2005 (5) TMI 232 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Director of IT (Inv.), New Delhi to issue a warrant of authorization under Section 132A of the IT Act, 1961.
2. Validity of the assessment order dated October 26, 1999, under Section 158BC read with Section 143(3) of the IT Act, 1961.
3. Charging of interest under Section 158BFA of the IT Act, 1961.
4. Legality and jurisdiction of the assessment made against the appellant.

Detailed Analysis:

1. Jurisdiction of the Director of IT (Inv.), New Delhi:
The appellant argued that the Director of IT (Inv.), New Delhi, lacked the jurisdiction to issue a warrant of authorization under Section 132A on October 17, 1997, as the jurisdiction over the appellant, who was in Uttar Pradesh (UP), lay with the Director of IT (Inv.), Kanpur. The Tribunal referred to Notification No. S.O. 703(E) dated September 6, 1989, which clearly demarcated the territorial jurisdiction of various Directors of IT (Inv.). According to the notification, the jurisdiction over UP was vested with the Director of IT (Inv.), Kanpur, and not with the Director of IT (Inv.), New Delhi. Consequently, the warrant of requisition issued by the Director of IT (Inv.), New Delhi, was held to be illegal and bad in law for want of jurisdiction.

2. Validity of the Assessment Order dated October 26, 1999:
The appellant contended that the notice issued under Section 158BC was invalid as it required the return to be filed "within 15 days" instead of "not less than 15 days" as mandated by the statute. The Tribunal examined the notice and observed that the terms "within 15 days" and "not being less than 15 days" are legally distinct. The former implies a period ending at the click of the last minute of the last day, while the latter specifies a period starting after the expiry of the mentioned days. The notice issued to the appellant was thus found to be invalid and bad in law for not complying with the statutory requirement of allowing a period of "not less than 15 days."

3. Charging of Interest under Section 158BFA:
The Tribunal did not specifically address the issue of charging interest under Section 158BFA in detail, as the primary grounds for quashing the assessment were based on jurisdiction and the validity of the notice under Section 158BC.

4. Legality and Jurisdiction of the Assessment:
Given the findings on the jurisdiction of the Director of IT (Inv.), New Delhi, and the invalidity of the notice under Section 158BC, the Tribunal held that all subsequent proceedings, including the assessment order dated October 26, 1999, were illegal and void ab initio. The assessment was quashed on the grounds of being without jurisdiction and in violation of statutory requirements.

Conclusion:
The Tribunal quashed the block assessment for the period April 1, 1987, to October 17, 1997, as it was found to be illegal and void ab initio due to the lack of jurisdiction of the Director of IT (Inv.), New Delhi, and the invalidity of the notice issued under Section 158BC. The appellant's appeal was allowed, and the assessment order was annulled.