AI Drafter 
TaxTMI 
TaxTMI 
1984 (7) TMI 23
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....lds jurisdiction over all hotel business and their partners. Since the assessee is a partner in M/s. Marwari Hotel, Frazer Road, Patna, which is assessed by him, his objection challenging the jurisdiction of the Income-tax Officer has no merit and is overruled. Assessment order of the Income-tax Officer is annexure " A " to the statement of the case. The other facts are available from the order of the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, an argument was advanced that the Income-tax Officer, C-Ward, Patna, made assessment without jurisdiction. It was stated that the assessment had been made by the Income-tax Officer, A-Ward, Patna, and the assessee had filed a return before him on October 20, 1964. The Income-tax Officer, A-Ward, thereafter, issued notices under sections 143(1) and 143(2) and the assessee appeared before him and produced the books of account. Before the assessment could be made, the Commissioner issued a circular regarding the jurisdiction of the various Income-tax Officers of Patna on December 30, 1967, by which this case was transferred to the Income-tax Officer, C-Ward, Patna. The Income-tax Officer, C-Ward, issued a n....
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....t Commissioner has pointed out that as the report of the Income-tax Officer was not exhaustive, he obtained a copy of the argument of the assessee and sent it again to the Income-tax Officer, C-Ward, Patna, for a detailed report. The Inspector in his report submitted that there was some vagueness in the circular of the Commissioner which may result in genuine confusion with regard to the jurisdiction of the Income-tax Officer in cases of such nature. The Appellate Assistant Commissioner has pointed out that section 124(6) of the Act clearly states that in cases where an assessee raises an objection questioning the jurisdiction of the Income-tax Officer and if the objection is within the limits prescribed by section 124(5), the matter is compulsorily to be referred to the Commissioner if the Income-tax Officer is in doubt. He has further observed that in this case the Income-tax Officer could not determine the matter himself. What he did was to seek instructions from the Inspecting Assistant Commissioner. No reference was made to the Commissioner as laid down in the Act. He, therefore, held that the assessment was made without properly determining the jurisdiction and, therefore, th....
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.... merely a case where due to certain confusion regarding the interpretation of the order of the Commissioner, the assessment proceedings of the assessee were carried on and completed by a particular Income-tax Officer, whereas, according to the assessee, it should have been completed by another Income-tax Officer. The question of jurisdiction is not a question which can be decided in appeal. The Appellate Tribunal held that in this case the provisions of sub-section (5) could not apply as the assessee was not objecting to the assessment as such but only to an assessment by the Income-tax Officer who came on the scene much after the time prescribed in sub-section (5) of section 124. The Tribunal held that the Appellate Assistant Commissioner found that it was a case of irregularities. The Tribunal held that the plea of the assessee that the assessment should be annulled cannot be accepted as the irregularity, if any, supervened at a later stage and not in the very beginning and the proceedings did not become ab initio void or a nullity. The Tribunal, therefore, held that the irregularity occurred in the proceedings at a later stage and, as such, the irregularity can be corrected by s....
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.... within the area for which lie is appointed. In this case, admittedly, the return of income was filed before the Income-tax Officer, A-Ward, on October 20, 1964, and the Income-tax Officer proceeded with the hearing of the case. Various dates of hearing were fixed. When the assessee appeared before the Income-tax Officer, A-Ward, his books of account were examined. On December 30, 1967, the Commissioner of Income-tax by a general order, made a redistribution of jurisdiction. According to this order, the cases filed in Ward No. 30 were assigned to the Income-tax Officer, Ward-A, and the assessee, having income from hotel business, was assigned to Ward-C. This order also provided that all the partners of a firm were to be assessed by the Income-tax Officer assessing that firm. The Income-tax Officer, C-Ward, issued a notice under section 142(2) which was received by the assessee on February 14, 1968. On February 20, 1968, the assessee questioned the jurisdiction of the Income-tax Officer, C-Ward, and requested him to determine the question of jurisdiction first. The Income-tax, Officer, C-Ward, perhaps consulted the Inspecting Assistant Commissioner and completed the assessment of....
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....in default by an ex parte decision, when as a matter of fact he has committed no default and inasmuch as also, in our view, if the law is correctly applied to the evidence, the only proper inference which any court of law could draw from the facts is that the principal place of business is in Calcutta and not in Cawnpore." In that case, question No. 2 was to the effect: " Whether if it is eventually found that the petitioner's business was carried on in Cawnpore, the income-tax authorities acted in accordance with the Act in assessing them by way of summary assessment while bona fide dispute was going on as to whether they were liable to be assessed in Cawnpore at all ? " The answer to question No. 2 was that the matter should have been decided in accordance with section 64(3) of the Act. Question No. 3 was to the effect : " Consequent upon the foregoing questions whether it was the duty of the income-tax authorities to obtain a decision under section 64(3) ? and the answer was yes. The decision does not show that on the ground of non-compliance of section 64(3), the assessment was annulled. It only says that the court held that the principal place of business was Calcu....
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....ted altogether and being annulled on the ground of lack of jurisdiction. It appears from pp. 403 and 404 that the assessee's plea before the Appellate Assistant Commissioner was that the Income-tax Officer, Ward-D, could not exercise jurisdiction over the assessee's case in the face of the assessee's challenge thereto until and unless the matter of jurisdiction was referred by him to the Commissioner and his decision obtained. In that connection, it was observed at page 404 that the Act no doubt envisages that where an objection regarding the jurisdiction of the Income-tax Officer is desired to be taken, it should be raised within the period specified by the section and should be decided by the Commissioner as envisaged by the section. It has also been observed that it is settled law that this is a matter on which the final decision rests with the administrative and not the appellate authorities under the Act. It has also been observed at page 404 of the decision that if the assessee raised the issue but the Income-tax Officer did not refer the question to the Commissioner as in the present case, what will be the result of such failure ? It was held that one answer to the question ....
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....t the order of the Appellate Assistant Commissioner can be supported in the light of the above observations of the Supreme Court. It has also been observed at page 406 of the decision that it will also be appreciated that this is only fair, for, if really the Income-tax Officer had jurisdiction in the matter, there is no reason why the assessment should fail merely for the reason that the decision was not given earlier and if he did not, then the assessee will not be prejudiced as the assessment cannot stand and will have to be attempted afresh by some officer only if otherwise permissible in law. It has been observed at page 406 of the decision that it is possible to look at the matter from another point of view and that it can be said that the issue involved is one of jurisdiction and when an assessee 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 Income-tax Officer can assume jurisdiction to proceed further and complete an assessment. The statute requires this to be done before the assessment is made and failure to do so will render the assessment null and void....
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....d Act. This decision does not help the assessee. Moreover, this is not a case of initial lack of jurisdiction. The assessee filed a return before the Income-tax Officer. In this case the assessee had originally filed a return before the Income-tax Officer, A-Ward, Patna, on October 20, 1964, and the Income-tax Officer issued notices under sections 143(1) and 143(2) of the said Act and the assessee appeared before him and produced books of account. However, on December 30, 1967, the Commissioner of Income-tax passed an order regarding the jurisdiction of the various Income-tax Officers of Patna and he directed that the cases of the assessees under Ward No. 30 will remain under the jurisdiction of the Income-tax Officer, A-Ward, but the cases of the assessees having income from hotel business were to be assessed by the Income-tax Officer, C-Ward. As the assessee had income from Marwari Hotel, the Income-tax Officer, C-Ward, issued notice to the assessee under section 142(1) of the said Act and even when the assessee objected to the jurisdiction of the Income-tax Officer, C-Ward, he completed the assessment on March 30, 1968. Thus, it is evident that there was some confusion and pr....
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.... to continue the proceedings from the stage at which the illegality had occurred. In the present case, the irregularity has occurred at the stage after petition was filed objecting to the jurisdiction of the Income-tax Officer, C-Ward, to proceed with the case and the Income-tax Officer without referring the matter to the Commissioner of Income-tax for deciding the matter himself completed the assessment. Thus the irregularity was at that stage and so the case has to be restored to that stage and so the Appellate Assistant Commissioner was justified in setting aside the assessment order for making a fresh assessment according to law and the Appellate Tribunal was justified in upholding the order of the Appellate Assistant Commissioner. The learned standing counsel for the Income-tax Department, Mr. B. P. Rajgarhia, relied on, the case of Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC). In the first place, this case related to the petition under article 32 of the Constitution and the question considered was whether articles 14 and 19(1)(g) of the Constitution were violated Mr. B. P. Rajgarhia has relied specially on the point that if an assessee has acquiesced in the....