KAKUNURU VENKATA REDDY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) KAKUNURU Venkata Reddy, a resident of Nellore did works contract in Mysore State. He was assessed under the I.T. Act (43 of 1961) for assessment years 1965-66 to 1969-70 as 'individual' by the ITO at Hospet. In December, 1970, the residential house of the assessee at Nellore was searched. The documents recovered in the search disclosed money-lending transactions by the assessee and, based on the documents, notices were issued to Venkata Reddy by the ITO at Nellore but no "returns" were submitted. Therefore, ex parte assessment orders on July 24, 1973, followed. The assessment orders, however, were questioned in appeal and it transpired in the appeal that the AAC on March 14, 1974, "ordered a substantial relief". Aggrieved thereby the revenue approached in further appeal the Tribunal and in that proceeding cross-objections were lodged by the assessee. Before the appellate authority and in the cross-objections before the Tribunal (the order is dated October 31, 1975,) the assessee without having raised a caveat as to territorial jurisdiction, unsuccessfully objected to the jurisdiction of the ITO at Nellore. Then followed the reference at the instance of the assessee. The question referred reads as under :

(2.) THE proceedings at the intervening stages of assessments were made over from the ITO, E-Ward, Nellore, to the ITO, D-Ward, Nellore, by the CIT. That order of the Commissioner is not challenged. THE consequent assessment orders passed by the officer at D-Ward are attacked as an order passed in violation of the provisions of Section 124 of the Act. THE orders of reassessment for the years 1965-66 to 1969-70 and the orders of assessment for the years of 1970-71 and 1971-72 are consequently, it is argued, non est and void in law.

(3.) SIMILAR questions arose under the repealed Act, XI of 1922. In the case of Dayaldas Kushiram v. CIT [1940] 8 ITR 139, the Bombay High Court construed Section 64 of the Act to have had invested no power in the revenue but soon the amending Ordinance IX of 1939 followed and Sub-section (5) was added. Section 64 was considered by the Allahabad High Court in Dina Nath Hem Raj v. CIT [1927] ILR 49 All 616; AIR 1927 All 299 and by the Supreme Court after the amendment in Rai Bahadur Seth Teomal v. CIT [1959] 36 ITR 9. Kapur J. observed at page 171.