2008 (4) TMI 313 - HC - Income Tax

Search and Seizure Special Jurisdiction by Notification - Even though appellant was an assessee before the Income Tax Officer, Ward II, Alleppey, file was sent to the Assistant Commissioner of Income Tax, Investigation circle, Kottayam for completing the block assessment pursuant to search under Section 158BC HC observed that this is not a case of transfer of file u/s 127 validity of assessment upheld.

Summary

Issues:
Jurisdiction of the assessing officer to complete block assessment under Section 158BC of the Income-tax Act.
Validity of transferring the assessment file from one officer to another under Section 127(1) of the Act.
Requirement of fresh notification for conferring jurisdiction under Section 158BD after the introduction of block assessment in Chapter XIV-B of the Act.

Jurisdiction of the assessing officer under Section 158BC:
The appellant, a financier, challenged the jurisdiction of the Assistant Commissioner of Income tax, Investigation Circle at Kottayam to complete the block assessment under Section 158BC. The appellant argued that no hearing was provided before transferring the file, and objections regarding inconvenience were ignored. However, the court found that the Commissioner of Income tax had issued a notification under Section 120 of the Act, conferring exclusive jurisdiction on the Assistant Commissioner at Kottayam for assessment of search cases from various districts, including Alleppey where the appellant's file was transferred. The court concluded that the Assistant Commissioner had the jurisdiction to make the assessment based on the notification.

Validity of transferring the assessment file under Section 127(1) of the Act:
The court determined that the transfer of the assessment file from the Income-tax Officer at Alleppey to the Assistant Commissioner at Kottayam was not a typical transfer as envisioned under Section 127 of the Act. It was clarified that the Officer at Alleppey lost jurisdiction to complete the block assessment under Section 158BC after the search, and the file was simply conveyed to the Assistant Commissioner at Kottayam, who had exclusive jurisdiction as per the notification. Since there was only one designated assessing officer for such cases from Alleppey District, the court found no violation in the transfer process and upheld the assessment made by the Assistant Commissioner.

Requirement of fresh notification for conferring jurisdiction under Section 158BD:
The court distinguished a case from the Andhra Pradesh High Court concerning Section 158BD, stating that it required a fresh notification for jurisdiction after the introduction of block assessment. However, in the present case under Section 158BC, the court held that the 1991 notification by the Commissioner of Income tax applied to all assessment cases after search, including block assessments. The court affirmed the Tribunal's decision to dismiss the appellant's jurisdictional objection and upheld the validity of the assessment conducted by the Assistant Commissioner at Kottayam. The court found no merit in the appellant's argument regarding the consideration of jurisdictional objections by the assessing officer and the Commissioner, as the Tribunal had already addressed and validated the assessment process.

In conclusion, the court dismissed the appeal, affirming the jurisdiction of the Assistant Commissioner at Kottayam to complete the block assessment under Section 158BC based on the notification issued by the Commissioner of Income tax.