SUBHASH CHANDER vs. COMMISSIONER OF INCOME TAX ROHTAK

ITA/129/2007HC Punjab & HaryanaPHHC01072801200707 December 2007Author: MR JUSTICE RAKESH KUMAR JAIN,MR. JUSTICE M.M. KUMAR11 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law deserved to be answered against the appellant-assessee. Referring to Section 124(3)(b) of the Act, the Court noted that an assessee cannot call into question the jurisdiction of an Assessing Officer after the expiry of one month from the date of service of a notice under Section 142(1) or after the completion of assessment, whichever is earlier. Section 124(4) is subject to Section 124(3). In the present case, the notice under Section 142(1) was issued on February 25, 1993, and the return was filed on March 1, 1993, well before the due date of March 15, 1993. No objection to jurisdiction was raised until September 6, 1994, when the assessee requested a transfer to Delhi. Therefore, the Assessing Officer was not obligated to refer the jurisdiction question to the Director General or Chief Commissioner under Section 124(2) read with Section 124(4). The Court also found that the temporary transfer of accounts to New Delhi, which were subsequently returned, did not invalidate the assessment order passed by the Assessing Officer at Sirsa, especially since the substantial business was transacted there. The Court stated that no arguments were addressed on questions (b) and (c), and therefore, no opinion could be expressed on them. The appeal was dismissed.

What were the facts?

The assessee, Shri Subhash Chander, a businessman in Sirsa, Haryana, was subjected to a survey under Section 133A of the Income-tax Act, 1961, on February 3, 1992. During the survey, discrepancies were found between his business records and regular books of accounts regarding investments, loans, and expenditures. A notice under Section 142(1) was issued on February 25, 1993, requiring the filing of a return by March 15, 1993. The assessee filed a return declaring a loss of Rs. 15,700 on March 1, 1993. The assessment was processed under Section 143(1)(a). No objection regarding the Assessing Officer's jurisdiction was raised. The case was selected for scrutiny, and the Assessing Officer completed the assessment on March 13, 1995, determining the income at Rs. 53,16,730. The assessee appealed to the CIT(A), raising the issue of jurisdiction. The CIT(A) set aside the assessment order for a fresh assessment but did not adjudicate the jurisdiction issue. The assessee appealed to the ITAT, which rejected the jurisdiction argument, relying on Section 124(3) of the Act.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether, on the true and correct interpretation of Section 124 of the Income-tax Act, 1961, the Tribunal was justified in upholding the Assessing Officer's assumption of jurisdiction when it vests with the Director General or Chief Commissioner or Commissioner. 2. Whether the Tribunal's order was against the object of the Income-tax Act, 1961, read with beneficial and reasonable rules of interpretation in fiscal statutes. 3. Whether the Tribunal's order was perverse in justifying the Assessing Officer's action by obliterating the administrative decision-making process prescribed under Section 124 of the Income-tax Act, 1961. Assessee's contentions: - Under Section 124(4) of the Act, the assessee had questioned the Assessing Officer's jurisdiction, and this question should have been determined by the Director General, Chief Commissioner, or Commissioner, not the Tribunal or CIT(A). - The transfer of the case file back to Sirsa after an initial transfer to Delhi did not constitute a ground for the Assessing Officer to re-assume jurisdiction. Revenue's contentions: - The case did not fall under Section 124(4) read with Section 124(2) but under Section 124(3)(b). - Section 124(3)(b) applies where no return is filed after the expiry of the time allowed by the notice under Section 142(1) or Section 148. Since a return was filed before the due date, the assessee was not entitled to question the Assessing Officer's jurisdiction, especially as the business was conducted in Sirsa.

Which sections of the Income-tax Act were involved?

Section 124,Section 133A,Section 142(1),Section 143(1)(a),Section 260A

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Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 129 of 2007 Date of Decision: 7.12.2007 Shri Subhash Chander ...Appellant Versus Commissioner of Income Tax, Rohtak …Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Mr. Pankaj Jain, Advocate, for the appellant-assessee. Mr. Yogesh Putney, Advocate, for the respondent-revenue.

JUDGMENT M.M. KUMAR, J. In this appeal, filed under Section 260A of the Income- tax Act, 1961 (for brevity, ‘the Act’), the appellant-assessee has challenged order dated 13.10.2006, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (for brevity, ‘the Tribunal’), in ITA No. 111/Chandi/1996, in respect of assessment year 1992-93. It has been claimed that the following substantial questions of law would arise for determination of this Court:-

I.T.A. No. 129 of 2007 a) Whether on the true and correct interpretation of provisions of Section 124 of the Income-tax Act, 1961, the Tribunal is justified in upholding the action of assumption of juri iction with the Assessing Officer whereas the same vests with the Director General or Chief Commissioner or Commissioner respecti

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