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TMI Blog2018 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ida to Income-Tax Officer, Ward-58 (2), Delhi required an order u/s 127 is fallacious and without merit - since Income-Tax Officer, Ward-1 (1), Noida accepted the request/prayer of the petitioner and had transferred pending proceeding to the Assessing Officer, Ward-58 (2), Delhi, therefore there was no need to invoke and follow the procedure mentioned u/s 127(2) - Section 127 of the Act would come into play when the case is to be transferred from the Assessing Officer having jurisdiction to a third officer not having jurisdiction over an assessee u/s 120 - thus Income-Tax Officer Ward 1(1), Noida would not per se lack jurisdiction, albeit he had concurrent jurisdiction with the Income-Tax Officer Ward 36(1)/58, Delhi. In the facts of the present case the contention raised about the lack of jurisdiction would not justify quashing the notice under Section 147 /148 of the Act - petition is dismissed. - WRIT PETITION (CIVIL) No. 11844/2016 - - - Dated:- 1-6-2018 - Mr. Sanjiv Khanna And Mr. Chander Shekhar, J.J. Mr. Arvind Kumar And Mr. Harsh Vardhan Sharma, Advocates- For the Petitioner Mr. Ashok K. Manchandani, Sr. Standing Counsel- For the Respondent JUDGEMENT : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his permanent address was FF-50, 3rd floor, Laxmi Nagar New Delhi-110092. The petitioner had not mentioned his Permanent Account Number (PAN Number). As per Know Your Customer Certification, the petitioner's address was A-32, Sector-5, Noida. Account Opening Form along with the particulars and details mentioned therein are not disputed. The petitioner also does not dispute that the account belongs to him. 6. As per the respondents, the aforesaid details were examined and thereupon notices under Section 133(6) dated 16th August, 2015 and 11th January, 2016 were issued by registered/speed post by the Income-tax Officer, Ward No.1(1) to the petitioner at A-32, Sector-5 Noida and third notice dated 14th December, 2015 was issued to the petitioner at the second address at FF-50, 3rd floor, Laxmi Nagar New Delhi-110092. Income-Tax Inspector had visited the Laxmi Nagar address with the notice dated 14th December, 2015 but the petitioner could not be located and the notice was thereupon affixed. 7. Income-Tax Officer Ward No.1 (1), Noida did not receive any response and reply to the above notices. 8. Left with no option, Income-Tax Officer Ward No.1(1), Noida after recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that copy of the postal receipts have not been placed on record and that notice dated 11th January, 2016 was wrongly addressed to Abhishek Jaina, 32, Sector-5 Noida, instead of Abhishek Jain, A-32, Sector-5 Noida. 13. We would recapitulate the facts in brief. (i) Petitioner accepts that the savings account in ICICI Bank, Sector 27, Noida, U.P. with communication address as A-32, Sector-5, Noida-201301 i.e. factory, where the petitioner works belongs to him. Petitioner had furnished a copy employee identity card and a letter from the employer confirming the Noida address. KYC form records the address of the petitioner as A-32, Sector-5, Noida. (ii) Petitioner has not given his Permanent Account Number or updated his permanent address in the bank account. (iii) Petitioner has not specifically challenged and disputed cash deposits of ₹ 12,18,609/- in the savings bank account in the period relevant to the assessment year 2009-10. This Information regarding cash deposits was mentioned in the 'Annual Information Return', filed by the ICICI Bank. (iv) As the address of the petitioner mentioned in the bank account was located in Noida, Income-Tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued fresh notice under Section 148 of the Act. 15. Contention of the petitioner predicated on lack of jurisdiction of the Income-Tax Officer Ward No.1(1), Noida on first glance appears to have strength, but on thoughtful consideration the contention must be rejected and should fail in view of the statutory provisions and peculiar facts of this case. On the legal position, we would like to refer to the decision dated 14th March, 2014 of the Delhi High Court authored by one of us (myself) in Income-Tax Appeal No. 255/2002, Commissioner of Income-tax Delhi-XVI Vs. S.S. Ahluwalia . However, we begin by reproducing Section 120 and Section 124 of the Act which read: 120. (1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. [Explanation. -For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply. (6) Notwithstanding anything contained in any direction or order issued under this section, or in section 124, 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 thereunder 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.] 124. Jurisdiction of Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, 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 under sub-section (1) or sub-section (2) of section 120. 16. Section 120 of the Act which relates to jurisdiction of the Income-tax Authorities stipulates that Income-tax Authorities shall exercise any of the powers and perform all or any of the functions conferred or assigned to such authority by or under this Act as per the directions of the Board i.e., Central Board of Direct Taxes. As per Explanation to sub-section (1), the power can also be exercised, if directed by the Board, by authorities higher in rank. Under sub-section (2), the Board can issue orders in writing for exercise of power and performance of functions by the Income-tax Authorities and while doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being the basis. Sub-section (2) stipulates that question/ dispute of jurisdiction among two or more Assessing Officers, if raised, shall be determined by the Director- General, Chief Commissioner or the Commissioner, or if the question relates to areas falling within the jurisdiction of different Directors- General, Chief Commissioners or Commissioners, then by the Directors- General, Chief Commissioners or Commissioners concerned, and if they are not in agreement, by the Board or by such Director-General, Chief Commissioner or Commissioner that the Board may by an Official Gazette specify. Subsection (3) further stipulates that the objection to the jurisdiction could be questioned by an assessee or a person within one month from the date on which return of income under Section 139(1) was made or within one month from the date of issuance of notice under Section 142(1) or 143(2) or after completion of assessment, whichever was earlier. If no return of income was made, objection to the jurisdiction could be entertained, if made within the time allowed by way of notice under Section 115WD (2)/142(1)/115WH (1)/148 of the Act to make the return or by notice under first proviso to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstanding the challenge within stipulated time, it could be corrected by way of writ jurisdiction. The position is no different under the Act i.e. Income Tax Act 1961, as was elucidated by a Division Bench of this Court in Kanji Mal Sons vs. C.I.T. (1982) 138 ITR 391 (Del), wherein reference to said two decisions was made and it was observed that if the assessee fails to raise objection before the Income Tax Officer within the time, he will be shut out from raising the question altogether. Further, if the issue was raised and decided by the Commissioner, the decision would be final and cannot be questioned in the appellate forums but where the Income Tax Officer does not refer the question to the Commissioner, the following proposition emerges: But where he raises the issue but the ITO does not refer the question to the CIT as in the present case (or the CIT or the Board does not decide the question before the assessment is completed) what will be the result of such failure? Clearly, one answer to the question would be that this failure should not be held to vitiate the assessment altogether and that it should be open to the appellate authority to set aside the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute. The statute does not say that such a direction cannot be issued by the appellate authority in a case of this nature. In interpreting s. 25A (1), we cannot also be oblivious to cases where there is a possibility of claims of partition being made almost at the end of the period within which assessments can be completed making it impossible for the ITO to hold an inquiry as required by s. 25A (1) of the Act by following the procedure prescribed therefor. We, however, do not propose to express any opinion on the consequence that may ensue in a case where the claim of partition is made at a very late stage where it may not be reasonably possible at all to complete the inquiry before the last date before which the assessment must be completed. In the instant case, however, since it is not established that the claim was a belated one, the proper o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible that, in appeal, it is open to the AAC or the Tribunal to set aside the assessment and direct a fresh assessment after following the procedure mentioned in s.124(4) (6) provided such a direction does not prejudice or affect the right of the assessee to challenge the reassessment as not being in accordance with any other provision of the Act. It is, however, not necessary to decide this question as the view of the Tribunal seems to be that such an assessment would be invalid and this matter is not in issue before us. 35. The said issue directly arises before us in the present appeals and it is time we give affirmative approval to the aforesaid principle as the question has been raised by the Commissioner. Reasons for the same are mentioned by the Division Bench of this Court in Kanji Mal s case (supra) and is also apparent and clear to us. Sub-section (4) and (6) of Section 124 and for that matter sub-section (2) and (4) of Section 124 after amendment w.e.f. 1st April, 1988 are procedural sections. They relate to administration and exercise of powers/authority by the Assessing Officers/Income Tax Officers and are not part of the substantive law. That the Act i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round which could have the effect of rendering the court entirely lacking in jurisdiction in respect of the subject matter of the suit or over the parties to it. 37. The view we have taken, finds support from the decision of the Patna High Court in MahalliramRamniranjan Das vs. CIT (1985) 156 ITR 885, wherein the decision of Delhi High Court in Kanji Mal Son s case (supra) was referred to. Reference was also made to the decision of the Supreme Court in Guduthur Bros. vs. ITO (1960) 40 ITR 298 (SC), and the matter was remanded to the authority to continue with the proceedings from the stage irregularity had occurred. It was observed that the tribunal was not right in annulling the assessment. It would be also appropriate here to refer to the decision in Hindustan Transport Co. vs. Inspecting Asstt. Commissioner of Income Tax and Anr. (1991) 189 ITR 326 of the Allahabad High Court-Lucknow Bench, wherein it has been observed as under:- A survey of the above provisions of the Act highlights the following situations. After creating the various Income Tax authorities, the Act does not prescribe their respective jurisdiction or functions. Any case can be deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture. From the above provisions of the Act, it is apparent that the Act does not treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first question, therefore, is that the power is administrative and procedural and is to be exercised in the interest of exigencies of tax collection and the answer to the second question is that, under the Act, a defect arising from allocation of functions is a mere irregularity which does not affect the resultant action. 38. In Commissioner of Income Tax vs. ShivkumarAgrawal (1990) 186 ITR 734 (Orissa), it was held that imposition of penalty by the Assistant Commissioner in view of the amendment was without jurisdiction in light of an earlier judgment but there was no dispute about validity of initiation of the said proceedings. Once proceedings were validly initiated but disposed of by an officer having no jurisdiction, the proceedings do not come to an end but should be finalized by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 120, 124 and 127 of the Act, it was observed in S.S. Ahluwalia (Supra) :- (13) The provisions indicate that Sections120, 124 and 127 of the Act recognizes flexibility and choice, both with the assessee and the authorities i.e. the Assessing Office before whom return of income could be filed and assessment could be made. The Assessing Officer within whose area an assessee was carrying on business, resided or otherwise income had accrued or arisen (in the last case, subject to the limitation noticed above) has jurisdiction. Similarly, the Assessing Officer also has authority due to class of income or nature and type of business. The Act, therefore, recognized multiple or concurrent jurisdictions. Provisions of Section124 ensure and prevent two assessments by different assessing officers, having or enforcing concurrent jurisdiction. There cannot be and the Act does not envisage two assessments for the same year by different officers. (Reassessment order can be by a different officer). 19. We would reiterate that sub-section (1) to Section 124 states that the Assessing Officer would have jurisdiction over the area in terms of any direction or order issued under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer by Income-Tax Officer, Ward-1(1), Noida to Income-Tax Officer, Ward-58 (2), Delhi required an order under Section 127 of the Act is fallacious and without merit. Section 127 relates to transfer of case from one Assessing Officer having jurisdiction to another Assessing Officer, who is otherwise not having jurisdiction as per directions of the Board under Section 120 and Section 124 of the Act. Under sub-section (1), transfer order under Section 127 can be passed by the Director General, Chief Commissioner or Commissioners from one Assessing Officer to another Assessing Officer subordinated to them. Sub-section (2) applies where the Assessing Officer to whom the case is to be transferred is not subordinated to the same Director General, Chief Commissioner or Commissioners of the Assessing Officer from whom the case is to be transferred. This is not a case of a transfer under Section 127 of the Act. This is a case in which the assessee had raised an objection stating that the Income-Tax Officer, Ward-1 (1), Noida should not continue with the assessment as the petitioner-assessee was regularly filing returns with the Income-Tax Officer, Ward-58 (2), Delhi. Objection as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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