SIMI DAVIS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PETITIONER is challenging garnishee proceedings issued under s. 226(3) of the IT Act by the third respondent for arrears of income -tax due and assessed for the year 1998 -99. According to the petitioner, petitioner shifted her residence to Bangalore where the petitioner filed her first income -tax returns for the year 2001 -02. The assessment issued by the ITO at Bangalore for the year 2001 -02 is produced as Ext. P2. According to the petitioner, after petitioner shifted her residence to Bangalore, the third respondent ceased to have jurisdiction for recovery as "AO" and therefore garnishee proceedings issued under s. 226(3) of the Act vide Exts. P5 to P9 are without jurisdiction. Petitioner relies on Ext. P3 circular issued by the CBDT under s. 120(1) and (2) of the Act providing jurisdiction of officers on assessees other than companies with reference to place of residence of assessee. According to the petitioner, after the petitioner shifted her residence to Bangalore, petitioner is within the jurisdiction of the ITO at Bangalore and so much so the third respondent ceases to be the "AO" of the petitioner who cannot issue any recovery proceeding against the petitioner.

(2.) SENIOR standing counsel appearing for the IT Department, Sri P.K.R. Menon, contended that petitioner's assessment for the year 1998 -99, for which garnishee proceedings are initiated, was completed by the third respondent and on the respondent continues to be the AO for recovery proceedings in respect of assessments completed by him. He also pointed out that even after shifting of residence by the petitioner and even after filing return for the year 2001 -02, petitioner requested for rectification of the assessment before the third respondent, who rectified the assessment for the year 1998 -99 vide Ext. P1 order.

(3.) PETITIONER has no case that the tax assessed is not payable by the petitioner. Her contention is limited to the jurisdiction of the third respondent to initiate recovery proceedings including garnishee proceedings under s. 226(3) of the Act, which is under challenge in this O.P. The jurisdiction of IT authorities are prescribed by the CBDT from time to time in exercise of powers under s. 120(1) and (2) of the Act. There is no dispute that the jurisdiction in respect of individual assessees like the petitioner is always with the officers who exercise jurisdiction over the area of residence of the assessees. In this particular case, petitioner was residing within the jurisdiction of the third respondent and was being assessed by him until the year 2001 -02 when the petitioner's assessment was completed by the officer at Bangalore vide Ext. P2 order. In fact, the officer at Bangalore should have called for the back files for follow -up action in regard to recovery and other matters. However, I do not think the failure of the officer at Bangalore in calling for records or the failure of the third respondent in transferring the file to the officer at Bangalore will affect the jurisdiction of the third respondent as "AO" in respect of recovery of tax assessed by him. Petitioner has no dispute that the third respondent has completed assessment for the year 1998 -99 as AO and he had jurisdiction to complete the assessment. The remaining question to be considered is whether the third respondent forfeits his jurisdiction for recovery of arrears of tax assessed by him on account of shifting of residence by the petitioner making the officer at Bangalore the present "AO", based on Ext. P3 circular issued by the CBDT in exercise of powers under s. 120(1) and (2) of the Act. It is to be noted that in Ext. P3, there is no mention about pending assessments or recovery of tax in respect of completed assessments, etc. as on the date of shifting of residence by the assessee. Of course, the Board probably expects transfer of back -files from the AO concerned to the officer before whom the petitioner is to be assessed after shifting of residence. In the absence of any specific provision in Ext. P3 about pending assessments and recovery of assessed tax, I feel, the AO who made assessment, namely, third respondent, continues to be the AO for the purpose of recovery of tax assessed by him. In this case, the assessment in question is for the year 1998 -99 and it is conceded by the petitioner that the third respondent had jurisdiction to complete the assessment and at the request of the petitioner, the original shifting of residence by the petitioner. In the circumstances, I hold that the third respondent continues to be the "AO" for the purpose of recovery of tax assessed by him for the year 1998 -99 also. It will be open to the Department to transfer the files and if back files are transferred then, of course, with effect from the date of its transfer the third respondent will cease to be the AO, and the officer before whom file is transferred will continue to exercise powers of AO over the petitioner, subject to other circulars or orders. It is for the third respondent to complete recovery and transfer the file or otherwise transfer the files to enable the officer at Bangalore to continue recovery proceedings. The Board is free to issue appropriate proceedings in the matter as Ext. P3 is silent about pending matters and recovery. Since I have held that garnishee proceedings are valid, i.e., Exts. P5 to P9, it is open to the third respondent to proceed with recovery proceedings and forward the files after completion of recovery proceedings. O.P. is dismissed.