1973 (4) TMI 7 - SC - Income Tax

Return was submitted to an Income-tax Officer who had no jurisdiction territorial or otherwise over the assessee - Consequently notice issued by him and the returns filed in response were invalid. The fresh notice by the second officer and the assessments by him were therefore valid

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer, Central Circle, to issue notices under Section 34 of the Indian Income-tax Act, 1922.
2. Validity of the notices issued by the Income-tax Officer, Ajmer, under Section 34.
3. Competence of the Income-tax Officer, Central Circle, to initiate fresh proceedings under Section 34(1A).

Detailed Analysis:

1. Jurisdiction of the Income-tax Officer, Central Circle:
The primary issue was whether the Income-tax Officer, Central Circle, had the jurisdiction to issue notices under Section 34 of the Indian Income-tax Act, 1922. The assessee contended that the place of assessment should be where the assessee carried on business, which was Jaipur. The Income-tax Officer, Central Circle, rejected this objection, stating that the case had been transferred under Section 5(7A) of the Act for better investigation and proper assessments. The Appellate Assistant Commissioner upheld this, noting that the Central Board of Revenue had the authority to assign specific classes of assessees or assessments to any Income-tax Officer of its choice.

2. Validity of the Notices Issued by the Income-tax Officer, Ajmer:
The assessee argued that since the Income-tax Officer, Ajmer, had already issued notices under Section 34 and the assessee had submitted returns in response, the Income-tax Officer, Central Circle, was incompetent to initiate fresh proceedings. However, the Appellate Assistant Commissioner observed that the Income-tax Officer, Ajmer, was not empowered to issue notices for the pre-integration period, making those proceedings invalid. The Tribunal initially accepted the assessee's contention but the High Court later ruled in favor of the department, stating that the Income-tax Officer, Ajmer, had no jurisdiction over the assessee for the relevant assessment years.

3. Competence of the Income-tax Officer, Central Circle, to Initiate Fresh Proceedings:
The High Court addressed whether fresh action under Section 34(1A) could be initiated by the Income-tax Officer, Central Circle, when a return was already pending before the Income-tax Officer, Ajmer. The High Court ruled in favor of the department, noting that the Income-tax Officer, Ajmer, had no jurisdiction over the assessee for the assessment years in question, thus invalidating the notices issued by him. Consequently, the Income-tax Officer, Central Circle, was competent to issue fresh notices under Section 34(1A).

Conclusion:
The Supreme Court upheld the High Court's judgment, agreeing that the Income-tax Officer, Ajmer, had no jurisdiction over the assessee for the relevant assessment years, making the notices issued by him invalid. Therefore, the Income-tax Officer, Central Circle, was competent to initiate fresh proceedings under Section 34(1A). The appeals were dismissed with costs.