JURISDICTION OF INCOME TAX AUTHORITIES

[Mr. M. GOVINDARAJAN]

Part B of Chapter XIII of Income Tax Act, 1961 (‘Act’ for short) (from Section 120 to 130A) deals with the jurisdiction of income tax authorities.   The Sections 121, 121A, 122, 123, 125, 125A, 126, 128, 130A have already been omitted.  The other sections deal with the following matters-

• Section 120 - Jurisdiction of income tax authorities;
• Section 124 - Jurisdiction of Assessing Officers;
• Section 127 - Power to transfer cases;
• Section 129 - Change of incumbent to an office;
• Section 130 - Faceless jurisdiction of income tax authorities.

Jurisdiction of income tax authorities

Section 120 of the Act provides that the income tax authorities shall exercise all or any of the powers conferred on them assigned to them by the provisions of the Act or by the directions issued by the Board.  It the Authority higher in rank is directed to perform the duties of the lower authorities the said authority is to perform the functions of the lower authorities. 

The Board may authorize the income tax authorities to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subor­dinate to it. While issuing such orders the following are to be taken into consideration-

• territorial area;
• persons or classes of persons;
• incomes or classes of income; and
• cases or classes of cases.

The Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made there under by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.

Jurisdiction of assessing officer

Section 124 (1) provides that by virtue of any direction or order issued the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction-

• in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the princi­pal place of his business or profession is situate within the area, and
•  in respect of any other person residing within the area.

The question as to whether the Assessing Officer has jurisdiction to assess any person shall be determined by the Principal Director General or Director General or the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner. 

The following persons are not eligible to question the jurisdiction of the income tax authorities-

• where he has made a return under section 115WD (1) or  under section 139 (1) , after the expiry of 1 month from the date on which he was served with a notice under section 142 (1) or  section 115WE (2) or  section 143(2) or after the completion of the assessment, whichever is earlier;
•  where he has made no such return, after the expiry of the time allowed by the notice under section 115WD (2) or section 142(1) or under section 115WH (1) or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judg­ment of the Assessing Officer, whichever is earlier.
• where an action has been taken under section 132 or section 132A, after the expiry of 1 month from the date on which he was served with a notice under section 153A(1) or section 153C(2) or after the completion of the assessment, whichever is earlier.

Every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued.

In ADARSH DEVELOPERS VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (1) , NATIONAL FACELESS ASSESSMENT CENTRE REP. BY ADDITIONAL/JOINT/ DEPUTY/ADDITIONAL COMMISSIONER 0F INCOME-TAX/ INCOME-TAX OFFICER NEW DELHI - 2024 (1) TMI 425 - KARNATAKA HIGH COURT, it was held that Where a return is filed under Section 115WD[1] or under Section 139(1), an Assessee cannot call in question the jurisdiction of the Assessing Officer after the expiry of 1 month from the date on which the assessee is served with notice under Section 143(2) or 143(1) or 115WE(2) and after the completion of assessment but on the condition that the earlier of the two will apply. The provisions of Section 124(1) relate to the territorial jurisdiction and determination of the questions relating to territorial jurisdiction when raised within the time limit under Section 124(3) by the officers mentioned in Section 124(2) The provisions of Section 124 stipulate that when an assessee calls in question the jurisdiction of the Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under Section 124(2).

Power to transfer cases

Section 127 of the Act provides that the Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case  from one or more Assessing Officers subordinate to him (with or without concurrent jurisdiction) to any other Assessing Officer or  Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.  No such opportunity is to be given where the transfer is from any Assessing Officer or  Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Offi­cer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place.

The transfer of a case may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or  Assessing Officers from whom the case is transferred.

In VEDANTA RESOURCES LTD. VERSUS THE ASST. COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, BHUBANESWAR AND ANOTHER - 2023 (2) TMI 531 - ORISSA HIGH COURT, the High Court held that Section 127 (2) indicates that it envisages transfer of cases of an Assessee to an Assessing Officer not subordinate to the same Commissioner, who originally exercises jurisdiction over the Assessee. In the present case, it is Commissioner of Income Tax (IT)-1, New Delhi who would have to pass orders transferring jurisdiction of the cases of VRL to O.P. No.1 in Bhubaneswar. The latter is not subordinate to the Commissioner of Income Tax  (IT)-1, New Delhi, but to his counterpart in Kolkata. In such event under section 127(2)(a), no such transfer of jurisdiction can take place without affording the Assessee a reasonable opportunity of being heard in the matter.

Change of incumbent of an office

Section 129 of the Act provides that whenever in respect of any proceeding an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor.  In such cases the assessee shall be given a reasonable opportunity of being heard before passing order by the successor.

In ANTONY ALPHONSE KEVIN ALPHONSE VERSUS THE INCOME TAX OFFICER, NON-CORPORATE WARD-4 (1) INCOME TAX OFFICE, COIMBATORE - 2023 (12) TMI 219 - MADRAS HIGH COURT, it was held that even assuming that the impugned order is passed by an incumbent Officer, who continued the proceedings in the place of earlier Assessing Officer and even the earlier Assessing Officer, who existed before the incumbent Officer has not issued any notice for personal hearing after the petitioner's filed reply. Therefore, the contention of the Department that the petitioner has failed to make a use of the opportunity granted under Section 129 of the Act, as he has not sought for an opportunity of rehearing is untenable and it would only means to putting the cart before horse.

Faceless jurisdiction

Section 130 of the Act gives powers to the Central Government to make a scheme under sections 120, 124, 127 or 129 to impart greater efficiency, transparency and accountability, by notification in the Official gazette.  The same may be achieved by-

• eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible;
• optimizing utilization of the resources through economies of scale and functional specialization;
• introducing a team-based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases, with dynamic jurisdiction.

The Board issued notifications defining the jurisdiction of Assessing Officer, Commissioner (Appeals) etc. and the procedures involved in faceless assessment.