1963 (3) TMI 81 - HC - Income Tax

Issues Involved:
1. Jurisdiction of Income-tax Officer (ITO) to issue notices under Section 34 of the Indian Income-tax Act, 1922.
2. Validity of the transfer of assessment proceedings under Section 5(7A) of the Act.
3. Legality of fresh notices under Section 34 of the Act of 1922 and Section 148 of the Income-tax Act, 1961.
4. Role of the Central Board of Revenue in transferring cases and the implications of such transfers.
5. Authority of courts to interfere in matters of place of assessment under Article 226 of the Constitution.

Detailed Analysis:

1. Jurisdiction of Income-tax Officer (ITO) to Issue Notices:
The petitioner argued that the ITO, Sangli, lacked jurisdiction to issue notices under Section 34 of the Act of 1922, as jurisdiction for the assessment years 1946-47 and 1947-48 rested with the ITO, Central Circle IV, New Delhi, by virtue of a notification issued by the Central Board of Revenue under Section 5(6) of the Act of 1922. The court found that the ITO, Sangli, had no jurisdiction to issue such notices, rendering the subsequent assessments by the ITO, Bombay, invalid.

2. Validity of the Transfer of Assessment Proceedings:
The court examined whether the order of transfer made by the Central Board of Revenue on 15th November, 1955, under Section 5(7A) had the effect of validly transferring the proceedings pending before the ITO, Sangli. The court concluded that the transfer order did cover all pending proceedings, including those for the years 1946-47 and 1947-48. The explanation to Section 5(7A) clarified that all proceedings under the Act pending on the date of transfer would be included.

3. Legality of Fresh Notices:
The petitioner contended that once the ITO, Bombay, completed the assessments, no fresh notices could be issued under Section 34 of the Act of 1922 or Section 148 of the Act of 1961. The court, however, determined that since the ITO, Sangli, lacked jurisdiction to issue the original notices, the assessments by the ITO, Bombay, were invalid. Consequently, fresh notices could be issued by the ITO, Central Circle IV, New Delhi, who had the proper jurisdiction.

4. Role of the Central Board of Revenue:
The court analyzed the powers of the Central Board of Revenue under Section 5(7A) and Section 5(6) of the Act of 1922. It was found that the Central Board of Revenue had the authority to transfer cases and that the specific transfer order on 15th November, 1955, included all proceedings related to the petitioner. The court emphasized that the specific must prevail over the general, and the Central Board of Revenue's order was presumed to be made with full awareness of previous notifications.

5. Authority of Courts to Interfere:
The court referenced the Division Bench decision in U.C. Rekhi v. Income-tax Officer, New Delhi, which held that the place of assessment is to be decided by the Income-tax Commissioner and not by the courts. The court reiterated that under Section 64 of the Act of 1922, the determination of the place of assessment was within the purview of the income-tax authorities and not subject to judicial review under Article 226 of the Constitution.

Conclusion:
The court dismissed the petition, holding that the ITO, Sangli, had no jurisdiction to issue the notices under Section 34 of the Act of 1922, rendering the subsequent assessments by the ITO, Bombay, invalid. The Central Board of Revenue's transfer order on 15th November, 1955, validly transferred all pending proceedings, including those for the years 1946-47 and 1947-48. Fresh notices could be issued by the ITO, Central Circle IV, New Delhi, who had the proper jurisdiction. The court also emphasized that the determination of the place of assessment is a matter for the income-tax authorities, not the courts. Each party was ordered to bear their own costs.

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