Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub- section 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in section 124(3)(a) are as under:
|(i)||Within one month from the date of service of notice or;|
|(ii)||After completion of assessment – whichever is earlier.”|
HIGH COURT OF CALCUTTA
Income-tax Officer, Ward 46(1), Kolkata
GA NO. 709 OF 2016
APO NO. 97 OF 2016
WP NO. 1172 OF 2015
AUGUST 3, 2016
R.N. Dutt and Mrs. Sutapa Roychowdhury, Advocates for the Appellant. Soumitra Mukherjee, Advocate for the Respondent.
1. The facts and circumstances of the case are as follows :—
The appellants had earlier filed a writ petition challenging the survey conducted under Section 133A of the Income-tax Act on 6th February, 2015. Notices issued under Section 131 of the Income-tax Act also on 6th February, 2015; an order under Section 133A (3)(i)(a) dated 24th February, 2015 and a notice dated 27th March, 2015 issued under Section 148 of the Income-tax Act pertaining to the assessment years 2012-13, 2013-14 and 2014-15 were also challenged on the ground that the respondent nos.1 and 2 “had no jurisdiction over the case of the petitioners on and from 15th November, 2014 in view of the Notification dated 22nd October, 2014.”
2. The writ petitioner alleged that he had demanded justice by letters dated 12th February, 2015, 29th April, 2015 and 12th May, 2015 but the same had been denied to him.
3. The said writ petition was registered as WP No.655 of 2015 and the same was disposed of by an order dated 14th July, 2015 by the following order:—
“In such circumstances, this writ petition is disposed of with a direction upon the Income Tax Officer, Ward 46(1), Kolkata, to respond to the petitioner’s letter dated 29th April, 2015. Till such time the concerned authority responds, no consequential effect shall be given in respect of the survey conducted under section 133A of the Income Tax Act.”
4. The letter dated 29th April, 2015 was replied to by a letter dated 17th August, 2015 stating as follows:—
|Item No.||Information sought for||Comments|
|1.||Reasons, if any, recorded for issuance of Notice u/s 148 of the Act||Reasons for reopening were already communicated to you through Post for the A.Y. 2012-13, 2013-14 & 2014-15|
|2.||CBDT’s Notifications, if any, showing that you have jurisdiction over the case after the aforesaid notification effective from 15.11.2014||Survey was conducted in the business premises of the assessee at No.74 and 75A, Narasingha Dutta Road, Howrach-711101 on 6th & 7th February, 2015 with proper authorization from the higher authority and the authorization was duly signed by the Joint Commissioner of Income Tax, Range-46, Kolkata. There was no challenge of jurisdiction at that time and the survey was concluded after impounding various materials as per list of books of accounts and/or other documents found in the premises of the assessee duly signed by Mr. Santosh Kr. Kundu, Partner of the Firm. Before, receiving the notice u/s 148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15, the partner of the assessee had made various correspondences to the office of ITO, Ward-46(1), Kolkata by sending letters through speed post, wherein no challenge of jurisdiction was made. But after receiving the notice u/s148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15, the issue of challenge of jurisdiction were came to their mind to avoid the penal action initiated by the department. You have also submitted a written submission to this office to treat the return for A.Y.2012-13, 2013- 14 & 2014-15 as return in responses to the notice u/s 148 of the Act on 12/05/2015 which is after expiry of 30(thirty) days from the date (27.03.2015) of service of notice, so you have no right to challenge the jurisdiction of Assessing Officer as per section 124(3) of the Act. Moreover, your firm had filed IT return for A.Y. 2014-15 through on line on 25th January, 2015, which is after the restructuring of the Income Tax Department. Therefore, you have intentionally filed you IT return after knowing the restructuring of the Department and hence your plea for challenging jurisdiction of this case does not hold. Hence, the service of notice u/s 148 of the Act remains valid and the proceedings initiated by way of servicing notice u/s 148 of the Act on the assessee for A.Y. 2012-13, 2013-14 & 2014-15 remain fully legal proceedings under the provisions of IT Act. On regards to Section 124(3) of the IT Act, the violation of CBDT’s Notifications does not arise in this particular case.|
|3.||Copy of satisfaction obtained from Ld. Commissioner of Income Tax, Kolkata-16, Central Board of Direct Taxes, if any, before issuance of such notice.||Section 151 of the Act provides the power to Assessing Officer, in this case ITO, Ward-46(1), Kolkata to issuance notice u/s 148 of the Act for A.Y. 2012-13, 2013-14 & 2014-15. Therefore, no need for satisfaction of the Commissioner of Income Tax, Kolkata-16, Kolkata in this particular case arises.|
5. Challenging the aforesaid letter dated 17th August, 2015 and subsequent notice issued under Section 142(1) of the Income-tax Act on 9th September, 2015, WP No.1172 of 2015 was filed which was dismissed by an order dated 23rd February, 2016 by holding as follows:-
“Since it is evident that the petitioning assessee was precluded by Section 124(3)(b) of the Act from questioning the authority of the assessing officer who had issued the notices under Section 148 of the Act dated March 27, 2015 to the petitioning assessee on April 29, 2015, the contents of the letters dated April 29, 2015 and the objection as to jurisdiction contained therein had been rightly disregarded by the ITO, Ward-46(1), Kolkata.
Accordingly, WP No.1172 of 2015 is dismissed and the department is left free to take appropriate steps against the petitioners in accordance with law ”
6. Challenging the aforesaid order dated 23rd February, 2016, the appeal was filed. The question for determination is whether the aforesaid view taken by the learned Trial Court is correct in law ?
7. Evidently the learned Trial Court has agreed with the views expressed in the letter dated 17th August, 2015 by the assessing officer.
8. Mr. Dutt, learned Advocate appearing for the appellants, submitted that the assessee did not raise any objection contending that the assessing officer issuing notice under Section 148 had no jurisdiction and that somebody else had jurisdiction to do so. If this were the case, the question of determining as to which of the two assessing officers had jurisdiction to issue notice under Section 148 might have arisen. But the contention of the writ petitioner was that jurisdiction of the assessing officer who had issued notice under Section 148 and had also conducted other various activities prior thereto had been taken away by this circular issued by the CBDT on 22nd October, 2014 which became effective on 15th November, 2014. Therefore, the contention was that any step taken by the assessing officer subsequent to 15th November, 2014 was without jurisdiction. He submitted that in deciding the question whether the steps taken by the assessing officer were without jurisdiction, Section 124 did not give any assistance. Therefore, reliance placed upon sub-section (3) of Section 124 by the assessing officer and subsequently upheld by the learned Trial Court are both erroneous.
9. He in support of his submission relied on a Judgement of the Apex Court in the case of Raza Textiles Ltd. v. ITO  87 ITR 539 wherein the following views expressed:—
“The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned single judge has done in this case, that the Income-tax Officer had clutched at the jurisdiction by deciding a jurisdictional fact erroneously, then the assessee was entitled for the writ of certiorari prayed for by him. It is incomprehensible to think that a quasi-judicial authority like the Income-tax Officer can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen. In our opinion, the Appellate Bench is wholly wrong in opining that the Income-tax Officer can “decide either way”.
10. We have not been impressed by the submissions advanced by Mr. Dutt.
11. The objection raised by the appellants was in essence an objection to the territorial jurisdiction of the assessing officer who had issued the notice under Section 148 and before that had conducted various proceedings including search, seizure and survey. Sub-section 3 of Section 124 precludes an assessee from questioning the jurisdiction of an assessing officer except in the manner laid down therein. It will be convenient to notice sub-Section 3 of Section 124, which reads as follows:—
“(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer-
|(a)||where he has made a return [under sub-section (1) of section 115WD or ] under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or [sub-section (2) of section 115WE or] sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier;|
|(b)||where he has made no such return, after the expiry of the time allowed by the notice under [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH 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 judgement of the Assessing Officer, whichever is earlier;|
|[(c)||where an action has been taken under section 132 or section 132A, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.]”|
12. Admittedly, the objection was not raised by the appellants within 30 days even from the date of issuance of notice under Section 148. The objection was raised by a letter dated 29th April, 2015 and the notices under Section 148 were received on 27th March, 2015. It is not also possible to contend that the period of limitation shall commence only from the date of issuance of the notice under Section 148. Notice under Section 148 was issued because prior thereto search and seizure was conducted and thereafter survey was conducted presumably leading to incriminating discovery. Thereafter documents were impounded and it is on the basis of these steps that the notice under Section 148 was issued. Each one of these steps was taken subsequent to 15th November, 2014 but the writ petitioner did not raise any objection.
13. Mr. Dutt submitted that the writ petitioner-appellants did not raise any objection because he had no knowledge of the change of jurisdiction made by the notification issued by the CBDT referred to above. It may be true that the writ petitioners did not have knowledge of the aforesaid notification but limitation on that account shall not remain suspended nor can the period during which the writ petitioner- appellant was ignorant about the change of jurisdiction can be excluded because that would be contrary to Section 124(3).
14. The judgement in the case of Raza Textiles Ltd. (supra) is not applicable to the facts and circumstances of this case. What had happened in that case was that a demand for more than Rs. 1.39 lakhs was made from the assessee on the ground that he had paid Rs. 2 lakhs on account of commission to a non-resident. It was contended that the assessee, therefore, was liable to deduct tax. But the assessee’s case was that the payment was not made to a non-resident.
The Learned Single Judge of the High Curt was of the opinion that the payment was not made to a non-resident. In an appeal preferred by the revenue, the Division Bench held that:—
“In the present case the question before the Income-tax Officer, Rampur, was whether the firm Nathirmal and Sons was non-resident or not. There was material before him on this question. He had jurisdiction to decide the question either way. It cannot be said that the officer assumed jurisdiction by a wrong decision on this question of residence.”
This finding of the Division Bench did not find favour from Their Lordship of the Apex Court. Their Lordship were of the opinion that a quasi-judicial authority like the Income-tax officer could not assume jurisdiction by deciding a jurisdictional fact wrongly. Here, no question arose of deciding any jurisdictional fact wrongly.
15. The assessee had questioned the territorial jurisdiction of the assessing officer and the assessing officer held that the assessee had lost the right to raise the objection by efflux of time. We, as such, find no substance in the case of the appellant.
16. Mr. Mukherjee, learned Advocate appearing for the revenue, drew our attention to a judgement of the Delhi High Court in the case of CIT v. Shri Shyam Sunder Infrastructure (P.) Ltd. [IT Appeal No. 236 of 2014] wherein the following views were taken :—
“Facially, Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub- section 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in section 124(3)(a) are as under:
|(i)||Within one month from the date of service of notice or;|
|(ii)||After completion of assessment – whichever is earlier.”|
17. We are in agreement with the view expressed by the Delhi High Court. In that view of the matter, the appeal fails and is dismissed.
18. Parties shall, however, bear their own costs.
All interim orders stand vacated.