By TIOL News Service

KOLKATA, AUG 25, 2016: THE issue is - Whether when the writ petitioners were not aware of the CBDT notification, limitation on that account shall not remain suspended nor can the period during which the writ appellant was ignorant about the change of jurisdiction can be excluded from the period granted for filing appeal. YES is the answer.

Facts of the case

The assessee is a pharma manufacturing Company. It had earlier filed a writ petition challenging the survey conducted u/s 133A. Notices issued u/s 131; an order u/s 133A (3)(i)(a) and a notice was issued u/s 148 pertaining to the AYs 2012-13, 2013-14 and 2014-15 were also challenged on the ground that the respondent nos.1 and 2 "had no jurisdiction over the case of the petitioners on and from 15th November, 2014 in view of the Notification dated 22nd October, 2014. The writ petitioner alleged that he had demanded justice by letters dated 12th February, 2015, 29th April, 2015 and 12th May, 2015 but the same had been denied to him. Challenging the aforesaid letter dated 17th August, 2015 and subsequent notice issued u/s 142(1) on 9th September, 2015, a writ was filed which was dismissed by an order by holding that since it was evident that the assessee was precluded by Section 124(3)(b) from questioning the authority of the AO who had issued the notices u/s 148 to the petitioning assessee on April 29, 2015, the contents of the letters dated April 29, 2015 and the objection as to jurisdiction contained therein had been rightly disregarded by the ITO. Accordingly, the writ was dismissed and the department was left free to take appropriate steps against the assessees in accordance with law.

Held that,

++ the objection raised by the appellants was in essence an objection to the territorial jurisdiction of AO who had issued the notice u/s148 and before that had conducted various proceedings including search, seizure and survey. Sub-section 3 of Section 124 precludes an assessee from questioning the jurisdiction of an AO except in the manner laid down therein. Admittedly, the objection was not raised by the appellants within 30 days even from the date of issuance of notice u/s 148. The objection was raised by a letter dated 29th April, 2015 and the notices u/s 148 were received on 27th March, 2015. It is not also possible to contend that the period of limitation shall commence only from the date of issuance of the notice u/s 148. Notice u/s 148 was issued because prior thereto search and seizure was conducted and thereafter survey was conducted presumably leading to incriminating discovery. Thereafter documents were impounded and it is on the basis of these steps that the notice u/s 148 was issued. Each one of these steps was taken subsequent to 15th November, 2014 but the writ petitioner did not raise any objection. Assessee submitted that the writ appellants did not raise any objection because he had no knowledge of the change of jurisdiction made by the notification issued by the CBDT referred to above. It may be true that the writ petitioners did not have knowledge of the aforesaid notification but limitation on that account shall not remain suspended nor can the period during which the writ appellant was ignorant about the change of jurisdiction can be excluded because that would be contrary to Section 124(3);

++ the assessee had questioned the territorial jurisdiction of AO and the AO held that the assessee had lost the right to raise the objection by efflux of time. We, as such, find no substance in the case of the appellant. In the case of Delhi HC in the case of CIT-III Vs. Shri Shyam Sunder Infrastructure (P.) Ltd. 2015-TIOL-374-HC-DEL-IT, it was decided that Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of subsection 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in Section 124(3)(a) are within one month from the date of service of notice or; after completion of assessment whichever is earlier. We are in agreement with the view expressed by the Delhi High Court. In that view of the matter, the appeal fails and is dismissed.

(See 2016-TIOL-1846-HC-KOL-IT)