1981 (8) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income Tax Officer (ITO) to issue notices under Section 34 of the old Income Tax Act, 1922, and Section 148 of the new Income Tax Act, 1961.
2. Bar of limitation for reassessment for certain assessment years.
3. Validity of notices issued under Section 148 of the new Act when proceedings under Section 34 of the old Act were pending at the commencement of the new Act.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the ITO to Issue Notices:

The petitioners argued that the original assessment orders for the years 1946-47 to 1950-51 were made by the ITO, C-III Ward, Bombay, and no order was made by the Central Board of Revenue (CBR) transferring these cases to the Jodhpur ITO or the Jaipur ITO. Hence, the notices issued by the Jaipur ITO were without jurisdiction. The court clarified the distinction between "jurisdiction" and "venue" or "place of assessment." Jurisdiction is the legal authority to decide a case, while venue refers to the locality where the case should be heard. The court held that Sections 64 of the old Act and 124 of the new Act deal with venue and not jurisdiction. The Jodhpur ITO and Jaipur ITO, being appointed according to law, had the jurisdiction to issue notices under Section 34 of the old Act and Section 148 of the new Act, respectively, regardless of the original assessments made by the Bombay ITO. The court concluded that the Jodhpur ITO had jurisdiction to issue notices under Section 34 of the old Act even without an order under Section 5(7A) of the old Act.

2. Bar of Limitation for Reassessment:

The petitioners contended that reassessment for the years 1946-47 and 1947-48 was barred by limitation when the new Act came into force. The court did not delve deeply into this issue, as it was primarily concerned with the jurisdictional challenge to the notices.

3. Validity of Notices under Section 148 of the New Act:

The petitioners argued that since notices under Section 34 of the old Act were issued and proceedings were pending at the commencement of the new Act, the Jaipur ITO could not lawfully issue fresh notices under Section 148 of the new Act. The court examined Section 297 of the new Act, which deals with "repeals and savings." It held that if notices under Section 34 of the old Act were issued before the commencement of the new Act, the proceedings could continue as if the new Act had not been passed. Therefore, the notices under Section 148 of the new Act for the years 1946-47 to 1949-50 were invalid, as proceedings under Section 34 of the old Act were pending at the commencement of the new Act. However, for the assessment year 1950-51, no notice under Section 34 of the old Act was issued before the new Act commenced, making the notice under Section 148 of the new Act valid.

Additional Points:

The respondents argued that the petition should be dismissed due to the availability of an alternative remedy and the delay in filing the petition. The court noted that the delay was explained by the petitioners' pending settlement application and that jurisdictional defects could not be waived by delay.

Conclusion:

The court quashed the notices, Ex. H-1 to Ex. H-4, for the assessment years 1946-47 to 1949-50, due to the lack of jurisdiction of the Jaipur ITO to issue them under Section 148 of the new Act. The notice, Ex. H-5, for the assessment year 1950-51, was held valid, allowing the respondents to initiate reassessment proceedings based on it. The petition was partly allowed, with no order as to costs.