2000 (4) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Competency, authority, or jurisdiction of the respondents to make requisition or enquiry.
2. Validity of the notice issued by the Assistant Commissioner of Income-tax (TDS).
3. Interpretation of the term "Assessing Officer" and the scope of their powers.
4. Concurrent jurisdiction and hierarchy of tax authorities.

Summary:

1. Competency, Authority, or Jurisdiction of the Respondents:
The petitioners challenged the competency, authority, or jurisdiction of the respondents to make requisition or enquiry relating to the returns filed u/s 206 of the Income-tax Act, 1961, read with rule 37 of the Income-tax Rules, 1962. The petitioners contended that the Assistant Commissioner of Income-tax (TDS), Circle 21(2), Calcutta, had no jurisdiction over the income-tax assessment of the petitioner-company, which was under the jurisdiction of the Joint Commissioner of Income-tax, Special Range-4, Calcutta.

2. Validity of the Notice Issued by the Assistant Commissioner of Income-tax (TDS):
The petitioner-company received a notice dated March 9, 2000, from the Assistant Commissioner of Income-tax (TDS), Circle 21(2), Calcutta, which was challenged on the grounds of jurisdiction. The court found that the notice was issued on verification of the annual return Form No. 26C for the financial year 1998-99, and the enquiry was made only in respect of short deduction of tax at source. The court declared the notice invalid, stating that respondent No. 1 had no competence, authority, or jurisdiction to issue the impugned notice.

3. Interpretation of the Term "Assessing Officer" and the Scope of Their Powers:
The court analyzed the definition of "Assessing Officer" u/s 2(7A) of the Income-tax Act, which includes the Assistant Commissioner or Income-tax Officer vested with relevant jurisdiction. The court noted that the Assistant Commissioner (TDS) and the Joint Commissioner have concurrent powers. However, the court emphasized that the Assistant Commissioner (TDS) was designated for specific purposes u/s 206 read with rule 36A and was not empowered to act as an Assessing Officer for the overall assessment of the petitioner-company.

4. Concurrent Jurisdiction and Hierarchy of Tax Authorities:
The court discussed the principle of concurrent jurisdiction, stating that it cannot be construed as allowing a subordinate authority to encroach upon the jurisdiction of a superior authority. The court highlighted that the notification dated September 15, 1999, vested the Assistant Commissioner (TDS) with extensive powers, including assessment, which could lead to excessive delegation of power. The court directed the Chief Commissioner of Income-tax, Calcutta, to modify the notification to clarify the hierarchy and jurisdiction of tax authorities.

Conclusion:
The court quashed the impugned notice dated March 9, 2000, and directed the Chief Commissioner of Income-tax, Calcutta, to issue a modified notification within one month to prevent confusion regarding the jurisdiction of tax authorities. The writ petition was disposed of with no order as to costs.