not also help the department in any way if eventually the CIT (or the Board) comes to the conclusion that the ITO, who completed the assessment, had no jurisdiction in the matter and it will not confer any right on any other ITO having jurisdiction to proceed against the assessee, if he is otherwise not competent to do so. It will only help the department in the event of the CIT (or the Board) coming to the conclusion that the ITO who completed the assessment had the jurisdiction so to do. The above approach to the issue derives support from the recent decision of the Supreme Court in the case of KapurchandShrimal v. CIT [1981]131ITR451. In that case (under the 1922 Act) the ITO completed the assessments of an HUF without disposing of the claim for partition that had been made by the members of the family. Before the Tribunal, the assessee contended that the assessments should be cancelled but the department contended that even if there had been a violation of s. 25A of the Act the proper order to be passed was either to direct the ITO to give effect to Section 25A or to set aside the assessments with ....
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....served :- "It is, however, possible to look at the matter from another point of view. It can be said that the issue involved is one of jurisdiction and when an assessed puts it in challenge immediately he receives a notice or files a return, it must be resolved one way or the other in the manner provided for in the statute before the ITO can assume jurisdiction to proceed further and complete an assessment. The statute requires this to be done before the assessment is made. A failure to do so will render the assessment null and void and without jurisdiction as held in Dina NathHemraj v. CIT [1927] 2 ITC 304 (All) which has been referred to and in no way disapproved in Teomal's case [1959]36ITR9(SC). Once the ITO fails to follow the statutory course prescribed before assessment, it can be said, he misses the bus and cannot be given a second chance to rectify matters. It appears that the Tribunal was inclined to accept this line of argument and to hold "that the AAC could not have rendered an assessment which was illegal into a legal assessment by putting the clock back, so to speak, and enabling the Commissioner to decide the question of jurisdiction." In the view of th....
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....fficer/Income Tax Officers and the assessees in respect of the assessment proceedings. It is a matter of merely a process. A irregularity in procedure need not result in annulment unless the statute specifically stipulates to the contrary. The appellate authorities have right to put a clock back and direct the Income Tax Officer/Assessing Officer to follow the procedure notwithstanding the difference between mandatory and directory procedural norms. In Grindlays Bank vs. Income Tax Officer AIR 1980 656 (SC), the Supreme Court quashed the assessment order but then issued directions to make fresh assessment in the circumstances of the case. The said principle has been followed in cases of violation of principles of natural justice wherein an order of remit/remand when justified are passed. The courts have taken recourse of pragmatism and exigencies of the situation rather than legalistic approach of void and voidable (see Principle of Administrative Law, M.P. Jain and S.N. Jain, Fifth Edition, 2007 at pages 592- 95). 36. In Budhia Swain and Ors.Vs. GopinathDev and Ors.(1999) 4 SCC 396, it was highlighted that distinction exists and was wel....
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....ons, which authority or officer, shall perform is left to be decided either by the Board or by the Commissioner. On what principles the Board and the Commissioner will allocate the functions is not indicated in the Act. The principle is, however, apparent from the nature of the enactment. The Act has been enacted with a view to collect revenue. Income Tax is the main source of revenue for the State. It is through revenue that the machinery of the State is run. It is desirable that the tax should be collected as early as possible. Collection of tax is preceded by assessment thereof. It is consequently desirable that the assessment proceedings should be completed expeditiously but expeditious disposal of an assessment does not mean that the assessee may be put to unwarranted harassment or prejudice. Therefore, the Board and the Commissioner shall take into account the convenience of the assessee also. It is with this purpose in view that it has been provided in Sub-section (1) of Section 127 that, whenever possible, an opportunity of hearing may be given to the assessee while transferring a case from one place to another. Since the assessee does not suffer any inconvenience or prejud....
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....the proceedings had not been finalized and could be finalized by the Income Tax Officer. In the present case, proceedings were initiated both by the AO, Delhi and ITO, Dimapur. Even if it is assumed that the proceedings initiated by AO, Delhi were not in accordance with law, there is no finding and indeed the respondent did not contest the proceedings initiated by ITO, Dimapur. ITO, Dimapur had accepted that the assessment order should be passed by AO, Delhi. Even if the said opinion/belief was wrong, it would not affect the initial initiation of proceedings by ITO, Dimapur, who had passed the assessment orders in the second round. 39. A Division Bench of Bombay High Court in Commissioner of Income Tax vs. BharatkumarModi (2000) 246 ITR 693, referred to the well settled principle of law; setting out the difference between lack of jurisdiction and irregular exercise of authority/ jurisdiction. Proceedings are a nullity when the authority taking it, has a no power to have seisin over the case. But an order is not a nullity or in exercise of void abintio jurisdiction, when the Assessing Officer does not confront the assessee with the materi....
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....pend upon the place where the person carries on business or profession or the area in which he is residing. Subsection (3) clearly states that no person can call in question jurisdiction of an Assessing Officer in case of non-compliance and/or after the period stipulated in clauses (a) and (b), which as observed in S.S. Ahluwalia (supra) would negate and reject arguments predicated on lack of subject matter jurisdiction. Where an assessee questions jurisdiction of the Assessing Officer within the time limit and in terms of sub-section (3), and the Assessing Officer is not satisfied with the correctness of the claim, he is required to refer the matter for determination under sub-section (2) before the assessment is made. Reference of matter under sub-section (2) would not be required when Assessing Officer accepts the claim of the assessee and transfers the case to another Assessing Officer in view the objection by the assessee. (In terms of sub-section (3) to Section 124 of the Act, the petitioner had lost his right to question jurisdiction of the Income Tax Officer, Ward No. 1(1), Noida.) 20. Sub-section (5) to Section 124, though limited in scope, would....
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.... as made in terms of sub-section (3) to Section 124, notwithstanding the fact that there was delay and non-compliance. The Income-Tax Officer, Ward-1 (1), Noida accepted the request/prayer of the petitioner and had transferred pending proceeding to the Assessing Officer, Ward-58 (2), Delhi. Therefore, there was no need to invoke and follow the procedure mentioned in sub-section (2) to Section 127 of the Act. Section 127 of the Act would come into play when the case is to be transferred from the Assessing Officer having jurisdiction to a third officer not having jurisdiction over an assessee (a case) in terms of the directions of the Board under section 120 of the Act. Section 127 of the Act could also apply when the department wants transfer of a case, and Sections 120 and 124 of the Act are not attracted. 22. Counsel for the petitioner had relied upon judgment of the Supreme Court in Hasham Abbas Sayyad Vs. Usman Abbas Sayyad & Ors., (2007) 2 SCC 355 which draws distinction between a person or authority lacking inherent jurisdiction which makes the order passed by them a nullity, and therefore, principle of estoppel, waiver and acquiescence or even res judicat....