1969 (1) TMI 13 - HC - Income Tax

Notices u/s 34(1)(A) - Assesment procedings against the company - returns filed before the ITO, were not valid returns as they are not filed before the competent ITO - therefore action could be taken against the company u/s 34(1)(a) by the ITO, by issuing a notice

Issues Involved:
1. Jurisdiction of Income-tax Officer, Central Circle IV, Delhi.
2. Validity of notices issued under section 34(1A) and 34(1)(a) of the Indian Income-tax Act, 1922.
3. Validity of return filed in response to notices by Income-tax Officer, Ajmer.
4. Competence of the Income-tax Officer, Ajmer, to issue notices.
5. Validity of assessment proceedings based on returns filed.

Issue-wise Detailed Analysis:

1. Jurisdiction of Income-tax Officer, Central Circle IV, Delhi:
The company contended that the Income-tax Officer, Central Circle IV, Delhi, lacked inherent jurisdiction to assess its pre-integration income. The Tribunal, however, decided this point in favor of the department, relying on section 42 of the Act and Entry No. 78A of Notification No. 49 I.T. dated 1st July, 1952, as amended by Notification No. 6, dated 24th January, 1955. The Tribunal concluded that the Income-tax Officer, Central Circle IV, Delhi, had the jurisdiction to issue notices and conduct assessments.

2. Validity of Notices Issued Under Section 34(1A) and 34(1)(a):
The company argued that the notices issued by the Income-tax Officer, Central Circle IV, Delhi, were invalid because it had already submitted returns in response to notices issued by the Income-tax Officer, Ajmer. The Tribunal, relying on the Supreme Court decision in Commissioner of Income-tax v. Ranchhoddas Karsondas and the Madras High Court decision in S. Raman Chettiar v. Commissioner of Income-tax, decided this point in favor of the company. However, the High Court found that the return filed before the Income-tax Officer, Ajmer, was not valid because the officer lacked jurisdiction. Therefore, the notices issued by the Income-tax Officer, Central Circle IV, Delhi, were deemed valid.

3. Validity of Return Filed in Response to Notices by Income-tax Officer, Ajmer:
The company filed returns under protest in response to notices from the Income-tax Officer, Ajmer. The High Court held that these returns were not valid because the Income-tax Officer, Ajmer, lacked jurisdiction. The court emphasized that a return must be filed before a competent Income-tax Officer to be considered valid. Since the returns were filed before an officer without jurisdiction, they were not valid, and the Income-tax Officer, Central Circle IV, Delhi, was justified in issuing fresh notices.

4. Competence of the Income-tax Officer, Ajmer, to Issue Notices:
The High Court examined whether the Income-tax Officer, Ajmer, had the jurisdiction to issue notices to the company under section 34 of the Act. It was found that the officer lacked jurisdiction as per Notification No. S.R.O. 1214 dated 1st July, 1952, which restricted the jurisdiction to pending assessments before the integration of Jaipur in the United State of Rajasthan, i.e., before 7th April, 1949. Since the notices were issued after this date, the officer lacked jurisdiction, rendering the notices invalid.

5. Validity of Assessment Proceedings Based on Returns Filed:
The High Court concluded that the returns filed before the Income-tax Officer, Ajmer, could not be considered valid for assessment purposes due to the officer's lack of jurisdiction. The court referenced the Supreme Court decision in Commissioner of Income-tax v. S. Raman Chettiar, which stated that a return must be filed within the time limit prescribed by section 34(3) and before a competent officer. Since the returns were not filed before a competent officer, they were invalid, and the Income-tax Officer, Central Circle IV, Delhi, was justified in initiating fresh proceedings under section 34(1)(a).

Final Judgment:
The High Court answered the referred questions in the affirmative, stating that the Income-tax Officer, Central Circle IV, Delhi, could validly take action under section 34(1)(a) of the Act. The writ petition filed by the company was dismissed with costs, and the department was awarded costs in Reference No. 27 of 1964. No order as to costs was made in the other references.

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