Ita/23/2003 Of Alleppey Financial Enterprises v. Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 7TH APRIL 2008 / 18TH CHAITHRA 1930 ITA.No. 23 of 2003() -------------------- AGAINST THE ORDER DATED 31/07/2002 IN COCH IN IT(S&S)A.4/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT --------------------------- ALLEPPEY FINANCIAL ENTERPRISES, ALLEPPEY, REPRESENTED BY ITS PARTNER IYPE KURIAKOSE BY ADV. SRI.JOHN RAMESH K.I.JOHN RESPONDENTS: ------------- COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07/04/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &T.R. RAMACHANDRAN NAIR, JJ. -------------------------------------------- -------------------------------------------- Dated this the 7th day of April, 2008 JUDGMENT C.R. C.N. Ramachandran Nair,J. The appellant is a financier whose business premises weresearched by the Income-tax Department on 6.1.1997. Even thoughappellant was an assessee before the Income Tax Officer, Ward II,Alleppey, file was sent to the Assistant Commissioner of Income Tax,Investigation circle, Kottayam for completing the block assessmentpursuant to search under Section 158BC in terms of Annexure Inotification which is issued by the Commissioner of Income Tax underSection 120 of the I.T. Act. From the very beginning appellantquestioned the jurisdiction of the assessing officer to whom file is sentfor assessment. Since he overruled the objection and made assessment,appeal was filed against the same. During the pendency of the appeal,Commissioner of Income tax suo motu revised the order issued underSection 158BC and directed revision of assessment, against which appellant filed appeal before the Tribunal. Before the Tribunal, theappellant questioned the jurisdiction of the Assistant Commissioner,Investigation Circle at Kottayam to make assessment after file wastransferred to him by the appellant's assessing officer at Alleppey. TheTribunal negatived the appellant's plea against which this appeal isfiled under Section 260A of the I.T. Act. 2. The only question raised before us is whether the Officer whopassed the assessment order, namely, the Assistant Commissioner ofIncome tax, Investigation circle at Kottayam, has jurisdiction tocomplete the block assessment under Section 158BC of the Act.Counsel for the appellant referred to the decision of the Supreme Courtin AJANTHA INDUSTRIES V. CENTRAL BOARD OF DIRECTTAXES, (1976) 102 I.T.R. 281 and contended that before transferringthe file from one Officer to another under Section 127(1) of the Act,the assessee should be given a hearing. According to counsel, nohearing was given and the objections about his inconvenience of goingto Kottayam to attend the assessment proceedings was ignored by thedepartment when the file was in fact transferred from the Officer at 2. The only question raised before us is whether the Officer whopassed the assessment order, namely, the Assistant Commissioner ofIncome tax, Investigation circle at Kottayam, has jurisdiction tocomplete the block assessment under Section 158BC of the Act.Counsel for the appellant referred to the decision of the Supreme Courtin AJANTHA INDUSTRIES V. CENTRAL BOARD OF DIRECTTAXES, (1976) 102 I.T.R. 281 and contended that before transferringthe file from one Officer to another under Section 127(1) of the Act,the assessee should be given a hearing. According to counsel, nohearing was given and the objections about his inconvenience of goingto Kottayam to attend the assessment proceedings was ignored by thedepartment when the file was in fact transferred from the Officer at Alleppey to the Assistant Commissioner of Income tax at Kottayam.Standing counsel appearing for the respondent has referred toAnnexure I notification issued by the Commissioner of Income taxunder Section 120 of the Act conferring exclusive jurisdiction forassessment of search cases from various Districts and Taluks in theState including the revenue District of Alleppey where from appellant'sfile was transferred on the Assistant Commissioner of Income tax,Investigation circle, Kottayam. On going through Annexure I dated24.4.1991 we find that in exercise of delegated powers under Section120 of the Act, the Commissioner of Income tax has notified the Asst.Commissioner of Income tax, Investigation Circle, Kottayam as Officerhaving exclusive jurisdiction to make assessment of search cases forvarious Taluks and revenue Districts including the revenue District ofAlleppey. Admittedly appellant is hailing f rom Alleppey where thereis no notified officer to make assessment of search cases. Going byAnnexure I notification it is clear that jurisdiction for assessment ofsearch cases from Alleppey District is exclusively conferred on theOfficer at Kottayam who really made the appellant's assessment. 3. The next question to be considered is whether the shifting offile from the Officer before whom appellant was assessed at Alleppeyto the assessing officer after search for making assessment underSection 158BC is a transfer of file as visualised under Section 127 ofthe Act. We are in agreement with the respondent's counsel's argumentthat this is not a case of transfer of file from one officer to anotherbecause the assessing officer before whom appellant was assessed,namely, ITO at Alleppey, ceased to have jurisdiction for makingassessment under Section 158BC of the Act. Appellant has no casethat the Officer before whom appellant was assessed until search hadthe authority to complete the block assessment under Section 158BCafter search. In fact transfer of file arises from an Officer withjurisdiction to make assessment to another Officer also withjurisdiction to make assessment. However, when the Officer beforewhom appellant was assessed ceased to have jurisdiction and theassessment has to be made by another officer who has exclusivejurisdiction in the matter, it is only a matter of conveying the file by theofficer who was making assessment until search to the officer who has jurisdiction to make assessment after search. All what has happened inthis case is after search, ITO at Alleppey who ceased to havejurisdiction to make assessment after search conveyed the file to theofficer who really is invested with power to make assessment underAnnexure I notification. There is no choice for the department or theappellant to choose between the officers for assessment because there isonly one officer who is designated as assessing officer to makeassessment of search cases from Alleppey Dist. Therefore there wasno need to consider objection against transfer of assessment file in thiscase and it is only a case of sending file to the only assessing officerwho had jurisdiction to make assessment. Since we find that there isno transfer of file as visualised under Section 127(1) of the Act, therewas no need to give any hearing to the appellant and therefore there isno violation of the principle laid down in the decision of the SupremeCourt above referred. 4. Another decision relied on by the appellant is that of AndhraPradesh High Court in MUKUTLA LALITA V. CIT, (1997) 226 I.T.R.23 wherein the High Court has taken the view that fresh notification conferring jurisdiction under Section 158BD is required afterintroduction of block assessment in Chapter XIV-B of the Act. We donot think we should go into this case because the case dealt with by theAndhra Pradesh High Court is a Section 158BD case where assessmentconcerned is in the name of son while the search was in the name of thefather. This is a case of block assessment under Section 158BC wherethe searched assessee is assessed by the department. We are of theview that Annexure I notification in 1991 by the Commissioner ofIncome tax applies to all cases of assessment after search whichincludes the block assessment under Section 158BC of the Act. We aretherefore of the view that the Tribunal rightly declined appellant'sjurisdictional objection against assessment and sustained theassessment made by the Asst. Commissioner of Income tax,Investigation Circle, Kottayam to whom appellant's file was conveyedby the Officer at Alleppey. Even though appellant has referred toSection 124 of the Act and contended that assessing officer as well asthe Commissioner did not consider appellant's objection aboutjurisdiction of the Officer, we do not think the issue survives because the Tribunal has considered the question and upheld the validity of theassessment which we find is perfectly in order. We therefore dismiss the appeal. (C.N.RAMACHANDRAN NAIR)Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk