SITARAM RATHORE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE aforesaid two references are at the instance of the assessee, out of order passed by the Tribunal, Delhi Bench SMC (C) , New Delhi, on 30th Oct., 1982 in IT Appeal No. 1716 (Del) of 1982 and IT Appeal No. 1710 (Del) of 1982, relating to the asst. yr. 1976-77. The questions referred are common which are as under:-

(2.) FACTS giving rise to these two References are these. The assessee is a partner in tow firms. One of these firms was carrying on business as Liquor Contractor at Guna. The assessee being resident of Guna and his place of business being at Guna, he filed voluntary returns on 19th Aug., 1976 before the Additional ITO at Guna, who had the jurisdiction to deal with the assessment cases of the assessee. The CIT for administrative convenience, and to cerntralise all the cases of the liquor contractors, passed an order dt. 7th April, 1977 to transfer the cases of the liquor contractors to the ITO, A Ward, Bhopal. The transfer order was made effective from 1st May, 1977. In view of this order, the aforesaid two cases of the assessee were also to be transferred. However, the ITO, Guna, accepted the return as filed and completed the assessment under S. 143 (1) , of the IT Act, 1961 ('the Act') , on 15th March, 1979, whereby the tax payable was assessed as Rs. 2,770 in the case of M.C.C. No. 186 of 1983 and Rs. 2,200 in the case of M.C.C. No. 187 of 1983. The assessee objected to this assessment, being without jurisdiction. ITO, Guna, did not reply to the assessee's objection, hence, aggrieved by the assessment orders, the assessee filed two separate appeals. The AAC, Gwalior, vide order Annexure B, cancelled the assessment, being beyond jurisdiction. Aggrieved by this order, the CIT preferred appeals before the Tribunal. The Tribunal held that the appeals were competent as the assessee had denied his liability to be assessed. However, the orders of the assessment passed by the ITO, Guna, were not declared to be nullity as the Tribunal held that initially the ITO, Guna, had the jurisdiction where the proceedings were validly commenced on filing of voluntary returns by the assessee, which were accepted by the ITO, Guna, in making the assessment . The Tribunal observed that ITO, Guna, committed an irregularity in making the assessment as after the order of CIT, the ITO Bhopal, alone was competent to make the assessment. Therefore, the Tribunal vide order dt. 30th Oct., 1982 ('Annexure "C") , set aside the order of the AAC and directed the ITO of competent jurisdiction to proceed afresh with the assessment. The assessee, aggrieved by the order of the Tribunal, filed an application under S. 256 (1) of the Act for referring the aforesaid questions of law for opinion of this Court.

(3.) SHRI R.D. Jain, the learned counsel for the Revenue, contended that the assessee filed a voluntary return under S. 139 (1) before the ITO, Guna, who had the jurisdiction to deal with the cases of assessment of the assessee because of the residence and the place of business. The returns filed by the assessee were accepted as it is. Therefore, no failure of justice is occasioned or prejudice is caused to the assessee. Besides, the CIT when passed the order of transfer of the case with a view to centralise all particulars class of cases, the assessee did not make any prayer for transfer of his cases. Therefore, in view of S. 124 (5) , the assessee was not entitled to call in question the jurisdiction of the ITO, Guna, as he ought to have raised the objection under cl. (a) of sub S. (5) of the S. 124 within a period of one month from the date on which he filed the return under sub-s. (1) of S. 139 or after the completion of the assessment whichever is earlier. That not having been done and there being no inherent lack of jurisdiction, the order of the AAC was rightly set aside by the Tribunal, but, the Tribunal committed an error in directing the ITO of competent jurisdiction to proceed afresh with the assessment. The learned counsel placed reliance on Wallace Bros. & Co. vs. ITC AIR 1945 FC 9; Seth Teomal vs. ITC AIR 1959 SC 742; Guduthur Bros. vs. ITO AIR 1960 SC 1326; Central Potteries vs. State of Maharashtra AIR 1966 SC 932; Firm Rasulji Buxji Kathawala vs. ITC AIR 1957 Raj. 54; R. Chinnaswami Naidu & Sons vs. ITO AIR 1967 Mad. 136. It was also that as the Tribunal has directed the competent ITO to proceed afresh, the question remains only academic which now need not be answered. The learned counsel, in support of his contention, relied on CIT vs. P.P. Contractor, (1994) 208 ITR 771 (Guj) .