1979 (9) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued under Section 22(2) of the Indian Income Tax Act, 1922.
2. Jurisdiction of the Income Tax Officer (ITO) 'D' Ward, Jodhpur.
3. Distinction between place of assessment and jurisdiction.
4. Timeliness of raising objections regarding jurisdiction.
5. Applicability of Section 64 of the Income Tax Act.
6. Impact of procedural irregularities on penalty proceedings.

Detailed Analysis:

1. Validity of Notices Issued Under Section 22(2):
The assessee raised a preliminary objection that the notices issued under Section 22(2) by the ITO 'D' Ward, Jodhpur, were invalid as the officer had no jurisdiction over the place of business. The Tribunal found that the notices issued by the ITO 'D' Ward were valid and that the assessments were completed by the ITO 'A' Ward, who had proper jurisdiction.

2. Jurisdiction of the Income Tax Officer (ITO) 'D' Ward, Jodhpur:
The primary contention was whether the ITO 'D' Ward had the jurisdiction to issue notices under Section 22(2). The Tribunal held that the question of jurisdiction and the place of assessment are essentially the same and that the objection to the place of assessment must be raised early. The court supported this view, indicating that the ITO 'D' Ward did not have an inherent lack of jurisdiction.

3. Distinction Between Place of Assessment and Jurisdiction:
The court clarified that the terms 'place of assessment' and 'jurisdiction' are interchangeable in this context. The objection raised by the assessee regarding the jurisdiction of the ITO 'D' Ward was, in substance, an objection to the place of assessment. The court cited several precedents, including *Dhrangadhra Trading Co. P. Ltd. v. CIT* and *Nund & Samont Co. (P.) Ltd. v. CIT*, to support this interpretation.

4. Timeliness of Raising Objections Regarding Jurisdiction:
The court emphasized that objections to the place of assessment must be raised within the time allowed by the notice under Section 22(2). Since the assessees did not object within this timeframe, they were barred from raising this issue later. The court referenced *Firm Rasulji Buxji Kathawala v. CIT* to underscore that objections regarding the place of assessment must be timely.

5. Applicability of Section 64 of the Income Tax Act:
Section 64 outlines the rules for determining the place of assessment. The court discussed the relevant provisions, including the second proviso to sub-section (3), which bars an assessee from questioning the place of assessment if they have not raised the issue within the specified time. The court cited *Dayaldas Khushiram v. CIT* and *Bidi Supply Co. v. Union of India* to illustrate the legislative intent behind Section 64.

6. Impact of Procedural Irregularities on Penalty Proceedings:
The court addressed whether procedural irregularities, such as the issuance of notices by an officer without proper jurisdiction, could invalidate penalty proceedings. The court concluded that the issue of notices under Section 22(2) falls within the term "assessment," and since the assessees did not object timely, they could not raise this issue in penalty proceedings. The court referenced *Chatturam v. CIT* and *D. P. Wadia and Sons v. CIT* to support this view.

Conclusion:
The court concluded that the Tribunal was justified in holding that the objection regarding the jurisdiction of the ITO 'D' Ward was essentially an objection to the place of assessment. Since the assessees did not raise this objection within the allowed time, they were barred from doing so in penalty proceedings. The court answered the question in the affirmative, upholding the validity of the penalty proceedings initiated by the ITO 'A' Ward.