TMI Blog1979 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereas the assessment of the partner was completed two days later, that is, on August 22, 1962. The ITO, "A" Ward, Jodhpur, initiated proceedings for the imposition of penalty against both the assessees the firm as well as the partner, for the late filing of returns of income by them. They raised preliminary objection to the proceedings for the levy of penalty, inter alia, on the ground that the notice under s. 22(2) of the Act was not valid inasmuch as the ITO, " D " Ward, Jodhpur, who had issued the notices had no jurisdiction over the place of business of the assessees. The ITO by his orders dated August 12, 1968, overruled the contentions raised by the assessees and imposed penalties of Rs. 11,949.25 on the firm and Rs. 9,964.77 on the partner. The assessees then preferred appeals against the orders passed by the ITO, " A " Ward, Jodhpur, before the AAC, who allowed the same by his orders dated January 4, 1965, and set aside the penalties imposed by the ITO holding that the notices issued by the ITO, " D " Ward, Jodhpur, under s. 22(2) of the Act were not valid. The department then preferred appeals to the Tribunal, which by a common order dated April 13, 1967, in both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, and which have been mentioned in the order of the ITO, dated August 12, 1964, may also be usefully mentioned here. The ITO has observed that the notice under s. 22(2) for the assessment year 1956-57 was issued by the ITO, 'A' Ward, jodhpur, on June 5, 1956, but the return was filed on March 14, 1958, by the assessee in 'D' Ward, jodhpur, after giving the address of Mohanpura Mohalla. On receipt of the return, the ITO, 'D' Ward, Jodhpur, issued a notice under s. 22(2) for the assessment year 1957-58 on March 18, 1958, and the return was filed before the ITO, 'D' Ward, Jodhpur, on February 24, 1959. Similarly, for the subsequent two years 1958-59 and 1959-60, notices under s. 22(2) were issued by the ITO, 'D' Ward, Jodhpur, but the returns were filed by the assessees before the ITO, 'A' Ward, Jodhpur. The ITO has also noted that the assessee had filed applications for registration and renewal of registration under s. 26A in the case of the firm, M/s. Indra Company, in 'D' Ward, jodhpur, on June 20, 1959, for the relevant assessment year. Mr. M. M. Vyas, learned counsel for the assessees, has urged that the ITO, 'D' Ward, jodhpur, had no jurisdiction to issue notices under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is determined, the assessee shall have had an opportunity of representing his views: Provided further that the place of assessment shall not be called in question by an assessee if he has made a return in response to the notice under sub-section (1) of section 22 and has stated therein the principal place wherein he carries on his business, profession or vocation or if he has not made such a return shall not be called in question after the expiry of the time allowed by the notice under sub-section (2) of section 22 or under section 34 for the making of a return: Provided further that if 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 subsection before assessment is made. (4) Notwithstanding anything contained in this section, every Income-tax Officer shall have all the powers conferred by or under this Act on an Income-tax Officer in respect of any income, profits or gains accruing or arising or received within the area for which he is appointed. (5) The provisions of sub-section (1) and sub-section (2) shall not apply and shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reading of the section shows that the same is imperative in terms. It also gives to the assessee a valuable right. He is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business. In Bidi Supply Co. v. Union of India [1956] 29 ITR 717 (SC), after having reproduced the above extracted passages from Dayaldas Kushiram's case [1940] 8 ITR 139 (Bom), their Lordships observed " ...that the learned judges treated the provisions of s. 64 more as question of right than as a matter of convenience only. It was for the above decision that the Indian Income-tax Act, 1922, was amended by the Indian I.T. (Amend.) Act, 1940 (XL of 1940), by adding to clause (b) of sub-s. (5) of section 64 the words 'in consequence of, any transfer made under sub-s. (7A) to s. 5 '.... ... The court went on to observe that (p.722): " It is thus clear from this amendment that the benefit conferred by the provisions of sub-ss. (1) and (2) are taken away and is to be deemed not to have existed at any time as regards the assessee with regard to whom a transfer order is made under sub-s. (7A) of s. 5 " In Seth Teomal v. CIT [1959] 36 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 8 ITR 139 (Bom), their Lordships held thus : " As a result of this judgment, Ordinance IX of 1939 was promulgated which subsequently was enacted as sub-s. (5) of s. 64 ". After the Ordinance the assessee, Dayaldas, was assessed by the same officer and the matter was again brought before the High Court by an application under s. 66(1) of the Act and it was held : " that the assessment of the assessee was validly made by the ITO and the Ordinance removed the invalidity of the orders made prior to the passing of the Ordinance so far as they related to the assessee ". Learned counsel for the assessees has placed strong reliance on the judgment of this court in CIT v. Industrial Trust Ltd. [1969] 74 ITR 385, and has submitted that the decision of this court was upheld by the Supreme Court in Industrial Trust Ltd. v. CIT[1973] 91 ITR 550. In that case the appellant-company was incorporated in the then Native State of Jaipur with its headquarters in Jaipur. For the assessment years 1946-47, 1947-48 and 1949-50 the ITO, Ajmer, issued notices under s. 34(1)(a) of the Act and in response thereto the appellant-company filed their returns. Pending those returns, the ITO, Central Circle I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invalid. Moreover, at no stage before the authorities under the Act, the assessee had put forward the case that any ITO, other than the ITO, Ajmer, or the ITO, Central Circle, had jurisdiction over it in respect of the assessment years in question. It may be noted that it was on account of lack of authority to assess, that the ITO, Ajmer, was held to have no jurisdiction over the assessee in respect of the assessment years in question. The further argument, on behalf of the assessee, Was, whether the ITO, Ajmer, had jurisdiction or not, since he had issued notices and the assessee had submitted its returns in response to those notices, the ITO, Central Circle, was not competent to initiate the assessment proceedings against the assessee. This argument was repelled by the court. Thus, the facts in the Industrial Trust Ltd.'s case [1973] 91 ITR 550 (SC), are altogether different and the principle laid down therein has no application to the facts and circumstances of the present case. Thus, from the above authorities, it is clear that the place of assessment cannot be called in question by an assessee, if he has not made return after the expiry of the time allowed by the notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued under s. 5(6). A question may be raised by an assessee, as has been done in the present case, whether he is liable to be assessed by an ITO specified in sub-s. (1) or sub-s. (3). That would clearly be a question as to the place, of assessment and it would have to be determined in accordance with the procedure set out in sub-s. (3), provided an objection is raised by the assessee. It is, therefore, clear that there is no real difference between a question as to the place of assessment and a question as to which particular ITO has territorial jurisdiction to assess the assessee. The objection raised in the present case, though styled as an objection to the jurisdiction of the ITO, was, therefore, in reality and substance, an objection as to the place of assessment and being covered by sub-s. (3) of s. 64, it could not be raised beyond the time-limit prescribed by that sub-section. At this stage, we may deal with another branch of argument of the learned counsel for the assessee, and it is this that in a case of inherent lack of jurisdiction of an authority, the objection regarding jurisdiction can be raised at any stage, as an order by such authority has to be treated as non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment, in an appeal against the assessment, after the assessment has been made. The same view was followed by this court in Udaipur Distillery Company v. CIT [1973] 87 ITR 516 (Raj), Rajasthan Industrial and Scientific Corporation v. Addl. CIT [1975] Tax LR 791 (Raj) and Gajanand Phoolchand v. ITO [1976] Tax LR 48 (Raj). Following the view taken in Wallace Brothers Co. Ltd. v. CIT [1945] 13 ITR 39 (FC) and Sarupchand and Hukamchand v. Union of India [1953] 23 ITR 382 (MB) [FB] the contention of the petitioner that the assessment is bad as the ITO did not follow the procedure laid down in s. 64(3), was repelled. Learned counsel for the assessee urged that, in any case, the issue of notice under s. 22(2) of the Act is not a part of " assessment " and in the penalty proceedings, the assessee is not debarred from raising an objection as to the jurisdiction of the ITO, 'D' Ward, jodhpur, to issue a notice. In this connection, he has urged that the word " assessment " should be construed to mean the computation of income and not issue of a notice under s. 22(2) of the Act. He has also argued that penalty proceedings are altogether separate and, therefore, the objection as to the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings and does not mark their initiation. In Bisheshwar Nath and Co., In re [1942] 10 ITR 103 (All), it was held that the combined effect of sub-ss. (1) and (4) of s. 64 is that, where two or more ITOs have territorial jurisdiction in respect of the same income, they exercise concurrent jurisdiction in the matter of issuing notices to the assessee and where notices have been issued by one officer it is unnecessary for the other officer to issue the same notices again. In support of his contention, learned counsel for the assessee has also relied upon M. Ramasamy Asari v. ITO [1964] 51 ITR 57 (Mad). However, the facts of the case are completely distinguishable and the rationale of that decision has no application to the facts and circumstances of the present case. Lastly, we may refer to another Division Bench authority of our own court: Firm Rasulji Buxji Kathawala v. CIT [1957] 32 ITR 592 (Raj), which seems to be rather near to the facts of this case. In that case, the assessee-firm was carrying on business at Udaipur. The ITO, Ajmer, served a notice on the assessee under s. 34 of the Act, calling upon him to make a return of his income for assessment year 1945-46. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants to object to his assessment at a particular place, he must do so within a very limited time. If he fails to do so within that limited time, he would not be heard to object to the place of assessment." Learned counsel for the revenue urged that so far as the partner, Jeewan Lal, is concerned, notice under s. 22(2) was issued to him by the ITO, A-Ward, also and hence this objection is not open to him at all. But we do not propose to go into this question inasmuch as the Tribunal has not dealt with this point nor it falls within the purview of the question referred to us. The result of the foregoing discussion is that it cannot be said that the ITO, 'D' Ward, Jodhpur, had inherent lack of jurisdiction in issuing notices under s. 22(2) of the Act to the assessees and the notices issued by him cannot be said to be void. The objection as to jurisdiction of the ITO, 'D' Ward, to issue notices under s. 22(2) was, in fact and substance, an objection pertaining to the place of assessment. Consequently, on the facts and in the circumstances of the case, the Tribunal was justified in holding that what the assessee meant by raising the plea of lack of jurisdiction of the ITO, 'D' Ward, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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