TMI Blog1988 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 (43 of 1961) (for short "the Act"), but he justifies the filing of the instant petition on the ground that the petitioner cannot raise the question of jurisdiction therein, a plea which is not disputed by learned counsel for the Income-tax Department ; according to him, the question cannot be raised even in the present proceedings. A few facts necessary for the disposal of the petition, may now be stated. For the assessment year in question, the petitioner filed his return showing an annual income of Rs. 82,749. The assessment proceedings were pending before respondent No. 1 who passed an order on February 25, 1988, under section 131(3) of the Act detaining certain books of account and documents for verification and another order on March 11, 1988, detaining certain vouchers under the same provision. The final order of assessment was passed, as stated earlier, on March 30, 1988, whereby the petitioner's income-tax was assessed at Rs. 15,05,580. Much prior to the passing of the earliest of the aforesaid three orders, the Central Board of Direct Taxes, New Delhi, for short "Board" passed an order dated December 31, 1987, under section 127 of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Act prescribing the income-tax authorities and their jurisdiction will require consideration. Chapter XIII of the Act contains the relevant information. Its main heading is "income-tax authorities". The Chapter is divided into four parts "A", "B", "C" and "D". These parts have the heading- "Appointment and Control", "Jurisdiction", "Powers" and "Disclosure of Information". Part "A" contains sections 116 to 119, Part "B" contains sections 120 to 130A, Part "C" contains sections 131 to 136 and Part "D" contains section 138, section 137 having been omitted with effect from April 1, 1964. Section 116 mentions the income-tax authorities. The authorities mentioned are (i) Central Board of Direct Taxes, (ii) Directors of Inspection, (iii) Commissioners of Income-tax, Commissioners of Income-tax (Appeals) and Additional Commissioners of Income-tax, (iv) Assistant Commissioners of Income-tax who may be either Appellate Assistant Commissioners of Income-tax or Inspecting Assistant Commissioners of Income-tax, (v) Income-tax Officers ; and, (vi) Inspectors of Income-tax. At the apex is the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red outside the "same city, locality or place". The proviso covers a situation where the offices of the transferee officers are situate in the same city, locality or place. In other words, it covers local transfers. In such transfers, neither is opportunity of hearing required to be given to the assessee nor are reasons required to be recorded. In the case on hand also, the transfer was local. We may now turn back to section 124 and consider two of its subsections, viz., (4) and (5). Under sub-section (4), a question relating to the jurisdiction of an Income-tax Officer is to be decided by the Commissioner and a question relating to the jurisdiction of Commissioners is to be decided by the concerned Commissioner or by the Board. Sub-section (5) provides the limit of time up to which objection on jurisdiction may be raised. Under clause (a), where the assessee has filed a return of income, the objection on jurisdiction must be raised within one month of the filing of the return or before the assessment is completed, whichever is earlier. Thus sub-section (5) places an embargo against raising of the plea of jurisdiction after the assessment has been completed. In the case in hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has; therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in section 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture. From the above provisions of the Act, it is apparent that the Act does not treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first question, therefore, is that the power is administrative and procedural and is to be exercised in the interest of exigencies of tax collection and the answer to the second question is that, under the Act, a defect arising from allocation of functions is a mere irregularity which does not affect the resultant action. In taking the above view, we are fortified by the decisions reported in Wallace Brothers and Co. Ltd. v. CIT [1945] 13 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the place of assessment is called in question by an assessee, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made" meaning thereby that no reference can be made after the assessment is completed. Taking note of the above scheme of the Act, their Lordships overruled the plea of jurisdiction raised in Wallace Brothers and Co. Ltd. [1945] 13 ITR 39, 45 ; AIR 1945 FC 9, by observing at page 13 as follows : "It however seems to us open to serious doubt whether the appellant is entitled to raise this question at all and whether it is really a matter for decision by the court. Clause (3) of section 64 provides that any question as to the place of assessment shall be determined by the Commissioner or by the Central Board of Revenue. The third proviso to the clause enacts that if the place of assessment is called in question by the assessee, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made. These provisions clearly indicate that the matter is more one of adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only having regard to the convenience of the assessee but also the exigencies of tax collection. In order to assess the tax payable by an assessee more conveniently and efficiently, it may be necessary to have him assessed by an Income-tax Officer of an, area other than the one in Which he resides or carries on business. It may be that the nature and volume of his business operations are such as require investigation into his affairs in a place other than the one where he resides or carries on business or that he is so connected with various other individuals or organizations in the way of his earning his income as to render such extraterritorial investigation necessary before he may be properly assessed. These are but instances of the various situations which may arise wherein it may be thought necessary by the income-tax authorities to transfer his case from the Income-tax Officer of the area in which he resides or carries on business to another Income-tax Officer, whether functioning in the same State or beyond it." (emphasis supplied). Again, in paragraph 23, (at pg 581 of 31 ITR) it is observed "The position, therefore, is that the determination of the question whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124. In respect of the parallel provisions of appeal or bar against raising the plea of jurisdiction after completion of assessment, their Lordships of the Federal Court have observed in the last sentence of the passage extracted above that "the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made." Interpreting the provisions of section 124(5) of the present Act, a Full Bench of the Gauhati High Court held in Sohani Devi Jain v. ITO [1977] 109 ITR 130; AIR 1978 Gauhati 19 that section 124 of the Act covers territorial jurisdiction as well as other kinds of jurisdiction and that an objection raised at the appellate stage as to the jurisdiction of the particular Income-tax Officer to assess the assessee is hit by sub-section (5) of section 124 of the Act. We are in respectful agreement with the view expressed in this case. Accordingly, the instant petition is not barred on account of the filing of appeal by the petitioner under section 246 of the Act. However, the petition will have to be dismissed, in view of the finding on merits recorded hereinabove. The petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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