2013 (2) TMI 173 - HC - Income Tax

Assessee is a NRI - filed return for the assessment year 2007-08 on July 31, 2007 at Jalandhar - Notice dated September 17, 2008, was issued under section 143(2) of the Act by the Assistant Commissioner of Income-tax, Jalandhar, - Thereafter, he was served with a notice along with a questionnaire calling for further information, which was followed by notice dated November 24, 2009, by the Director of Income-tax (International Taxation), Chandigarh. - vide notification dated September 28, 2007, under section 120 of the Act, the Central Board of Direct Taxes authorized the officers specified therein to exercise powers of Assessing Officers and other authorities- contention raised in the writ petition is that - In spite of the said notification, power has been exercised by respondent No. 2, i.e., Joint Commissioner of Income-tax (International Taxation) Further assessee contended that notice dated September 17, 2008 under section 143(2) is barred by limitation. Held that - Under section 143(2) of the Act, limitation for issuing notice was 12 months from the end of the month in which the return was filed. In the present case, return was filed on July 31, 2007, and limitation for issuance of notice under section 143(2) of the Act was up to July 31, 2008. However, by virtue of amendment by the Finance Act, 2008, with effect from April 1, 2008, limitation stood extended up to six months from the end of the financial year in which the return was furnished, i.e., up to September 30 2008. It is well settled that a statute of limitation is a procedural statute and is applicable to pending proceedings. However, limitation law is prospective as it does not revive an action which may have become time barred on the date of enforcement of the changed law nor the changed law extinguishes a subsequent cause of action Even though the order under section 143(1) of the Act was after notification dated September 28, 2007, under section 120 of the Act, the said order cannot be held to be nullity. It is well settled that objection as to territorial jurisdiction has to be raised at the earliest and is otherwise deemed to have been waived. On the same analogy, notice under section 143(2) cannot be held to be void for want of jurisdiction. Reference may be made not only to section 21 of the Code of Civil Procedure but also to section 124(3) of the Act- The Chandigarh authority while issuing notice under section 142(1) of the Act, was acting in continuation of the notice already issued by the adjudicating authority. This being the factual position, the plea of lack of territorial jurisdiction did not vitiate notice under section 143(2) of the Act. No prejudice is shown to have been caused to the assessee. The effect of notification under section 120 of the Act is to transfer jurisdiction to Chandigarh but in the absence of prejudice to the assessee, proceedings which took place at Jalandhar prior to actual transfer of record, i.e., October 29, 2009, could not be held to be nullity Against the assessee.

Summary

Issues Involved:
1. Whether the notice dated September 17, 2008, is barred by limitation and its effect.
2. Whether the notice dated September 17, 2008, is without jurisdiction.
3. What is the effect of the notification dated September 28, 2007, transferring jurisdiction from Jalandhar to Chandigarh.

Issue-wise Detailed Analysis:

Re: (i) Whether the notice dated September 17, 2008, is barred by limitation and its effect:

The petitioner argued that the notice under section 143(2) of the Income-tax Act, 1961, was barred by limitation, relying on various judgments. The court, however, held that under the amended provision of section 143(2)(ii) of the Act, the limitation for issuing notice was extended to six months from the end of the financial year in which the return was filed. Since the return was filed on July 31, 2007, the limitation extended up to September 30, 2008. The notice issued on September 17, 2008, was within this period. The court cited established principles that statutes of limitation are procedural and apply to pending proceedings. The judgments cited by the petitioner did not contradict this principle. Therefore, the court concluded that the notice was not barred by limitation and decided this issue against the assessee.

Re: (ii) Whether the notice dated September 17, 2008, is without jurisdiction:

The petitioner contended that the notice was issued without proper jurisdiction, as the notification dated September 28, 2007, transferred jurisdiction from Jalandhar to Chandigarh. The court noted that despite this notification, the petitioner did not object to the jurisdiction when the order under section 143(1) was passed on February 7, 2008. The petitioner even filed an application under section 154 at Jalandhar. The court emphasized that objections to territorial jurisdiction must be raised at the earliest opportunity, and failure to do so constitutes a waiver. The court referred to section 21 of the Code of Civil Procedure and section 124(3) of the Act, which support this view. The court also cited the Supreme Court's judgment in Kiran Singh v. Chaman Paswan, which held that objections to territorial jurisdiction are technical and must show prejudice to be considered. Since the petitioner did not raise the jurisdictional objection timely and no prejudice was shown, the court decided this issue against the assessee.

Re: (iii) What is the effect of the notification dated September 28, 2007, transferring jurisdiction from Jalandhar to Chandigarh:

The court held that the notification under section 120 of the Act did transfer jurisdiction to Chandigarh. However, since the actual transfer of records occurred on October 29, 2009, actions taken at Jalandhar prior to this date could not be deemed nullities in the absence of any shown prejudice to the assessee. Therefore, the proceedings at Jalandhar before the transfer were valid.

Conclusion:

The court dismissed the writ petitions, holding that the notice dated September 17, 2008, was neither barred by limitation nor issued without jurisdiction. The notification transferring jurisdiction did not invalidate prior proceedings at Jalandhar.