TMI Blog1997 (11) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT had directed the Chief Commissioner of Income-tax to settle the question of jurisdiction. 4. Because the learned CIT(Appeals) has erred in relying upon the order under section 124(2) dated14-2-1996passed by the CCIT,New Delhi, as a valid order, without the order of the CCIT,Kanpuras required under section 124(2). 5. Because the learned CIT(Appeals) has erred in seeking clarification to the order dated 14-2-1996 passed by the Chief Commissioner of I.T., New Delhi, under section 124(2) of Income-tax Act, 1961 and has further erred in holding that the order dated 14-2-1996 was merely clarificatory in nature, and has wrongly relied upon the subsequent unauthorised communication dated 4-6-1996 from the office of the CCIT, New Delhi, as order under section 124(2). 6. Because has erred in upholding the validity of notice under section 148 dated17-1-1994and notice under section 142 (1) dated23-2-1996which were illegal, time barred and without jurisdiction, on the basis of which no assessment could validly be made. 7. Because the learned CIT(Appeals) has erred in upholding the second assessment order dated 8-3-1996, passed by the Assessing Officer, on the same income wilful know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed for the assessment years 1987-88 to 1992-93. For the assessment year 1986-87, the assessee-company filed an appeal before the CIT(Appeals), Muzaffarnagar. The date of filing of the appeal was28-4-1993. The said appeal was disposed of by the CIT (Appeals), Muzaffarnagar, on7-7-1994. The appellate order is found provided at page 75 of the assessee's paper book. In the cause title of the appellate order, the address of the assessee was given as follows : "M/s. Amulya General Trading Agencies Ltd., 316 -- Essel House, 10, Asaf Ali Road, New Delhi." Only theNew Delhiaddress of the assessee was continued to be given in the cause title of similar appellate orders passed by the CIT(Appeals), Muzaffarnagar, for assessment years 1987-88, 1988-89 and 1990-91 vide pages 82B, 87 and 91 of the assessee's paper book. The appellate orders were dated28-3-1993,24-9-1991and21-9-1994receptively for these years. On20-3-1989itself, the ACIT, Com. Cir. I(4), New Delhi, had completed assessment against the assessee for assessment year 1986-87 under section 144 on the basis of the return of income filed by the assessee-company voluntarily on 30-9-1986. The assessment thus made against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age was A-10/11, Bhandari House, Dr. Mukherjee Nagar,Delhi. Similarly, at page 32 of the assessee's paper book, the statement of account of M. Sharda Co., Chartered Accountants, as found in the books of account of the assessee-company is furnished. It would disclose that on 1-10- 1985 the balance due to the creditor by the assessee-company was Rs. 12,780 which is shown as brought forward figure. Again, on30-9-1986, a sum of Rs. 9,000 was said to have been borrowed by the assessee-company from the same party. The debtor's name even at that page was found to be the assessee-company carrying on business at A- 10/11, Bhandari House, Dr. Mukherjee Nagar,Delhi- 9. It is significant that at pages 28, 29, 31 and 32 of the assessee's paper book the address of the assessee-company as well as the places at which it is said to be carrying on business on the dates of borrowal were all given only by the assessee-company and hence, the address given at those pages can be taken to be a clear admission on the part of the assessee-company as to its place of business or principal place of business. The address of the assessee-company at all those pages was given asDelhionly and not asGhaziabador Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order, the following address was given: "M/s. Amulya General Trading Agencies Ltd., 316 Essel Building, 10, Asaf Ali road, New Delhi ." At page 48 of the assessee's paper book, copy of the intimation sent to the assessee under section 143(1) is provided which is dated 3l-12-1991. The return was stated to have been filed before the Assessing Officer,Ghaziabad. For the assessment year 1992-93 also, the income-tax return was filed before Assessing Officer, Ghaziabad, and the assessment was stated to have been completed under section 143(1) as per the intimation dated 31-12-1992 provided at page 49 of the assessee's paper book. Copies of the acknowledgements of income-tax statements which are provided at pages 48 49 show that columns of income-tax statements are to be filled by the assessee in duplicate. That means, the names and addresses given in the income-tax statements were provided by none other than the assessee-company itself. The address of the company in both these acknowledgements of income-tax statements for assessment years 1991-92 and 1992-93 reveal that the assessee was carrying on business at 5/5761, Dev Nagar, Street No. 2, Karol Bagh, New Delhi-5 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al area ; (b) persons or classes of persons ; (c) incomes or classes of income ; and (d) cases or classes of cases. Inasmuch as the head office of the assessee-company was situated in Delhi and also because it carried on its business activities in Delhi, by virtue of conferment of territorial jurisdiction over the area, the ACIT, Commercial Circle I(4), New Delhi, only has got the requisite jurisdiction to complete the assessments on the assessee-company for the assessment years under consideration, namely 1988-89 to 1992-93. Therefore, we are unable to agree with the contention of the assessee that the learned CIT(Appeals)'s impugned order is in any way bad under law because he had failed to quash and annul the assessment order dated 8-3-1996 passed by ACIT, Commercial Circle I(4), New Delhi. Thus grounds 1 2 are rejected. Ground Nos. 3 to 5 : 7. These grounds are intimately connected with each other and hence, a joint consideration of all the grounds is found more appropriate and hence, dealt with accordingly. The question of determining which assessing authority has got correct jurisdiction to assess the assessee-company for the assessment year 1986-87 was ultima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hief Commissioner of Income-tax,Delhi, hereby assigned the jurisdiction of the case particulars of which are referred in Col. No. 2 of the Schedule given below to the Assessing Officer mentioned in Col. No. 3 thereof. The said jurisdiction is being decided after concurrence with the Chief Commissioner of Income-tax,Kanpur." SCHEDULE ------------------------------------------------------------------------------------------------------------------------------------------------- S. No. Name of the assessee Name of charge ------------------------------------------------------------------------------------------------------------------------------------------------- 1. M/s. Amulya General Trading Agencies Ltd. AC, Co. Cir. I(4),New Delhi. This order shall take effect from16-2-1996." ------------------------------------------------------------------------------------------------------------------------------------------------- At para 4.4 of the impugned order, the learned CIT(Appeals) had stated the following with regard to dispute regarding jurisdiction : "In the first place the issue relating to the determination of jurisdiction stands practically settled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the CIT(Appeals),Kanpur, and reliefs were granted by the said authority for some of the impugned assessment years. 9. Now, let us consider whether under law was there any necessity for the CCIT,Kanpur, to transfer jurisdiction from the Assessing Officer,Ghaziabad, to ACIT, CC. I(4),New Delhi. In our understanding of the legal provisions under sections 120, 124 and 127, the question of taking away jurisdiction from Assessing Officer,Ghaziabad, and conferring jurisdiction on the Assessing Officer,New Delhi, would only require the consent of CCIT,Kanpur, or a specific order from the CCIT,Kanpur. This argument presumes that Assessing Officer,Ghaziabad, had got rightful jurisdiction to complete the assessments of the assessee-company. If this premise does not hold good and if it is found that Assessing Officer, Ghaziabad, had no jurisdiction at all or if he is found to be lacking inherent jurisdiction to assess any part of the income of the assessee-company, then the question of taking away jurisdiction from Assessing Officer, Ghaziabad, does not arise. As already observed, the assessee-company carried on business as investment company. No material was placed before us to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made." If the Assessing Officer, Ghaziabad, is not satisfied with the plea of the assessee about his jurisdiction to take up or complete the assessments of the assessee-company for any of the assessment years, he shall hear the assessee on the question of jurisdiction and should refer the matter to the Chief Commissioner, Kanpur, and should await his orders on the question of jurisdiction under section 124(2). The Assessing Officer,Ghaziabad, did not do so. He neither heard the Assessing Officer, on the question of jurisdiction nor passed any order rejecting the contention of the assessee-company. No material is placed before us to show that he referred the question of jurisdiction to CCIT,Kanpur, under whom he was working. He did not also wait for the orders of the CCIT,Kanpur, if any, which may have been passed under section 124(2). The assessments, which were passed by Assessing Officer, Ghaziabad, for the assessment years, were completely in violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. Such a transfer can be made when both the AOs. are under the jurisdiction of the same CCIT or, in some cases, the cases can be transferred from the file of one Assessing Officer to the file of another Assessing Officer even though they are working under different CCITs. In cases where they are working under different CCITs., there was necessity for a case to be transferred by the Commissioner from whose jurisdiction the case is to be transferred. This is made very clear from the wording of section 127(2) which contains two paras (a) and (b) and for the sake of easy comparison sub-section (2) of section 127 having two paras is extracted hereunder : "(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officers to whom the case is to be transferred are not subordinate to the same Director General or Chief Commissioner or Commissioner,-- (a) where the Directors General or Chief Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Director General or Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subordinate Officers, we will have to correctly understand the provisions of section 120(1) (2), which are as follows : "120(1). Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. (2) The directions of the board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it." Under section 120(1), it is the CBDT who has got the power to confer territorial jurisdiction to Assessing Officers. The power to define the territorial jurisdiction of Assessing Officer may be exercised by CBDT itself or it may also delegate such power to any of its subordinates and such delegated power would be exercising the powers of the CBDT and in the facts of the case before us, having regard to the text of the jurisdictional order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi, was not conferred with jurisdiction to try the case of the assessee-company for the first time only after the passing of the jurisdictional order dated14-2-1996. The said orders must be understood to be having acknowledged such jurisdiction which the ACIT, Com. Cir. I(4),New Delhi, was already having. In this connection, we have already recorded our finding that the assessee was not only having its Head Office at New Delhi but also carried on its business activities at Delhi in which case the ACIT, Com. Cir. I(4),New Delhi, had complete jurisdiction. At this juncture, sub-section (5) of section 124 may be understood in its correct perspective. The said sub-section is already extracted above. It begins with a non-obstante clause. The non-obstante clause governs not only section 124 but also any direction or order issued under section 120. If the assessee is found carrying on business and earning business income in any jurisdictional area of ACIT, Com. Cir. I(4),New Delhi, then, notwithstanding anything contained in section 124 sub-sections (1) to (4), the ACIT, Com. Cir. I(4),New Delhi, would have jurisdiction to complete the assessment in respect of income accruing or ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed a Writ Petition in the High Court of Delhi seeking to quash the notices issued under section 148 and seeking to prohibit the Assessing Officer atDelhifrom proceeding to make the assessments. On the above fulcrum of facts, the Delhi High Court held that by virtue of the notification under section 5(6), the ITO at Sangli lost jurisdiction and the notices issued by him under section 34 were invalid and the assessments made by the ITO,Bombay, on the basis of those notices were also consequently invalid. Those assessments did not bar the initiation of proceedings under section 34 by the Officer who had jurisdiction. Therefore, in our view, it is for the CBDT to recognize the correct territorial jurisdiction of an Assessing Officer. The result of passing an order under section 124(2) will be that the prior proceedings, if any, made by an Assessing Officer, who had no jurisdiction, were invalid or nullity in the eyes of law and it is only the Assessing Officer whose territorial jurisdiction was recognised as correct who had the ultimate jurisdiction to pass either the assessment orders or re-opening the assessments under section 148. In this view of the matter, the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority may not have the requisite territorial jurisdiction from the beginning and such territorial jurisdiction was conferred for the first time only by the order passed under section 124(2). There may also be cases where the territorial jurisdiction was already vested with a particular assessing authority and on a doubt having been expressed with regard to the correct jurisdiction by means of a specific order passed under section 124(2), such territorial jurisdiction was continued to be recognized to have been vested in an assessing authority. In the second class of cases, whichever proceedings which were started earlier or prior to passing the jurisdictional order can validly be continued even after the passing of the jurisdictional order. Now, in this case, prior to 14-2-1996, on 17-1-1994 itself, the notices under section 148 were issued relating to all these years by ACIT, CC.I(4), New Delhi. By dint of the fact that he was always having the requisite jurisdiction, the jurisdictional order passed on14-2-1996removes any cloud or doubt expressed in that regard and puts the unquestionable jurisdiction of ACIT, Com. Cir. I(4), beyond the pale of any controversy. In such cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(Appeals), Muzzaffarnagar, were quite invalid and they do not confer any right in favour of the assessee. They also do not operate as a bar for completion of the assessment dated8-3-1996by the ACIT, CCI(4),New Delhi. In our considered opinion, the assessment order dated8-3-1996is the only valid assessment order for each of these asst. years and it cannot be construed as a second order passed for each of these asst. years. Ground No. 7 stands rejected. Ground No. 8 : 13. In this ground, it is contended that no default was committed by the assessee and there are no grounds to frame the assessments against the assessee under section 144. After going through the order of the learned CIT(Appeals) and the directions which were issued independently for each of the asst. years 1988-89 to 1992-93, in our view, it would clearly show that he had duly appreciated the contention of the assessee that there were no defaults on its part. The learned CIT(Appeals) had given appropriate directions to the Assessing Officer for each of these asst. years. For instance, for the asst. year 1988-89, the following is what is stated : "The present Assessing Officer has disallowed the entire exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer with a direction to the Assessing Officer to redo the assessment according to law. His direction is couched in the following words : "In my opinion, the case deserves to be set aside in its entirety to the file of the Assessing Officer to be redone according to law after according a fresh opportunity to the appellant of being heard and after verifying the genuineness of the purchase of 4.99 lakhs and also the correctness of the other expenditure claimed. The assessment is set aside with these directions." Even with regard to the asst. year 1992-93, the following direction is given : "In my opinion, the Assessing Officer erred in disallowing the entire expenditure without any basis whatsoever. He is directed to allow from the gross income, expenditure to the tune of Rs. 74,173 as claimed in the P L A/c. However, he should re-examine the correctness of the claim of the writes off of the balance to the tune of Rs. 1,49,065. To this limited extent, the issue is restored to the Assessing Officer." 14. Having observed that the learned CIT(Appeals) had given several directions already quoted above, we cannot agree with the contention that the learned CIT(Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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