2016 (3) TMI 543 - HC - Income Tax

Challenge to the authority of ITO to issue notices under Section 148 - Held that - An additional twist is sought to be given by the department in suggesting that the ITO, Ward-46(1) may not have been the person entitled to receive the returns from the petitioning assessee, but that such officer exercised the authority of an assessing officer over the petitioning assessee in view of the petitioning assessee having filed the original returns with such officer. According to the department, the appropriate assessing officer of the petitioning assessee ought to have been the assessing officer whose duties have now been assigned to the ITO, Ward-46(1) under the notification of October 22, 2014 which became effective on November 15, 2014. However, such aspect of the matter is not gone into since such reason is not expressly or otherwise indicated in the impugned letter of August 17, 2015. If the reasons indicated in a relevant order suffice for such purpose, it would be wholly unnecessary to supplement the order with additional reasons which did not occur to the authority rendering the decision in the first place. Since it is evident that the petitioning assessee was precluded by Section 124(3)(b) of the Act from questioning the authority of the assessing officer who had issued the notices under Section 148 of the Act dated March 27, 2015 to the petitioning assessee on April 29, 2015, the contents of the letters dated April 29, 2015 and the objection as to jurisdiction contained therein had been rightly disregarded by the ITO, Ward-46(1), Kolkata.

Summary

Issues:
Challenge to the authority of the Income Tax Officer under Section 148 of the Income Tax Act, 1961.

Analysis:
The petitioners contested the letter issued by the Income Tax Officer, questioning the officer's authority to issue notices under Section 148 of the Income Tax Act. The petitioning assessee accepted the jurisdiction of the Income Tax Officer, Ward-46(1), Kolkata before a Central Board of Direct Taxes notification on October 22, 2014. The petitioners argued that post the notification, jurisdiction should have been with ITO Ward-22(2), Kolkata. The notices under Section 148 dated March 27, 2015, required the assessee to file returns within 30 days. The petitioners received the notices on the same day, making the deadline April 28, 2015. Section 124(3)(b) allows challenging jurisdiction before the return deadline. The petitioners raised objections through letters on April 29, 2015. An earlier order directed the ITO to respond to these objections.

The concerned ITO cited Section 124(3) to counter the objections, stating the assessee couldn't question authority post receiving notices. The petitioners argued that since the appropriate ITO was different post the notification, Section 124(3) didn't apply. However, failing to question the jurisdiction within the stipulated time barred the petitioners from challenging the authority later. The delay in responding to the notice extinguished the right to question authority. The jurisdictional challenge was based on perceived irregularities post the CBDT notification. The department suggested that although another ITO might be entitled to receive returns, the issuing officer had the authority as the assessing officer due to the original returns filed with them. The impugned letter didn't address this aspect.

The court found that the petitioning assessee was precluded from challenging the authority of the assessing officer issuing the notices under Section 148 due to Section 124(3)(b). Hence, the objections raised in the letters dated April 29, 2015 were rightly disregarded. Consequently, the petition was dismissed, allowing the department to proceed legally. No costs were awarded, and parties could obtain certified copies of the order if needed.