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TMI Blog1981 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... s petition, may be recapitulated here. Kanmal Nahta, who died on June 26, 1964, was an assessee within the jurisdiction of 3rd ITO, C-III Ward, Bombay, till the assessment year 1950-51. It appears he closed his business at Bombay and shifted his residence to Jodhpur some time in the year 1949. He was being assessed by the ITO, D-Ward, Jodhpur (hereafter called the " Jodhpur ITO "), till the assessment year 1957-58. In 1957, an additional ITO was posted to D-Ward, Jodhpur. Kanmal Nahta fell in the category of assessees who were transferred to the jurisdiction of the additional ITO, D-Ward, Jodhpur (hereafter called the " Jodhpur Addl. ITO "), with effect from the assessment year 1958-59. Thus, Kanmal Nahta was being assessed by the Jodhpur Addl. ITO till 1962. On January 9, 1962, the Jodhpur Addl. ITO sent the file of this assessee to the Jodhpur ITO, on the ground that the assessee was likely to attract the wealth-tax liability and that, therefore, his assessment should be dealt with by the latter as all cases attracting wealth-tax liability were being dealt with by him. On January 10, 1962, the Jodhpur ITO sent a detailed letter to Kanmal Nahta, stating that he had concealed his i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 148 of the new Act relating to the assessment years 1946-47, 1947-48, 1948-49, 1949-50 and 1950-51, respectively. These notices are in identical terms. We may reproduce here only one of them as typical of all. The notice (H-1) relating to the assessment year 1946-47 reads as under: Whereas I have reason to believe that your income chargeable to tax for the assessment year 1946-47 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961 ; . I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income assessable for the said assessment year. 2. This notice is being issued after obtaining the necessary satisfaction of the Central Board of Revenue. Sd. Anand Prakash, Income-tax Officer, Special Investigation Circle, 'A' Jaipur. SEAL Office of the Income-tax Officer, Special Investigation Circle 'A', Jaipur. The writ petition was admitted by a Division Bench of this court on March 23, 1967. This court further directed respondents Nos. 1 and 2 to stay proceedings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t jurisdiction. (ii) Reassessment in respect of the assessment years 1946-47 and 1947-48 had already become barred by limitation when the new Act came into force. (iii) Notices under section 34 of the old Act were issued before, and proceedings under that section were pending at, the commencement of the new Act. Therefore, by virtue of the provisions of section 297 of the new Act, more specially sub-clause (ii) of clause (d) of sub-section (2) of this section, notices, Ex. H-1 to Ex-5, could not be issued lawfully under the new Act. Hence, the said notices are illegal, invalid and without jurisdiction. The respondents contested the writ petition and filed a return with supporting-affidavit in answer to it. They pleaded that since Kamal Nahta had closed his business at Bombay on October 17, 1949, and thereafter taken up residence at Jodhpur and had been filing returns at Jodhpur since the assessment year 1951-52, the Jodhpur ITO had acquired jurisdiction in the matter to issue notice under s. 34 of the old Act in respect of the assessment years prior to the year 1951-52. They further pleaded that Kanmal Nahta filed returns of his income for the assessment years, 1946-47 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioners and they have already taken resort to that remedy, this writ petition is liable to be dismissed on that ground alone. They also pleaded that the writ petition suffers from the vice of long delay, laches and acquiescence. After hearing both the sides at some length and considering the matter in all aspects, we are of opinion that the decision in the controversy turns mainly on the grounds of challenge by the petitioners summarised at Nos. (i) and (iii) at pp. 6 and 7 of this judgment. Ground (i) is to the effect that since the original orders of assessment for the years 1946-47 to 1950-51 had been made by the ITO, C-III Ward, Bombay (hereinafter called " the Bombay ITO "), and since no order under sub-s. (7A) of s. 5 of the old Act had been passed by the CBR transferring any of these cases from the Bombay ITO to the jodhpur ITO, the latter and, for that matter, the Jaipur ITO also, had no jurisdiction to issue notices under s. 34 of the old Act and s. 148 of the new Act, respectively, for reassessment of the alleged escaped income of the assessee in any of those years. In order to understand the implications of this ground as well as ground No. (iii), one m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istinction between jurisdiction and venue in a paragraph which may be quoted here with advantage: The distinction between 'jurisdiction' and 'venue ' has been plainly established and has been frequently recognised jurisdiction connotes the power to decide a case on the merits, while venue connotes locality, the place where the suit should be heard. The word 'venue', unless it is given jurisdictional effect by localising the action, relates only to the place where or the territory within which either party may require the case to be tried, and unless it is a localised action, the question of jurisdiction of subject-matter is not involved. 'Venue ' as a matter of procedure does not arise until an action is started. The mere existence of general rules of venue, whether in common law, or statutory form, does not, of itself, affect the right of the court to hear and determine foreign causes. " To sum up, therefore, we must bear in mind that there is a real distinction between " jurisdiction " and " venue " or place of assessment as involved in the instant case. jurisdiction is the power of an ITO to make an order of assessment or reassessment. If a person, not appointed as ITO acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch cases or classes of cases as the Commissioner may direct. This allocation does not deprive an ITO of his general power under law to function as an ITO beyond the work allocated to him by the Commissioner. That is why, perhaps, the Legislature took care to specifically provide in s. 64 of the old Act and s. 124 of the new Act that the place of assessment shall not be called in question by an assessee after the expiry of time allowed by notice issued according to law. Had venue or place been a question pertaining to jurisdiction, the mere absence of objection to jurisdiction by the assessee within a particular period of time would not have conferred jurisdiction. It is obvious on a plain reading of these sections that they deal with venue or place of assessment as contra-distinguished from jurisdiction. A reference to Wallace Brothers Co. Ltd. v. CIT [1945] 13 ITR 39 (FC), Seth Teomal v. CIT [1959] 36 ITR 9 (SC) and Gajanand Phool Chand v. ITO [1975] WLN 965 ; [1976] Tax LR 48 (Raj), would confirm the conclusion arrived at above. The Federal Court held in Wallace Brothers Co. Ltd., that the matter (i.e., venue or place of assessment dealt with by s. 64 of the old Act) is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of assessment according to s. 34 read with other relevant provisions of the old Act. It may also be mentioned here that the assessee had admittedly closed his business at Bombay in 1949 and returned to jodhpur where he took up residence in that year. He continued residing at jodhpur till the notices under s. 34 of the old Act were issued to him in March, 1962. He had been filing annual returns of income before the Jodhpur ITO from 1951-52 to 1958-59 and the orders of assessment for all these years had been made by the jodhpur ITO. In other words, the jodhpur ITO was " the ITO of the area in which he resides ", within the ambit of this phrase as used in s. 64 of the old Act. Even from the limited standpoint of the venue " or " place of assessment " also, therefore, the Jodhpur ITO had the jurisdiction to issue these notices. It is true that no order under s. 5(7A) of the old Act appears to have been made by the CBR in respect of this assessee for the assessment years 1946-47 to 1950-51, transferring this case from the Bombay ITO to the jodhpur ITO. jurisdiction of the jodhpur ITO to issue notice under s. 34 of the old Act was, however, not dependent on such order alone. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-51 at the commencement of the new Act. That being so, notice, Ex. H-5, relating to the assessment year 1950-51, issued by the Jaipur ITO under s. 148 of the new Act, must be held to have been issued according to law. Its validity is not open to any objection at all. The argument raised on behalf of the petitioners applies on all fours to the other impugned notices, viz., Ex. H-1 to Ex. H-4, for the assessment years, 1946-47 to 1949-50, respectively. It will be recalled that notices under s. 34 of the old Act relating to these years had already been issued by the jodhpur ITO before the commencement of the new Act and that proceedings in respect of those notices were pending before him at such commencement. This fact-situation clearly attracts the provisions of s. 297 of the new Act. The relevant portions of this section read as under : "297. Repeals and savings-(1) The Indian Income-tax Act, 1922 (XI of 1922), is hereby repealed. (2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act) . ...... (d) where in respect of any assessment year after the year ending on the 31st day of March, 1940, (i) a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on October 15, 1959, and published in the Gazette of India, dated October 31, 1959, the Commissioner directed, inter alia, that the jodhpur Addl. ITO shall exercise his functions in respect of persons whose last assessed income on the date of issue of the order did not exceed Rs. 10,000 and who under the previous orders were liable to assessment by the Jodhpur ITO. It appears that since the income of Kanmal Nahta, last assessed by the jodhpur ITO, was less than Rs. 10,000, the Jodhpur Addl. ITO began to assess his income with effect from the assessment year 1960-61. As already stated, the jodhpur Addl. ITO sent the file of this assessee back to the jodhpur ITO on January 9, 1962, on the ground that the assessee was likely to attract the wealth-tax liability and that as all cases, attracting such liability, were required to be dealt with by the Jodhpur ITO, the case of this assessee should also be dealt with by him. Learned counsel for the Revenue argued that once the jurisdiction to assess the income of this assessee had been transferred, according to law, from the Jodhpur ITO to the jodhpur Addl. ITO, the former ceased to have any jurisdiction to assess him and that such ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the thrust of his argument in the context of ground No. (iii) was that since by virtue of an order passed by the Commissioner under s. 5(5) of the old Act on October 15, 1959, the assessee was being assessed by the jodhpur Addl. ITO instead of jodhpur ITO from the assessment year 1960-61 onwards, and since no further order was made by the Commissioner or the CBR under s. 5(7A) transferring the case back to the Jodhpur ITO, the latter had no jurisdiction to issue the notices under s. 34 which he issued on March 26, 1962, and about which the proceedings were pending at the commencement of the new Act. The aforementioned contradiction may not, however, detract from the strength of the petitioners' case on ground No. (iii), for it has already been held that even in the absence of an order by the CBR under s. 5(7A) of the old Act transferring the case from the Bombay ITO to the jodhpur ITO, the latter had jurisdiction to issue notices under s. 34 in respect of the income of the assessee escaping assessment in the years 1946-47 to 1950-51. We may now proceed to discuss the rival arguments in the context of the contention, raised on behalf of the Revenue, to the effect that since no fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the provisions of s. 64(1), (2) and (3). The order made by the Commissioner under s. 5(5) on October 15, 1959, in the instant case, clearly shows that it does not relate to any particular assessee. It is an order which, in terms, applies to all persons or classes of persons whose last assessed income does not exceed Rs. 10,000. That being so, the provisions of s. 64(5) are not attracted with the result that provisions of s. 64(1), (2) and (3) apply to this case with full force and the result, therefore, is that both the ITOs of the area, namely, the jodhpur ITO and the Jodhpur Addl. ITO, were competent to assess the assessee. The Jodhpur ITO who had been assessing him without any limitation as to the extent of income till the assessment year 1959-60 continued to have such jurisdiction to assess even after the issue of the order by the Commissioner under s. 5(5) on October 15, 1959. The Jodhpur Addl. ITO who was authorised under the said order to exercise his functions relating to all persons or classes of persons whose income does not exceed Rs. 10,000 acquired such power to that extent concurrently with the Jodhpur ITO. It is significant to note that there is nothing in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred the case of an individual assessee from one ITO to another in exercise of its powers under s. 5(6) of the old Act. It was on these facts that the Delhi High Court held that a notice issued to the assessee by an officer other than the one to whom his case had been transferred is invalid. Now, it has already been seen in the facts of the instant case that the case of Kanmal Nahta had never been transferred as an individual under s. 5(7A) from the jodhpur ITO to the jodhpur Additional ITO. What happened in this case was that the Commissioner issued a general order of allocation and distribution of work under s. 5(5) under which two ITOs acquired concurrent powers with a pecuniary limitation on the powers of one of them. For all these reasons, Madhavnagar Cotton Mill's case, AIR 1968 Delhi 54, does not support the argument raised on behalf of the Revenue. On the contrary it lends support to the petitioner's case that, notwithstanding the general order, dated October 15, 1959, made by the Commissioner under s. 5(5), directing certain ITOs including the jodhpur Addl. ITO to perform their functions in respect of all persons whose last assessed income on the date of issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the Jaipur ITO had no jurisdiction to issue the impugned notices, Ex. H-1 to Ex. H-4, in respect of the assessment years, 1946-47 to 1949-50, respectively, under s. 148 of the new Act, and that the said notices deserve to be quashed. However, the notice, Ex. H-5, issued under that very section in respect of the assessment year 1950-51, is valid, because, unlike the other years, no notice under s. 34 of the old Act had been issued in respect of that year before the commencement of the new Act, and, therefore, no proceedings under that section were pending at such commencement. Learned counsel for the Revenue then argued that this writ petition is liable to be dismissed on the ground of delay. He referred in this connection to the fact that the impugned notices were issued by the Jaipur ITO, on March 21, 1963, and that the present writ petition challenging their validity was filed on March 23, 1967. He argued that this delay of 4 years has not been explained by the petitioner at all. On the other hand, the petitioner's learned counsel replied that the assessee had made an application (see Ex. C), dated January 31, 1964, for settlement of this case, and that the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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