ORDER
Per Shri Vimal Gandhi, J.M. – These appeals, by the assessee for the assessment year 1986-87, are directed against the orders of CIT (Appeals) dated 5-11-1990 and 25-2-1994. The main ground agitated before us was that the assessments made by ACIT, Company Circle 1(4), New Delhi were without jurisdiction. The above objection was raised in the following circumstances.
2. The assessee-company, with its registered office at 316, Essel House, 10 Asaf Ali Road, New Delhi, filed a return declaring a loss of Rs. 52,616 on 30-9-1986 with ITO Company Circle 1(4), New Delhi. Simultaneously the assessee filed a similar return with ITO, Ghaziabad. The Assessing Officer C.C. 1(4) New Delhi made assessment for the year 1986-87 on a total income of Rs. 20,79,226 vide order dated 20-3-1989. The ITO, Ghaziabad also made separate assessment for the same assessment year 1986-87. The assessee, therefore, took up the plea before the CIT (Appeals) that two assessments for the same assessment year by two different Assessing Officers could not be made. It was contended that assessment made by ACIT CC 1(4), New Delhi was without jurisdiction. The learned CIT (Appeals) in the impugned order dated 5-11-1990 set aside the assessment order with the following observations : “The Assessing Officer will also decide the issue once and for all regarding the correct jurisdiction of the case. As already referred to by me above, the jurisdiction can only be at Delhi where the registered office of the company is situated and where the appellant-company themselves have filed the returns along with the original TDS certificates, etc.”. In the earlier portion, the learned CIT (Appeals) has stated : “I am unable to sustain the assessment order either on facts or on the merits of the case”.
3. After the above order of CIT (Appeals), the learned Assessing Officer passed order dated 14-10-1993 under section 250 of the Income-tax Act and held that the assessee is to be assessed only at Delhi where its registered office is located. The Assessing Officer in the above order heavily relied upon the observation of the CIT (Appeals) in her order dated 5-11-1990. Simultaneously, ITO Ghaziabad kept on conducting proceedings against the assessee. In the letters dated 27-1-1993 and 4-2-1993 ITO Ghaziabad (Shri R. D. Yadav) went to the extent of saying that the decision of learned CIT (Appeals), New Delhi was not legally correct. It is also brought on record that ITO made assessment not only for assessment year 1986-87, but also for subsequent assessment years raising demands against the assessee. Those demands are taken as valid even by ITO C.C. 1(4) as would be evident from notice dated 28-9-1993 issued by him in respect of demands for assessment years 1986-87, 1987-88, 1989-90 and 1990-91. The second assessment by company Circle 1(4) was made on 24-3-1993 on a total income of Rs. 20,79,226.
4. The assessee once again impugned the assessment in appeal and raised question of jurisdiction of ITO Company Circle 1(4), New Delhi before CIT (Appeals). The CIT (Appeals), for the reason recorded in para 2.7, held that the jurisdiction was rightly exercised by ACIT CC1(4), New Delhi. He also allowed relief of Rs. 12,94,540 in respect of main addition of Rs. 20,62,441. He also deleted certain disallowances made by the Assessing Officer. The assessee, still being aggrieved, has brought the issue in appeal before the Appellate Tribunal.
5. We have heard the submissions of both the parties at length. We have also examined the material available on record. Shri C. S. Aggarwal, the learned counsel for the assessee vehemently contended that territorial jurisdiction in case of a company cannot be exercised by the Assessing Officer where the registered of office of the company is situated. It has to be with reference to the place from where the activities of the company are carried. At any rate two assessments in respect of same assessment year by two different Assessing Officers could not be made as double assessment is prohibited under the Income-tax Act. He drew our attention to the notice issued by ITO Coy. Circle 1(4) treating assessments and demands raised by ITO, Ghaziabad as valid and enforceable. The assessment made was accordingly submitted to be without jurisdiction.
6. The learned Departmental Representative opposed the above submissions. In fact, he raised a preliminary objection that no appeal challenging the territorial jurisdiction of Assessing Officer was competent. In this connection Shri Haldhar drew our attention to the decision of Honble Supreme Court in the case of Rai Bahadur Seth Teomal v. CIT [1959] 36 ITR 9.
6.1 Shri Haldhar also relied upon the provision of section 124 of the Income-tax Act and strongly contended that objection as to territorial jurisdiction was to be raised before the Assessing Officer in terms of sub-section (5) of section 124 as it stood prior to its amendment w.e.f. 1-4-1988. As no objection was filed under the above section before the Assessing Officer, the assessee, now, could not challenge the jurisdiction of the Assessing Officer. Shri Haldhar accordingly supported the assessment.
7. After careful consideration of the rival submissions in the light of statutory provisions, we are of the view that section 124, as introduced w.e.f. 1-4-1988 was applicable in this case. It is true that returns in this case were filed on 30-9-1986 and the provisions as existing on the above date should normally apply. However, section 124 is a procedural in nature and would apply to all cases coming for consideration after the amendment and therefore the question was required to be considered as per the amended provision as the same was raised after 1-4-1988. The provisions of section 124 at the relevant time were as under :
“124. (1) Where by virtue of any direction of order issued under sub-section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction –
(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and
(b) in respect of any other person residing within the area.
(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief Commissioner or the Commissioner; or when the question is one relating to areas within the jurisdiction of different Directors General or Chief Commissioners or Commissioners, by the Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by the Board or by such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, specify.
(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 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 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 (1) of section 142 or under section 148 for the making of the return or by the notice under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier.
(4) Subject to the provisions of sub-section (3), where an assessee calls in question the jurisdiction of an Assessing Officer, then the Assessing Officer, shall if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) before the assessment is made.
(5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all the powers conferred by or under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-section (1) or sub-section (2) of section 120.”
7.1 It is clear from the above provision that whenever the jurisdiction of the Assessing Officer is questioned by the assessee, the Assessing Officer, if not satisfied with correctness of the claim, has to refer the matter for determination to the authorities mentioned in sub-section (2) of section 124. He is not competent and empowered to decide the aforesaid question. In fact, no other authority except those mentioned in sub-section (2) can go into the question of territorial jurisdiction of the Assessing Officer. The learned Departmental Representative Shri Haldhar vehemently contended that this Tribunal was not empowered to go into the question of territorial jurisdiction of the Assessing Officer. He also contended that the assessee, in view of sub-section (5) of section 124, prior to its amendment w.e.f. 1-4-1988, was not competent now to raise the question before the appellate authority, the same not having been raised before the Assessing Officer. Shri Haldhar further contended that the assessee himself had submitted the return with ITO Coy. Circle 1(4) , New Delhi and cannot complain on ground of territorial jurisdiction. We are unable to find any justification or force in the above objection particularly in the circumstances of this case. It is clear from the scheme of section 124 that question of determination of territorial jurisdiction should always remain vested exclusively in the authorities mentioned in the section. It is further clear that the Assessing Officer cannot create his own territorial jurisdiction nor the same can be vested in him by the assessee by filing return with him. It is a matter to be determined in accordance with law. The provision of sub-section (5) of section 124 as also other provisions are to be interpreted in the above background. The purpose of above sub-section is mainly to avoid unnecessary litigation and wastage of time on technical grounds which have nothing to do with the merit of the case. It is, therefore, provided that the assessee shall not be entitled to question the jurisdiction of the Assessing Officer except as provided in the sub-section. But it does not follow that two or more demands can be separately created by different Assessing Officers in respect of same income for the same assessment year. Both the Assessing Officers would claim jurisdiction over the case and the person who had suffered double taxation would be without a remedy. In our opinion there is no bar to and consider the question of territorial jurisdiction by authorities mentioned in sub-section (2) of the relevant section at any time. The validity of assessment or assessments in turn depend upon the order ultimately passed under sub-section (2). If the authority is wrongly assumed by the Assessing Officers and two assessments are made, the matter can be taken as fully covered under clause (a) of section 246(1) of Income-tax Act. In such a case the assessee denies his liability be assessed under this Act and challenges the order passed for assessment under section 143(3) of Income-tax Act as two orders cannot stand simultaneously. In this case, admittedly, double assessments have been made which are not permissible under the law. Therefore, the appeal, as filed by the assessee before the CIT (Appeals) was competent. The other objection of the DR in terms of sub-section (5) of unamended Act (there is no material difference on this point between amended and unamended provisions) is also not valid as the Assessing Officer and, on appeal, the learned CIT (Appeals) have gone into the question of territorial jurisdiction. None of the authorities had said that the territorial jurisdiction of the Assessing Officer could not be questioned. There is, further, no proof that objection was not raised within one month of service of notice as mentioned in sub-section (3) of section 124 (amended) or sub-section (5) of section 124 (unamended). The objection of limitation can also be treated as waived. If it is held that question cannot be raised now, it would tantamount to upholding double assessments of the assessee for the same assessment year – one by ITO Coy. Circle 1(4), New Delhi and the other by the ITO, Ghaziabad. It would also tantamount approval of illegality committed by the Assessing Officer by not following the mandatory provisions of sub-section (4) of section 124 and in assuming jurisdiction contrary to specific statutory provisions. Besides, the learned CIT (Appeals), in her order dated 5-11-1990, asked the Assessing Officer to go into the question of “correct jurisdiction” of the case. The correct jurisdiction, as per the scheme of section of the Income-tax Act, has to be determined by authorities mentioned in sub-section (2) of section 124 amended w.e.f. 1-4-1988. Having regard to the order passed by the CIT (Appeals), the question is arising out of the order of the Appellate Authority. The assessee had also approached the Administrative Commissioner under section 264 of the Income-tax Act to hold that the ACIT Company Circle 1(4), New Delhi had no jurisdiction over this case. The CIT rejected that petition vide order dated 2-12-1994 on the ground that the CIT (Appeals) had already decided the question and that appeal before the ITAT on the same issue was pending. It is, therefore, little too late for the revenue to oppose the claim raised by the assessee. The interest of justice demands that Assessing Officers should refer the matter to the authority under sub-section (2) of section 124 for determination of correct jurisdiction over the case. Accordingly, after setting aside the orders of CIT (Appeals) and of Assessing Officer, impugned before us, we restore the matter to the file of the Assessing Officer. In the view of the matter that we have taken above, it is unnecessary for us to go into the merit of other grounds raised before us.
8. In the result, the assessees appeals are allowed for statistical purposes.