Notice u/s 148 issued by ITO having jurisdiction over bank where assessee had account was held legal in view that there could be concurrent jurisdiction of two or more AOs over a particular assessee in terms of sub-section Section 120 (3)
The instant Petition had been filed for quashing notice issued under Section 148 read with Section 147 of the Income-tax Act, 1961 (‘Act’) by the Income-tax Officer. It had been alleged that the notice was without jurisdiction and consequently the proceedings pending on transfer before the Income-Tax Officer were bad and void
ABCAUS Case Law Citation
ABCAUS 2357 (2018) 06 HC
The Petitioner was an individual had been filing returns at Delhi with the jurisdictional Income Tax Officer (ITO) as per his declared place of residence. The petitioner had a savings bank account at Noida. As per bank records, communication address of the petitioner was of Noida and his permanent address was of Delhi. The petitioner had not mentioned his Permanent Account Number (PAN) and as per Know Your Customer (KYC), the petitioner’s address was of Noida.
Based on Annual Information Return (AIR) information available with the Income Tax Officer, Noida regarding cash deposits in said bank account, a notice was issued u/s 133(6) of the Act. The notice was issued by registered/speed post at his Noida address. Subsequently the notice was issued at his Delhi address and later an Income-Tax Inspector had visited the Delhi address with the notice which was affixed due to the petitioner being could not be located.
Income-Tax Officer, Noida did not receive any response and reply to the above notices. Consequently, he, after recording reasons to believe in writing had issued notice under Section 148 read with Section 147 of the Act, which was sent by registered post at the Noida address. The petitioner did not file return of the income, in terms of the notice nor did he come forward and state that he had filed return of income for the relevant assessment year with the Income-Tax Officer, Delhi and was being assessed in the said Ward.
Thereafter, the ITO, Noida issued notice u/s 142 (1) of the Act, requiring compliance including filing of return and furnishing of information and documents regarding cash deposits.
At this juncture, the petitioner responded stating that he was regularly assessed and had filed return of income for the relevant assessment year with the ITO, Delhi. He claimed that the notice issued under Section 142(1) and notice under Section 148 of the Act were illegal and without jurisdiction. Without prejudice, the petitioner had enclosed a copy of his return with the request to treat this return as filed in response to the notice. Request was also made to furnish a copy of the reasons to believe to enable the petitioner to file detailed objections. However he did not specifically state that the he had not been served with the notice under Section 148 of the Act at the Noida address.
Later, the Petitioner also filed his objections to the notice issued u/s 148 on jurisdictional ground. Consequently, the Income-Tax Officer, Noida transferred pending proceeding to the Assessing Officer, Delhi.
The Petitioner has filed this instant petition challenging the validity notice issued under Section 148 by ITO, Noida.
The Hon’ble High Court after going through the sequence of events and communication opined that the Petitioner had deliberately not responded at least to the notice issued under Section 148 of the Act. The muteness and belated response of the Petitioner was intentional and malevolent as hr wanted to object to jurisdiction of the IncomeTax Officer, Noida post 31st March so that in view of time mandate in Section 149 of the Act, ITO, Delhi could not have issued fresh notice under Section 148 of the Act.
The Hon’ble High Court opined that the contention predicated on lack of jurisdiction on first glance appeared 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.
It was observed that as per Section 120 of the Act, it does not authoritatively confer exclusive jurisdiction to specific Income Tax Authority. It is left to the Central Board of Direct Taxes (CBDT) to issue directions for exercise of power and functions taking into consideration territorial area, class/types of persons, income and case. The said Section by necessary implication postulates and acknowledges that multiple or more than one Assessing officer could exercise jurisdiction over particular assessee. Concurrent jurisdictions are therefore an accepted position under the Act.
The Hon’ble High Court further observed that the term “jurisdiction” in Section 120 of the Act has been used loosely and not in strict sense to confer jurisdiction exclusively to a specified and single assessing officer, to the exclusion of others with concurrent jurisdiction. It would refer to “place of assessment”, a term used in the Income Tax Act, 1922. Sub-section (5) to Section 120 of the Act again affirms and accepts that there can be concurrent jurisdiction of two or more assessing officers who would exercise jurisdiction over a particular assessee in terms of the four-fold criteria stated in sub-section (3) to Section 120. Second part of sub-section (5) states that where powers and functions are exercised concurrently by Assessing Officers of different classes, then the higher authority can direct the lower authority in rank amongst them to exercise the powers and functions.
It was observed that the concurrent jurisdiction is reflected and recognized in Section 124 of the Act. It was noted that in a previous judgment of the High Court explained the provisions of Section 127 of the Act and scope and ambit of the said power, to observe that the section does not speak of the transfer of jurisdiction but transfer of case as defined in Section 127. Expression “concurrent jurisdiction” is mentioned in sub-section (3) to Section 127 of the Act. Elucidating the legal effect of Sections 120, 124 and 127 of the Act, it was held that the provisions indicate that Sections 120, 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 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 Section 124 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.
The Hon’ble High Court reiterated 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 sub-section (1) or sub-section (2) to Section 120 of the Act. Jurisdiction would depend upon the place where the person carries on business or profession or the area in which he is residing. Subsection (3) clearly states that no person can call in question jurisdiction of an Assessing Officer in case of non-compliance and/or after the period stipulated in clauses (a) and (b), which would negate and reject arguments predicated on lack of subject matter jurisdiction. Where an assessee questions jurisdiction of the Assessing Officer within the time limit and in terms of sub-section (3), and the Assessing Officer is not satisfied with the correctness of the claim, he is required to refer the matter for determination under sub-section (2) before the assessment is made. Reference of matter under sub-section (2) would not be required when Assessing Officer accepts the claim of the assessee and transfers the case to another Assessing Officer in view the objection by the assessee. In terms of sub-section (3) to Section 124 of the Act, the petitioner had lost his right to question jurisdiction of the Income Tax Officer, Noida.
The Hon’ble High Court also observed that Sub-section (5) to Section 124, though limited in scope, would also be applicable in the facts and circumstances of the present case as the Income-Tax Officer, Noida had the power to assess income accruing or arising within the area as it was not the case of the petitioner assessee that the said officer did not have jurisdiction in view of location of the bank account and/or petitioner’s place of work. Section 124(5) of the Act saved assessment made by an assessing officer provided that the assessment does not bring to tax anything other than income accruing, arising or received in that area over which the assessing officer exercises jurisdiction.
The contention of the petitioner that the transfer by Income-Tax Officer, Noida to Income-Tax Officer, Delhi required an order under Section 127 of the Act is fallacious and without merit. This was not a case of a transfer under Section 127 of the Act. This was a case in which the assessee had raised an objection stating that the Income-Tax Officer, Noida should not continue with the assessment as the petitioner-assessee was regularly filing returns with the Income-Tax Officer, Delhi. The objection raised were treated as made in terms of sub-section (3) to Section 124, notwithstanding the fact that there was delay and non-compliance. The Income-Tax Officer, Noida accepted the request/prayer of the petitioner and had transferred pending proceeding to the Assessing Officer, Delhi. Therefore, there was no need to invoke and follow the procedure mentioned in sub-section (2) to Section 127 of the Act.
It was observed that the Supreme Court had classified and drawn jurisprudential difference amongst – territorial or local jurisdiction; pecuniary jurisdiction; and jurisdiction over the subject matter. As far as territorial or pecuniary jurisdictions are concerned, objection should be taken at the earliest possible opportunity and /or before the settlement of issues and not at the subsequent stage. Jurisdiction as to the subject matter is distinct and stands on a different footing.
The Hon’ble High Court opined that objections as to the jurisdiction of assessing officer could not be equated with lack of subject matter jurisdiction, they were related to place of assessment. Income-Tax Officer Noida would not per se lack jurisdiction, albeit he had concurrent jurisdiction with the Income-Tax Officer, 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.
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