1973 (5) TMI 17 - HC - Income Tax

Transfer of case jurisdiction of Income-tax Officer - (i) Whether as a matter of fact and in law the Income-tax Officer Special Circle Ranchi had jurisdiction or not ? (ii) If he had jurisdiction whether the assessee s belief that he had no jurisdiction and his (assessee s) failure to file the return because of that erroneous belief was a sufficient cause for non-compliance with his obligation to file a return even after service of notice under section 22(2) read with section 34 of the Act ?

Summary

Issues Involved:
1. Competency and timeliness of the appeal filed before the Tribunal.
2. Legality and validity of the assessment by the Income-tax Officer, Special Circle, Ranchi.

Detailed Analysis:

1. Competency and Timeliness of the Appeal:
The first question addresses whether the appeal filed before the Tribunal was competent and within time. The court found in favor of the assessee, noting that the Tribunal had the authority to accept the filing of the correct order of the Income-tax Officer, Hazaribagh, even after the time limit fixed for filing the appeal under rule 10(2) of the Appellate Tribunal Rules, 1946. The Tribunal correctly accepted the correct copy of the Income-tax Officer's order and condoned the delay, thereby deeming the appeal to have been filed in time and competent.

2. Legality and Validity of the Assessment by the Income-tax Officer, Special Circle, Ranchi:
The second question is bifurcated into two parts:

(i) Jurisdiction of the Income-tax Officer, Special Circle, Ranchi:
The court concluded that the Tribunal's decision on this point was erroneous in law. The Supreme Court's quashing of the Central Board of Revenue's order dated August 18, 1952, revived the previous position, where the assessee was under the jurisdiction of the Income-tax Officer, Special Circle, Ranchi, by virtue of the order dated April 21, 1951. The court emphasized that there was no need for a fresh order to transfer the case back to Ranchi, as the Supreme Court's decision merely nullified the Central Board of Revenue's order without affecting the earlier order by the Commissioner. The court referenced a similar decision in "Raja Bahadur Kamakshya Narain Singh v. Income-tax Officer," which supported this interpretation. Therefore, the first part of question No. 2 was answered against the assessee and in favor of the department.

(ii) Sufficient Cause for Non-Compliance:
The court found that the Tribunal erred in law by accepting the assessee's belief that he was not amenable to the jurisdiction of the Ranchi Income-tax Officer as a sufficient cause for not filing the return. The court highlighted that the notice under section 22(2) read with section 34 of the Act was served on the assessee, and thus, he could not justifiably claim ignorance of the Ranchi Income-tax Officer's jurisdiction. The court held that this belief did not constitute a sufficient cause under section 27 of the Act.

The court also addressed the argument that satisfying the Income-tax Officer regarding compliance with the notice under section 22(4) alone was sufficient for reopening the assessment. The court rejected this argument, stating that both defaults (failure to make the return and failure to comply with the notice under section 22(4)) needed to be addressed. The court referenced the decision in "Chiranjilal Tibrewala v. Commissioner of Income-tax," which supported this view.

Conclusion:
The first question was answered in favor of the assessee, affirming the competency and timeliness of the appeal. The second question was answered in favor of the Commissioner of Income-tax, validating the jurisdiction of the Income-tax Officer, Special Circle, Ranchi, and rejecting the assessee's claim of sufficient cause for non-compliance. There was no order as to costs for this reference.