TMI Blog1977 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... she stated to be a partner of M/s, Jain Commercial Corporation at Jorhat, which had come into existence since the assessment year 1960-61. It was disclosed in the return by the petitioner that she was one of the partners of the aforesaid firm and that she had invested in it Rs. 28,500 on April 2, 1959, in the books of the said firm as her capital. The I.T.O., Jorhat, issued a notice under section 143(2) of the Act and a questionnaire was also issued to her. In compliance of the said notice, her authorised advocate, Shri P. L. Haritwall, appeared. The petitioner submitted answers in writing to the questionnaire, by her letter dated February 27, 1965. In the letter she, inter alia, stated that she was "in Assam since 1959 " (answer No. 4); that previously she was a partner of M/s. Pin Metal Industry, Calcutta, which was closed down in 2010 (answer No. 6); that she was "assessed at Calcutta from the assessment years 1952-53 to 1959-60" (answer No. 14). The petitioner stated that she was an existing assessee of the Income-tax Officer, Special Survey Circle IV, Calcutta (hereinafter referred to as the " I.T.O., Calcutta "), under the general index register No. 161-J/E. It was also st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jorhat. It was contended on behalf of the revenue before the Tribunal that while the assessee filed her voluntary returns before the I.T.O., Calcutta, on August 18, 1959, the order of assessment was made on December 28, 1960, for the assessment years 1952-53 to 1959-60; that the I.T.O. fixed August 25, 1959, for the production of the accounts and completed the assessment on the same date; that it was mentioned in the order sheet that the assessee had no bank accounts, nor any proper account books; and that the assessments were made on figures ranging from Rs. 3,878 to Rs. 5,779 for the assessment years 1952-53 to 1959-60. It was also urged that the Calcutta I.T.O. issued a notice under section 22(2) on June 1, 1960, fixing November 3, 1960, when the case was adjourned till November 29, 1960, at the request of the assessee and a further adjournment was made as the earlier order was not complied with by the assessee, and that ultimately, the I.T.O., Calcutta, made an order of assessment on December 28, 1960, under section 23(4). It was further urged on behalf of the revenue that the assessee had stated before the I.T.O., Jorhat, that she had closed down her Calcutta business and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession is 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. (4) Where a question arises under this section as to whether an Income-tax Officer has jurisdiction to assess any person, the question shall be determined by the Commissioner; or where the question is one relating to areas within the jurisdiction of different Commissioners, by the Commissioners concerned or, if they are not in agreement, by the Board. (5) No person shall be entitled to call in question the jurisdiction of an Income-tax Officer- (a) after the expiry of one month from the date on which he has made a return under sub-section (1) of section 139 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section (2) of section 139 or under section 148 for the making of the return. (6) Subject to the provisions of sub-section (5) where an assessee calls in question the jurisdiction of an Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the court. The scheme of the Act does not contemplate an objection as to the place of assessment being raised in appeal against the assessment after the assessment has been made. The fact that the Appellate Tribunal nevertheless thought fit to allow the question as to the place of assessment to be raised and even included it in the reference to the High Court under section 66 of the Act, cannot alter the position and the question cannot be allowed to be raised before the Federal Court in appeal against the decision of the High Court on the reference under section 66 of the Act." (Emphasis added). It has already been mentioned that no objection as to the lack of jurisdiction, territorial or otherwise, appears to have been raised before the I.T.O., Jorhat. The order of the I.T.O. does not show that any such objection was raised, either in writing or orally, by her counsel who appeared before the I.T.O. at the time of hearing. In paragraph 3 of the petition before us, however, it has been alleged by the petitioner: " In course of hearing assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner could not bring to our notice any document to show that any objection as to jurisdiction was raised before the I.T.O, Jorhat. The plea of filing the return before him through "mistake" appears to be an after thought. No reliance on the averments of the petitioner that objection as to jurisdiction was raised before the I.T.O. at Jorhat can be placed. The plea is worthless. An affidavit-in-opposition was filed on behalf of I.T.O., Jorhat, and respondent No. 3 (the Commissioner of Income-tax, Assam, Nagaland, Manipur, Meghalaya Tripura, Shillong). True it is that the averment in paragraph 3 of the petition has not been expressly denied in the counter-affidavit. The deponent is one Shri Sunil Kumar Dutta, Income-tax Officer, "A" Ward, Tinsukia. In the affidavit he has stated that he is the I.T.O. at Tinsukia and that now the petitioner falls within his jurisdiction. He was not the I.T.O. at Jorhat in 1960. Naturally, therefore, it was not possible for him to know whether the alleged objection was raised before the I.T.O, Jorhat, in 1960 unless it was disclosed by records. The only persons who were supposed to know whether or not such an objection was raised, were the then I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or had no jurisdiction is dependent on the question whether the I.T.O., Calcutta, had or had no jurisdiction. The submission of learned counsel for the assessee that once an order of assessment for a particular year has been made by the I.T.O., Calcutta, the I.T.O., Jorhat, has no jurisdiction to make the assessment for the same year, is based on the assumption that the I.T.O., Calcutta, had jurisdiction. In order that a second assessment may be invalid the first assessment must be valid. In the instant case, the finding is that the assessment order alleged to have been passed by the I.T.O., Calcutta, was "got passed" ; in other words, the order of the Calcutta I.T.O. has been found to be suspicious and collusive. This is a finding of fact. If that be so, it was an invalid order. Counsel for the petitioner submitted that unless an invalid order is set aside, it is a good order, and in support of his contention he has cited Commissioner of Income-tax v. Bidhu Bhusan Sarkar [1967] 63 ITR 278 (SC). The facts of that case have no bearing on the case in hand. As between a valid and an invalid order, the former supersedes the latter. That apart, the petitioner is not entitled to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rule is discharged. There will be no order as to costs. D. PATHAK J.-I agree with the opinion expressed and the conclusion reached by my learned brother, Islam J. SADANANDASWAMY J.-The Division Bench which heard this writ petition in the first instance was of the opinion that it involves an important question of law and, therefore, requires to be heard by a larger Bench. Hence, this writ petition has been referred to this Bench. In this writ petition the petitioner has prayed for the issue of a writ in the nature of certiorari quashing the order of assessment dated March 24, 1965, passed by the Income-tax Officer, "A" Ward, Jorhat, for the assessment year 1960-61 and the notice of demand of the same date as well as for a writ of mandamus directing the respondents to refund the sum of Rs. 10,000 collected from the petitioner in pursuance of the said notice. According to the case of the petitioner, she is a resident of Tinsukia in the District of Lakhmipur. She was a partner in a partnership firm which carried on business at Calcutta and other places in Assam. She was an assessee within the jurisdiction of the Income-tax Officer, "B" Ward, Special Survey Circle IV, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made by the Income-tax Officer, Jorhat. Thereafter, the petitioner filed an appeal before the Income-tax Appellate Tribunal, Calcutta Bench, "C", Calcutta, against the order of the Appellate Assistant Commissioner. The appeal was rejected by the Income-tax Appellate Tribunal by its order dated November 24. 1969. It was of the view that the petitioner was residing at Jorhat in the relevant accounting period and as such the Income-tax Officer, Jorhat, had the jurisdiction to assess the petitioner. The petitioner filed an application before the Income-tax Appellate Tribunal requesting it to refer certain points of law arising out of its order to the High Court. That application was also rejected by the Income-tax Appellate Tribunal by its order dated May 23, 1970. In the course of the examination of the accounts of the firm, M/s. Jain Commercial Corporation, wherein the petitioner was a partner since the assessment year 1960-61, it was found that she had invested a sum of Rs. 28,500 on April 2, 1959, as her capital. The Income-tax Officer, Jorhat, asked the petitioner to prove the nature and source of the said amount. In reply, the petitioner stated, amongst other things ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was made on December 28, 1960, under section 23(4) by the Income-tax Officer, Calcutta. It was also urged by him before the Tribunal that the petitioner had closed down the business and had shifted to Jorhat and since there was no business at Calcutta the Income-tax Officer, Jorhat, was the competent officer to deal with the case of the petitioner on merits. The explanation offered by the petitioner was rightly rejected on merits by the Income-tax Officer, Jorhat. After a consideration of the abovesaid contentions urged by the parties, the Appellate Tribunal noticed that the assessments for the years 1952-53 to 1959-60 were completed by the Income-tax Officer, Calcutta, on a date subsequent to the date of deposit appearing in the books of M/s. Jain Commercial Corporation wherein the petitioner became a partner and that the petitioner stated in her reply before the Income-tax Officer, Jorhat, that she came back to Jorhat during the relevant accounting period. It, therefore, held that the Income-tax Officer, Jorhat, had the jurisdiction to assess the petitioner and that the petitioner herself having filed the return on July 29, 1964, she could not urge that the assessment is wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al times in 1947. The Income-tax Officer at Calcutta passed an order under section 23A of the Income-tax Act that the undistributed portion of the income of a company, in which the appellant was a shareholder, should be deemed to be distributed and as a result of this order an additional sum had to be included in the income of the appellant for the assessment year 1944-45. The Income-tax Officer, Delhi, upon information, issued a notice to the appellant under section 34 of the Income-tax Act to include the above sum as income which had escaped assessment and made a fresh assessment order against the appellant. The appellant contended that the Income-tax Officer at Lahore, and not the officer at Delhi, had jurisdiction to make the assessment under section 34. It was held by the Supreme Court that the place where an assessment or reassessment could be made under section 34 had to be decided under section 64. As the appellant did not carry on any business but was residing at Delhi he could be properly assessed by the Income-tax Officer, Delhi, under section 64(2) if the assessments were the original assessments and, therefore, no objection could be taken to his assessment under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection as to the place of assessment must be specific and that section 64(3) becomes operative only when a question as to the place of assessment arises. The decision in Wallace Brothers Co. Ltd. v. Commissioner of Income-tax [1945] 13 ITR 39 (FC) was followed. The statement by the assessee to the effect that the income which accrued to him in Madhya Bharat for the year 1949-50 could not be taxed under the Income-tax Act and that, therefore, he was not liable to pay tax, was held to be not an objection as to the place of assessment. Since the petitioner in the present case did not specifically object to the place of assessment but merely contended before the Income-tax Officer, Jorhat, that he had no authority to reassess the petitioner, it is urged that such a contention would not amount to an objection to the jurisdiction of the officer as contemplated under section 64 and that, therefore, an objection as to jurisdiction of the officer cannot be raised after the assessment. In Manilal Ramchand v. Commissioner of Income-tax [1964] 53 ITR 377 (Guj) the High Court of Gujarat has held that a mere negative objection asserting that the Income-tax Officer who seeks to assess the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . While considering the contentions of the appellant it was observed by the Supreme Court as follows ([1969] 72 ITR 197, 201 (SC): "He, however, submits that even if the return was not demanded, since the return for 1946-47 was filed by the appellant the Income-tax Officer was bound to consider that return according to law and to pass appropriate orders of assessment thereon and so long as he did not do so, he was incompetent to issue a notice of reassessment either under section 34 of the Income-tax Act of 1922, or section 148 of the Income-tax Act, 1961. We are unable to accept that contention. The Act does not provide for any machinery for dealing with voluntary returns filed by an assessee after assessment of income for the year of assessment is completed. Such a voluntary return does not operate as a bar to the Income-tax Officer issuing a notice of reassessment." The earlier decision of the Supreme Court in Commissioner of Income-tax v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC) was noticed wherein it was held that where no return has been filed by the assessee within the period prescribed by section 22(1) of the Indian Income-tax Act, 1922, the assessee is entitled in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the assessees as a firm and directed the Income-tax Officer to take necessary action. The Income-tax Officer accordingly assessed the firm to super-tax on May 4, 1929. By section 58, the provisions of the Act, with certain exceptions not material for the purpose of that case, were made applicable so far as may be to the charge, assessment, collection and recovery of super-tax. One of the questions which arose for decision in that case was whether the Income-tax Officer had power to make the order on 4th May, 1929, in view of the provisions of sections 34 and 35 of the Act. While considering the question whether the notice of demand can be made any time, it was observed as follows : " It had been argued on behalf of the appellant that the Act nowhere imposes any limit of time within which an assessment under the provisions of sections 23 and 29 is to be made, and that the service of the notice of demand can, therefore, be made at any time. This is true. It had, in effect, been so determined by this Board in the case of Rajendranath Mukerjee v. Commissioner of Income-tax [1934) 2 ITR 71 (PC). But it is not true that after a final assessment under those sections has been made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, not open to the Income-tax Officer, Calcutta (sic) to reopen the assessment and pass an order of assessment similar to the one passed by the Income-tax Officer, Jorhat (sic). The assessment under section 22 is the assessment of the total income of the assessee. Hence, it is deemed to include the whole of the income of the assessee wherever it may arise as the definition of "total income" in section 5 shows. Hence, the fact that the Income-tax Officer, Jorhat, assessed the income which arose at Jorhat and not at Calcutta, makes no difference to the effect of the order of assessment passed by the Income-tax Officer, Calcutta, earlier for the same assessment year. The bar to a reassessment after an order of assessment is not against the Income-tax Officer who passed the order of assessment only but the bar is against reassessment, irrespective of which Income-tax Officer passes the order of reassessment. The fact that the Income-tax Officer, Jorhat, made the subsequent order of assessment makes no difference to the position in law that a second assessment cannot be made once an assessment has been made for the same year under section 22, except under section 34 or 35. It als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to intervene. As long as the other order is not set aside, it remains in force and takes full effect. The order was not totally without jurisdiction; at best it was an order not contemplated by law and it could not be treated as a non-existent order." In the present case the order of the Income-tax Officer, Calcutta, cannot be ignored. It cannot be said that it is an order without jurisdiction. The Income-tax Appellate Tribunal has not expressed any opinion as to the validity or otherwise of the order passed by the Income-tax Officer, Calcutta. Hence, the Income-tax Officer, Jorhat, could only proceed to take action under the provisions of the Income-tax Act which was open to him on the basis that there was already an order of assessment under section 22 of the Act for the assessment year 1960-61. Therefore, the only course open to the Income-tax Officer, Jorhat, if he wanted to make a fresh assessment for the same year, was to proceed under section 34 or section 35 if the circumstances permitted him to do so as prescribed under those sections and also within the period prescribed under those sections. Hence, the order of the Income-tax Officer, Jorhat, was without jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute had been complied with and that even though the provisions of the statute have not been complied with, no injustice is done to the citizen if he is compelled to pay the tax to the State. The authorities under the Act have no power which is not specifically conferred on them by the Act. They cannot claim any power on the ground; that such power is not excluded specifically under the statute. What is not authorised under the Act is necessarily outside the powers conferred on them. The authorities under the Income-tax Act are empowered to levy tax in cases of escaped income under sections 34 and 35 of the 1922 Act and the corresponding provisions of the 1961 Act. But such power is to be exercised within the limitations prescribed under those provisions. It is the intention of the legislature to thus restrict the powers of the departmental authorities in cases of escaped income. The purpose of placing such restrictions is to protect bona fide assessees and to prevent roving investigations by the departmental authorities. It is urged on behalf of the respondents that the petitioner has suppressed material facts and did not disclose the income earned by her at Jorhat, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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