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TMI Blog2005 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... de. X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective operation of a legislation conferring jurisdiction. By reason of such legislation neither the jurisdiction, which was already there could be taken away with retrospective effect nor the jurisdiction could be created with retrospective effect. Therefore, the default having been committed before May 8, 1989, the jurisdiction remains with the officer before whom the return was submitted and it could not be taken away by the said circular or by creation of separate ward. According to him, the pending cases could not be transferred except by express provisions in the statute. Mr. Agarwal has also pointed out that this question of jurisdiction was taken for the first time before the learned Tribunal and was never taken either before the Assessing Officer or the Commissioner (Appeals). Therefore, this point can no more be agitated. Mr. Agarwal had referred to several decisions to support his contention with regard to the mandatory nature of the liability to pay interest under section 201(1A) as well as in relation to the question of jurisdiction. We shall be referring to those decisions at the appropriate stage. Points replied: In reply Dr. Pal referred to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 issued by the Board will not help us to hold that the interest provided under section 201(1A) would be equally non-mandatory. Having regard to the expression used in section 201(1A), it appears that in the case of default either to deduct tax or to deposit the tax after deduction, the principal officer shall be liable to pay simple interest at 12% per annum on the amount of such tax from the date on which such tax is deductible to the date on which such tax is actually paid. Section 201 provides for consequences of failure to deduct or pay tax deducted at source. Sub-section (1) makes the person responsible to deduct a deemed assessee in default on account of failure to deduct in respect of cases referred to in section 194. By reason of sub-section (1), the assessee in default is exposed to penalty unless good and sufficient reasons are shown to the satisfaction of the Assessing Officer to defend such failure and such penalty imposed under section 221, thus, appears to be discretionary dependent upon good and sufficient reasons to the satisfaction of the Assessing Officer. Whereas sub-section (1A) provides for interest without prejudice to sub-section (1); it makes an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the liability accrues and continues until the amount is actually paid voluntarily or non-voluntarily pursuant to or through recovery proceedings. The actual payment of tax is relevant only for the purpose of determining the period up to which a defaulting person would be liable to pay interest under that section. This decision, however, was sought to be distinguished by Dr. Pal. The decision was concerned with the question where the assessee contended that it was not liable to pay tax since it did not deduct the tax at all and it had deposited the tax immediately after the tax was deducted. In that context, this decision having been rendered, this is distinguishable and would not apply in the present situation. There seems to be no distinction as was sought to be advanced. Inasmuch as in case the liability to pay tax accrues if the deduction is not made, in that event, interest cannot be avoided in a case where tax was not deducted on the date the tax was deductible till the date it was deducted and deposited. Dr. Pal relied upon the decision in State v. Amru Tulsi Ram, AIR 1957 Punj 55 in order to interpret the meaning of the expression "liable" occurring in sub-section (1A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge of tax liability to the date of issuance of a demand notice and the period of 30 days from the date of the demand, would not alter the nature of the said liability. However, Dr. Pal submitted that this decision in Vikrant Tyres Ltd. [1993] 202 ITR 454 (Karn) was reversed by the apex court in Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821. But this decision was reversed altogether on a different context, namely, on the question of demand notice on the facts that the amount was paid as demanded within the time stipulated in the notice, therefore, in such a situation, on a literal meaning of section 220(2), the Department had no right to demand interest for the period commencing from the date of refund of the tax upon the appellate order till the taxes were finally paid after disposal of the reference. This decision was rendered in the context of default in relation to section 220, which contemplated payment of tax within a particular time on the service of the demand notice where the liability accrues on demand and not otherwise. Therefore, this reversal of the decision will not be an answer to the question with which we are now concerned, though, however, we may apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culty. As pointed out by Dr. Pal, it is an admitted proposition that no jurisdiction can be conferred by default or by agreement and a decision without jurisdiction is a nullity. This defect of jurisdiction can be pecuniary or territorial and is incurable as was held in Kiran Singh v. Chaman Paswan, AIR 1954 SC 340. The court passing a decree without jurisdiction is a defect, which cannot be cured and the decree passed is a nullity. It was so held in Balvant N. Viswamitra v. Yadav Sadashiv Mule [2004] 8 SCC 706 and in CIT v. Pearl Mech. Engg. and Foundry Works (P.) Ltd. [2004] 267 ITR 1 (SC). In order to appreciate the situation in the present case, we may quote the notification in annexure E dated April 10, 1989 at pages 117-118: "Notification No. S.O. 1436, dated April 10, 1989 In exercise of the powers conferred under sub-sections (1) and (2) of section 120 of the Income-tax Act, 1961, and all other powers enabling me in this behalf, I, the Chief Commissioner of Income-tax (Administration), Calcutta, hereby create a new Range viz., Range 21, under the jurisdiction and administrative control of the Commissioner of Income-tax, West Bengal VII, Calcutta. I also create six new wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and 221, in respect of all the assessees who were or would come under the jurisdiction of a particular officer at the time of creation or thereafter was vested to the jurisdiction of the officer of the ward newly created. The expressions "who are" or "would come" include all assessees whose cases are pending or who would have come or used to come would also come under the new jurisdiction apart from those who are within such jurisdiction. The expression is clear enough to mean that this jurisdiction was prospective but all matters would be prospectively dealt with from the stage as it stood on the particular date, namely, May 8, 1989. The creation of new range and ward does not appear to be retrospective. It also does not provide that the matters pending would be transmitted to the newly created range or pending proceedings would stand transferred with the creation of the new jurisdiction. Unless there are express provisions in the statute, there is no scope for effecting transfer of pending proceedings to the newly created jurisdiction. However, Mr. Agarwal sought to rely upon the decision in Sait Bansilal and Rangisetti Veeranna v. CIT [1972] 83 ITR 750 (AP) to contend that u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transfer since there was no order of transfer, therefore, the officer before whom the proceeding was initiated would continue to exercise jurisdiction. This decision also on the same analogy does not help Mr. Agarwal. The principle applied: Assessment years 1983-84, 1934-85, 1986-87 and 1987-88: In this case, so far as the assessments relating to the financial years 1982-83, 1983-84, 1985-86 and 1986-87 corresponding to the assessment years 1983-84, 1984-85, 1986-87 and 1987-88 were all initiated as against the assessee, admittedly, after May 8, 1989. Therefore, the Assessing Officer having territorial jurisdiction in respect of the regular assessment of the assessee could not assume jurisdiction after May 8, 1989, in respect of the matters covered under Chapter XVII-B. Thus, the orders in relation to those assessment years involved in the appeal except the assessment year 1985-86 corresponding to financial year 1984-85 cannot be sustained being without jurisdiction and a nullity. The assessment year 1985-86: So far as the assessment in respect of the financial year 1984-85 corresponding to the assessment year 1985-86 is concerned, it appears that this decision was taken o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e within such jurisdiction and the present assessee being one of them come within one of the wards under Income-tax Range 21, Calcutta, with effect from May 8, 1989, no proceeding under section 201(1A) could be initiated against the assessee after May 8, 1989. It was not a case of a proceeding pending before the erstwhile authorities, but a proceeding initiated after the creation of the new range and ward. The jurisdiction is not dependent on the date of accrual of the cause of action but on the date when it is initiated. It is the existence of the jurisdiction on the date of initiation of the proceeding, which is material. As such the proceedings against the present assessee in relation to the assessment years 1983-84, 1984-85, 1986-87 and 1987-88 having been initiated against the assessee, admittedly, after May 8, 1989, by the Assessing Officer having territorial jurisdiction in respect of the regular assessment of the assessee were without jurisdiction. Therefore, the orders passed by such Assessing Officer are without jurisdiction and a nullity and are liable to be set aside. The proceeding in relation to the assessment year 1985-86 having been initiated and concluded before M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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