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Citation Codes
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citation codes
Case Number
Attorney(S)
  • Anand ParchureA.J. Bhoot
Judges
  • Manish PitaleM.S. SANKLECHA
Acts
  • sub-section (1) of section 142 or (sub-section (2) of section 115WE or) sub-section (2) of section 143
  • sub-section (1) of section 115 WD or) under sub-section (1) of section 139,
  • Income Tax Act, 1961 :Jurisdiction of Assessing Officers.124(1)
  • (2) of section 115WD or sub-section (1) of section 142
  • sub-section (1) or sub-section (2) of section 120
  • clause (b) of sub-section (4) of that section
  • clause (ii) of sub-section (1) of section 142
  • INCOME TAX ACT 1961
  • him.(2) (3) ..(4) ..Explanation - In section 120
  • Section 124(3) of the Income Tax Act
  • sub-section (1) of section 115
  • FINANCE ACT 2016
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Cites
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Anand ParchureA.J. Bhoot
Judges
  • Manish PitaleM.S. SANKLECHA
Acts
  • sub-section (1) of section 142 or (sub-section (2) of section 115WE or) sub-section (2) of section 143
  • sub-section (1) of section 115 WD or) under sub-section (1) of section 139,
  • Income Tax Act, 1961 :Jurisdiction of Assessing Officers.124(1)
  • (2) of section 115WD or sub-section (1) of section 142
  • sub-section (1) or sub-section (2) of section 120
  • clause (b) of sub-section (4) of that section
  • clause (ii) of sub-section (1) of section 142
  • INCOME TAX ACT 1961
  • him.(2) (3) ..(4) ..Explanation - In section 120
  • Section 124(3) of the Income Tax Act
  • sub-section (1) of section 115
  • FINANCE ACT 2016
See more information ...
Smart Summary

Judgment Summary — M.S. Sanklecha, J.

Factual and Procedural Background

In 1999 a search and seizure operation was conducted on the Motwani group at Nagpur; a concurrent search on the respondent/assessee took place from 2.2.1999 to 6.2.1999. At that time the respondent/assessee's assessment was with the I.T.O., Rajnandgaon (Madhya Pradesh).

On 6.7.1999 the Commissioner of Income Tax, Raipur, under Section 127 of the Income Tax Act, transferred the respondent/assessee's assessment proceedings to the Deputy Commissioner of Income Tax, Nagpur. The respondent/assessee challenged that transfer before the Madhya Pradesh High Court which, on 17.9.1999, quashed the 6.7.1999 transfer order and directed the Commissioner to hear the respondent and pass a reasoned order in support of transfer.

On 22.9.1999 the Deputy Commissioner, Nagpur issued a notice under Section 158BC (block assessment notice) requiring a return. The respondent filed a return on 5.5.2000 declaring undisclosed income as nil. Thereafter the Commissioner passed a fresh order under Section 127 on 18.1.2000 maintaining the earlier transfer.

The Deputy Commissioner, Nagpur issued notices under Sections 142(1) and 143(2) on 12.8.2000, participated proceedings followed and an assessment order dated 28.2.2001 under Section 143(3) read with Section 158BC was passed determining undisclosed income at Rs. 27.56 crores. The respondent appealed to the CIT(A); CIT(A) by order dated 14.3.2002 partly allowed the appeal and remitted to rework undisclosed income. Both revenue and the assessee appealed to the Tribunal.

Before the Tribunal the respondent raised the additional ground that the assessment order of 28.2.2001 was without jurisdiction because the notice under Section 158BC was issued on 22.9.1999 when the Deputy Commissioner, Nagpur was not the Assessing Officer (the 6.7.1999 transfer order had been quashed on 17.9.1999). The Tribunal allowed the additional ground, held Section 124(3) did not bar the objection, and allowed the respondent's appeal. Revenue appealed to this Court.

Legal Issues Presented

  1. Whether, in the facts and circumstances of the case and in law, the filing of return in response to notice under Section 158BC by the respondent/assessee with Nagpur ITO is sufficient to invoke the bar under Section 124(3) of the Income Tax Act so as to preclude the respondent from questioning the jurisdiction of the Assessing Officer?

Arguments of the Parties

Appellant/Revenue's Arguments

  • Section 124(3) bars the respondent/assessee from challenging the jurisdiction of the Assessing Officer because the respondent filed a return and participated in proceedings and raised the jurisdictional objection only belatedly before the Tribunal, beyond the time provided in Section 124(3).
  • By participating in proceedings following the Section 158BC notice and allowing the Deputy Commissioner, Nagpur to complete the assessment, the respondent waived the right to challenge jurisdiction.
  • Even if there was an earlier quashing of the 6.7.1999 transfer order, the subsequent order of the Commissioner dated 18.1.2000 restored the Deputy Commissioner, Nagpur's jurisdiction retrospectively, validating the notices and assessments issued earlier.

Respondent/Assessee's Arguments

  • Section 124(3) is inapplicable because it does not deal with notices issued under Section 158BC; the return here was filed in response to a Section 158BC notice (though verified similarly to a Section 142(1)(ii) return), and the statutory bar in Section 124(3) therefore does not apply. The Finance Act, 2016 amendment extends Section 124(3) to notices under Sections 153A and 153C but not to Section 158BC.
  • Mere participation in proceedings cannot amount to waiver where there is inherent lack of jurisdiction; waiver cannot confer jurisdiction that does not exist. Reliance was placed on Kanwar Singh Saini (Apex Court) for the proposition that jurisdiction cannot be derived from consent or participation.
  • On 22.9.1999 when the Section 158BC notice was issued, the Deputy Commissioner, Nagpur had ceased to be the Assessing Officer because the 6.7.1999 transfer order had been quashed on 17.9.1999; therefore the notice and subsequent proceedings lacked jurisdiction.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kanwar Singh Saini v. High Court of Delhi, 2012 (4) SCC 307 Principle that conferment of jurisdiction is a legislative function; jurisdiction cannot be conferred by consent, participation or acquiescence and lack of jurisdiction can be raised at any stage. The Court relied on this authority to hold that mere participation or acquiescence by the assessee cannot validate proceedings before an officer who inherently lacks jurisdiction.
Asstt. CIT v. Hotel Blue Moon, [2010] 321 I.T.R. 362 / 188 Taxman 113 That issuance of notice under Section 158BC consequent to a search is mandatory and foundational for jurisdiction; such notice must be issued by the Assessing Officer. The Court applied this principle to conclude that the Section 158BC notice dated 22.9.1999 had to be issued by the Assessing Officer; since the Deputy Commissioner, Nagpur was not the Assessing Officer on that date, the notice was without jurisdiction.
Venad Properties Pvt. Ltd. v. Commissioner of Income Tax, [2012] 340 ITR 463 (and related reports) Decision dealing with non-service of notice before passing of an order by an Officer having inherent jurisdiction — characterized as irregular exercise of jurisdiction (as opposed to absence of jurisdiction). The Court treated Venad as distinguishable: it concerned irregular exercise of jurisdiction where the officer had inherent jurisdiction, whereas the present case involved absence of jurisdiction; thus Venad did not support revenue's waiver argument.

Court's Reasoning and Analysis

The Court examined the relevant statutory provisions (Sections 2(7A), 124, 127 and 158BC) reproduced in the opinion and analysed the effect of those provisions upon the facts.

First, the Court considered the argument that Section 124(3) bars the respondent from questioning jurisdiction. Section 124(3)(a) applies where a person has made a return under Section 139(1) or in response to a notice under Section 142(1) (or akin provisions) and then fails to object within one month of service of a notice under Section 142(1) or Section 143(2) or after completion of the assessment, whichever is earlier. The Court observed that the return in this case was filed in response to a notice under Section 158BC (block assessment), not in response to Section 142(1) or Section 139(1). Although Section 158BC provides that such returns are to be verified in the same manner as returns under clause (ii) of sub-section (1) of Section 142, the Court emphasised that the Section 158BC procedure is part of Chapter XIV-B and applies "so far as may be" only those provisions of Sections 142 and 143 which are relevant; they do not apply in their entirety.

On that basis the Court concluded that the time-bar in Section 124(3) does not operate to prohibit the respondent from challenging jurisdiction where the return was filed in response to Section 158BC. The Court further noted that the later Finance Act, 2016 amendment expressly extended Section 124(3) to notices under Sections 153A and 153C but did not include Section 158BC — a fact the Court regarded as supportive of its interpretation that Section 124(3) was not intended to cover Section 158BC notices.

Second, the Court addressed the waiver argument. It explained that waiver can apply to rights but cannot create substantive jurisdiction where none exists. The Court held that waiver (or mere participation in proceedings) cannot validate acts of an officer who inherently lacks jurisdiction. The decision in Venad was distinguished as concerning irregular exercise of jurisdiction by an officer who had inherent jurisdiction — not a case of absence of jurisdiction. The Court relied on the principle from Kanwar Singh Saini that jurisdiction is conferred by statute and cannot be created by consent, participation or by a superior court.

Third, the Court considered the revenue's contention that the Commissioner’s order dated 18.1.2000 restored or retrospectively validated the earlier 6.7.1999 transfer order so as to confer retrospective jurisdiction on the Deputy Commissioner, Nagpur. The Court analysed Section 127 and its Explanation and concluded that Section 127 does not empower authorities to retrospectively confer jurisdiction so as to validate notices that were issued without jurisdiction. The statutory scheme indicates that transfer operates from the date of the transfer order and that proceedings pending on that date continue before the transferee, but Section 127 does not validate notices previously issued without jurisdiction.

Applying these analyses to the facts, the Court found that on 22.9.1999 (the date the Section 158BC notice was issued) the Deputy Commissioner, Nagpur was not the Assessing Officer (because the 6.7.1999 order had been quashed on 17.9.1999) and therefore the notice dated 22.9.1999 was issued by an officer who lacked jurisdiction. Consequently all proceedings arising from that notice were without authority of law.

Holding and Implications

APPEAL DISMISSED

Holding: The substantial question of law framed at admission — whether filing of a return in response to a Section 158BC notice suffices to invoke the bar under Section 124(3) — was answered in the negative in favour of the respondent/assessee and against the appellant/revenue. The Court upheld the Tribunal's finding that the Deputy Commissioner, Nagpur lacked jurisdiction to issue the Section 158BC notice on 22.9.1999 and that Section 124(3) does not bar the respondent from challenging that jurisdiction.

Direct consequences: The appeal by the revenue was dismissed and the Tribunal's order in favour of the respondent/assessee was affirmed. The Court recorded "No order as to costs."

Broader implications: The opinion confines the applicability of the time-bar in Section 124(3) to situations falling within the specific textual ambit of that provision (returns under Section 139(1) or responses to notices under Sections 142/143 as qualified in the provision) and highlights that participation in proceedings cannot validate an officer's inherent lack of jurisdiction. The opinion did not purport to lay down a new, expansive precedent beyond these conclusions with respect to Section 158BC and the effect of a quashed transfer order.

Show full summary ...

    Commissioner of Income tax-1, Nagpur v. Lalitkumar Bardia

    JUDGMENT

    M.S. Sanklecha, J. - This appeal challenges the Order dt.17.2.2006 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order relates to Block Assessment Years 1989-90 to 1999-2000.

    2. This appeal was admitted on 6.10.2009 on the following substantial questions of law :

    "Whether in the facts and circumstances of the case and in law the filing of return in response to notice under Section 158BC by respondent/assessee with Nagpur ITO, is sufficient to apply bar under Section 124(3) of the Income Tax Act in the matter"

    3. In the year 1999, there was a search and seizure operation on Motwani group of Nagpur. As a consequence, a search was also carried out on respondent/assessee during the period from 2.2.1999 to 6.2.1999. At that time, the respondent/assessee was being assessed at Rajnandgaon (M.P.).

    4. On 6.7.1999, the Commissioner of Income Tax, Raipur, in exercise of powers under Section 127 of the Act, transferred the Appellant's assessment proceedings (case) from I.T.O., Rajnandgaon to the Deputy Commissioner of Income Tax, Nagpur. The respondent/assessee challenged the order dated 6.7.1999 passed under Section 127 of the Act by the Commissioner of Income Tax, Raipur before the Hon'ble Madhya Pradesh High Court. On 17.9.1999, the Hon'ble Madhya Pradesh High Court quashed and set aside the order dt.6.7.1999 passed u/s.127 by the Commissioner of Income Tax, Raipur. However, the Court by its Order, dated 17.9.1999 directed the Commissioner to hear the respondent/assessee and pass a reasoned order in support of the transfer of the case.

    5. On 22.9.1999, the Deputy Commissioner of Income Tax, Nagpur issued a show cause notice under Section 158BC of the Act calling upon the appellant to file its return of income. In response to the above notice, the appellant on 5.5.2000 did file its return of income declaring undisclosed income at 'Nil'.

    6. In the meantime i.e. after the order of High Court dt.17.9.1999 quashing the earlier order dt.6.7.1999 by the Commissioner of Income Tax, Raipur, the CIT passed a fresh order dt.18.1.2000 under Section 127 of the Act. By order dt.18.1.2000, the Commissioner of Income Tax, Raipur maintained the earlier order dt.6.7.1999. In fact, the operative part of the order reads as under :

    "The case of the petitioner was connected case of Motwani Group of Nagpur, where search and seizure operation u/s.132 of the I.T. Act were conducted. Accordingly, the case of the petitioner was transferred from ITO, Ward Rajnandgaon to the Dy CIT, Central Circle-1(1) Nagpur for co-ordinated investigation. Thus, the order passed u/s.127 dated 6.7.99 is in order and no further action is necessary. "

    7. Thereafter, the Deputy Commissioner of Income Tax, Nagpur on 12.8.2000 issued notices u/ss. 142(1) and 143(2) of the Act. The respondent/assessee participated in the proceedings and consequent thereto, an order dated 28.2.2001 of assessment came to be passed u/s.143(3) r/w. Section 158BC of the Act by the Deputy Commissioner of Income Tax, Nagpur. The above order dated 28.2.2001 of assessment determined the undisclosed income at Rs.27.56 Crores.

    8. Being aggrieved by the Order dated 28.2.2001 of the Deputy Commissioner of Income Tax, Nagpur, the respondent/assessee filed an appeal to the Commissioner of Income Tax (Appeals) [CIT (A)]. By an Order dated 14.3.2002, the CIT (A) partly allowed the respondent/assessee's appeal in effect reducing the undisclosed income by directing the Deputy Commissioner of Income Tax to rework the undisclosed income, thus, reducing the tax payable thereon.

    9. Being aggrieved by order dt.14.3.2002 of the CIT (A), both the appellant/revenue as well as the respondent/assessee filed the appeals to the Tribunal. Before the Tribunal, the respondent/assessee raised an additional ground viz. that the Assessment Order dt.28.2.2001 passed u/s.143(3) r/w. 158BC of the Act by the Deputy Commissioner of Income Tax, Nagpur, is without jurisdiction. This is so as, on the date when notice under Section 158 BC of the Act was issued i.e. 22.9.1999, the Deputy Commissioner of Income Tax, Nagpur was not his Assessing Officer. The basis of his assuming jurisdiction was the Order dt.6.7.1999 by the Commissioner of Income Tax, Raipur, which had been quashed by the Order dated 17.9.1999 of Hon'ble Madhya Pradesh High Court. The Tribunal allowed raising of additional ground as it concerned the issue of jurisdiction, being a pure question of law. Thereafter, the impugned order upheld the objection of the respondent/assessee negating the stand of the Appellant/Revenue that the issue of jurisdiction cannot be urged by the Respondent/Assessee in view of Section 124 (3) of the Act. This by holding that the same would not apply as the respondent/assessee has not filed his return of income u/s.139(1) or in response to notice u/s.142(1) or 142(3) of the Act, but in response to notice u/s.158BC of the Act. Besides holding that on 22.9.1999 when the notice under Section 158BC of the Act was issued, the Deputy Commissioner of Income Tax, Nagpur was not having jurisdiction, the Tribunal allowed the respondent/assessee's appeal. Being aggrieved, the Revenue is in appeal before us.

    10. Before considering the rival submissions, it would be useful to reproduce the provisions of the Act which would have a bearing in answering the question formulated for our consideration :

    Section 2(7A) of the Income Tax Act, 1961 :

    "Assessing Officer" means the Assistant Commissioner (or Deputy Commissioner) (or Assistant Director) (or Deputy Director) or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act and the (Additional Commissioner or) (Additional Director or) (Joint Commissioner or Joint Director) who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;).

    Section 124 of the Income Tax Act, 1961 :

    Jurisdiction of Assessing Officers.

    124(1) Where by virtue of any direction or 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. .........

    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 115 WD or) 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 115WE 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 (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115 WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or 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.

    It is pertinent to note that w.e.f. 1.6.2016 the Finance Act, 2016 is inserted the following sub-clause (c) :

    (c) where an action has been taken under section 132 or section 132A, after expiry of one month from the date on which he was served with a notice under sub-section (1) of section 153A or sub-section (2) of section 153C or after the completion of the assessment, whichever is earlier.

    Section 127 of the Income Tax Act, 1961 :

    Power to transfer cases.

    (1) The (Principal Director General or) Director General or (Principal Chief Commissioner or) Chief Commissioner or (Principal Commissioner or) Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.

    (2) ………

    (3) ……..

    (4) ……..

    Explanation - In section 120 and this section, the word "case, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.)

    Section 158 BC of the Income Tax Act, 1961 :

    Procedure for block assessment.

    158BC. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A. In the case of any person, then, -

  • (a) the Assessing Officer shall -
  • (I) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days;
  • ( ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (ii) of sub-section (1) of section 142 setting forth his total income including the undisclosed income for the block period :

    • Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter :

    Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return;)

    (b) ……

    (c) …....

    (d) ……

    (emphasis supplied)

    11. Mr.Anand Parchure, learned Senior Counsel for the appellant/assessee in support of the appeal submits as follows :

  • (a) In view of Section 124(3) of the Act, the respondent/assessee is statutorily barred from objecting to the jurisdiction of the Assessing Officer. This is so as the same was raised only before the Tribunal. Thus, admittedly, beyond the time provided therein;
  • (b) As the respondent/assessee has participated in the proceedings consequent to notice issued under Section 158BC of the Act and allowed the Deputy Commissioner of Income Tax, Nagpur to complete the assessment without raising this objection, it amounts to waiver. The respondent/assessee cannot now challenge the jurisdiction of the Deputy Commissioner of Income Tax, Nagpur; and
  • (c) In any view, the Deputy Commissioner of Income Tax, Nagpur was vested with jurisdiction to complete the assessment of undisclosed income under Section 158BC of the Act by the subsequent Order dated 18.1.2000 of Commissioner of Income Tax, Raipur which has retrospectively revived his earlier Order dated 6.7.1999. Consequently, the Deputy Commissioner of Income Tax, Nagpur is the Assessing officer in terms of the Act at the time when the notice was issued to the respondent/assessee and no fault can be found with the same.

    • 12. On the other hand, Mr. Thakar, learned Counsel appearing for the respondent/assessee while supporting the impugned order, submits as under :

  • (a) Section 124 (3) of the Act would have no application as, at the relevant time and even now, as it does not deal with the notices issued u/s.158 BC of the Act. Even the amendment carried out by Finance Act, 2016 only seeks to bring within its ambit any notices issued u/s.153A and 153C of the Act and not notices issued under Section 158BC of the Act. Thus, no fault can be found with the order of the Tribunal and the question as framed has to be answered in favour of the respondent/assessee.
  • (b) There can be no question of waiver by mere participation in the Assessment proceedings where there is inherent lack of jurisdiction in the Assessing Officer. In support, he placed reliance upon the Apex Court decision in Kanwar Singh Saini v. High Court Of Delhi., 2012 (4) SCC 307; and
  • (c) At the time when the notice u/s.158BC was issued on 22.9.1999, the Deputy Commissioner of Income Tax had ceased to be the Assessing Officer. This is for the reason that the Order dated 6.7.1999 passed u/s.127 bestowing jurisdiction on him had already been quashed and set aside on 17.9.1999. Thus, the Deputy Commissioner of Income Tax, Nagpur could not have assumed jurisdiction to issue notice u/s.158 BC of the Act.

    • 13. It is undisputed position that the respondent/assessee was being assessed at Rajnandgaon (M.P.). It was as a consequence of search upon the Motwani group at Nagpur that a search was carried on upon the Respondent/Asseessee. In view of the above, the Commissioner of Income Tax, Raipur for facilitating detailed and coordinated investigation, passed an order on 6.7.1999, under Section 127 of the Act transferring the respondent/assessee's case from Rajnangaon to Nagpur. However, the Order dated 6.7.1999 of the Commissioner of Income Tax, Nagpur was quashed and set aside on 17.9.1999 by the Hon'ble M.P. High Court. The notice u/s.158BC of the Act was issued on 22.9.1999 i.e. after the order of transfer dated 6.7.1999, u/s.127 of the Act was quashed and set aside. Thus, it ceased to exist. Consequently, on 22.9.1999, when the Deputy Commissioner of Income Tax, Nagpur ceased to have jurisdiction to assess the Respondent/Assessee as there was no order of transfer of the respondent/assessee's case to Nagpur. In terms of Section 2(7A) of the Act, the Assessing Officer means 'an Officer of the Income Tax vested with jurisdiction either by virtue of Section 120 or any other provision of the Act'. Admittedly, the Deputy Commissioner of Income Tax, Nagpur does not have jurisdiction over the respondent/assessee by virtue of Section 120 of the Act. However, the claim of jurisdiction as a Assessing Officer over respondent/assessee is the Order dated 6.7.1999 which has been passed u/s.127 of the Act, while issuing notice on 22.9.1999, under Section 158 BC of the Act. But, as the Order dt.6.7.1999 under Section 127 of the Act by the Commissioner of Income Tax, Raipur was set aside before issuing of notice, the Deputy Commissioner of Income Tax, Nagpur ceased to be the Respondent/Assessee's Assessing Officer. In the result, the notice dated 22.9.1999 issued u/s.158BC of the Act was issued by the Deputy Commissioner of Income Tax, who was not the Assessing Officer of the respondent/assessee. It is the Assessing Officer alone who has to serve notice upon the assessee calling upon him to furnish a return in terms of Section 158BC of the Act. This notice the Deputy Commissioner of Income Tax could not issue as, on 22.9.1999, he was not the Assessing Officer. As a consequence, the notice being without jurisdiction, all the proceedings subsequent thereto are without authority of law.

    14. In fact, as the Apex Court held in Asstt. CIT. v. Hotel Blue Moon, [2010] 321 I.T.R 362/188 Taxman 113 (So that the issue of notice under Section 158 BC of the Act, consequent to search is mandatory, as it is the very foundation for jurisdiction. Therefore, the notice u/s.158 BC of the Act has necessarily to be issued by a person who is the Assessing Officer and not by any Officer of the Income Tax Department. In view of the above, on 22.9.1999, when the notice under Section 158 BC of the Act was issued by Deputy Commissioner of Income Tax, Nagpur, he was not the Assessing Officer of the Respondent/Assessee. Therefore, no fault can be found on the above count with the Order of the Tribunal.

    15. Notwithstanding the above, it is submitted on behalf of the Revenue that the respondent/assessee is statutorily barred by virtue of Section 124(3) of the Act, from now urging this issue before the Tribunal or before this Court. However, on examination of Section 124(3) of the Act, it is noted that a person is not entitled to question the jurisdiction of a Assessing Officer in the context of the present facts after the time prescribed therein, only when a return is filed under Section 139(1) of the Act and within one month of service of notice under Section 142(1)/143(2) of the Act. In this case, admittedly, the return has been filed in response to a notice under Section 158BC of the Act, though it may be verified in the same manner as a return under Section 142(1)(i) of the Act as provided in Section 158BC(b) of the Act. However, it is still a return filed in response to notice under Section 158BC of the Act and not a return in response to notice under Section 142(1)(i) of the Act. The assessment consequent to notice issued under Section 158 BC of the Act (Chapter XIV-B of the Act) is carried out in the manner prescribed/laid down in Section 158 BC of the Act. Further Section 158 BC of the Act provides that provisions of Section 142 and 143 (2) and (3) of the Act shall so far as may be, apply. Therefore, these sections do not apply in its entirety, but only to the extent applicable. Further the requirement in Section 124(3)(a) of the Act of raising objection within one month of completion of Assessment is to be read in the context of the earlier part i.e. objection within one month of the notice under Sections 142 and 143 of the Act, as the later part is qualified by the words "whichever is earlier'.

    16. In this case, it is undisputed position that the return of income was filed declaring undisclosed income at 'Nil' on 5.5.2000 in response to the notice dated 22.9.1999 issued under Section 158 BC of the Act and not consequent to notice u/ss.142(1)(i) of the Act which was issued as late as 12.8.2000. In the above view, it is clear that the bar of Section 124(3) of the Act would not prohibit the respondent/assessee from calling in question the jurisdiction of the Deputy Commissioner of Income Tax, Nagpur in passing the Assessment Order beyond the period provided therein. It needs to be pointed out that amendment by Finance Act, 2016 which is w.e.f. 1.6.2016 brings within ambit of Section 124(3) of the Act cases when notice is issued consequent to search u/s.153(A) or 153(C) of the Act preventing/prohibition an assessee from raising the issue of jurisdiction. It does not include notices issued u/s.158 BC of the Act. This further supports the view that time bar u/s.124(3) of the Act to question the jurisdiction of the Income Tax Officer would not apply to the cases where return has been filed consequent to notice u/s.158 BC of the Act.

    17. It was next submitted that even absent statutory provision, the respondent/assessee is barred from raising the issue of jurisdiction after having participated in the proceedings before the Deputy Commissioner of Income Tax, Nagpur on principle of waiver of its right to question his jurisdiction. A waiver would mean a case where a party decides not to exercise its right to a particular privilege, available under the law. In this case, the Respondent/assessee has a right not to be assessed to tax by an Income Tax Officer, who is not the Assessing Officer. However, the waiver can only be of one's right/privilege but non- exercise of the same will not bestow jurisdiction on a person who inherently lacks jurisdiction. Therefore, the principle of waiver cannot be invoked so as to confer jurisdiction on an Officer who is acting under the Act when he does not have jurisdiction. The Act itself prohibits an Officer of Income Tax from exercising jurisdiction u/s.158 BC of the Act, unless he is an Assessing Officer. This limit in power of the Income Tax Officer in exercise of jurisdiction is independent of conduct of any party. Waiver can only be of irregular exercise of jurisdiction and not of lack of jurisdiction. The decision of the Delhi High Court in Venad Properties Private Limited v. Commissioner Of Income Tax [2012] 340 ITR 463/[2011] 16 taxmann.com 62/[2013] 212 Taxman 20 relied upon by the Appellant/Revenue is a case of non-service of notice before passing of an order by an Officer having inherent jurisdiction. Therefore, it is a case of irregular exercise of jurisdiction and not absence of jurisdiction to issue notice. Therefore, it will have no application.

    18. It is a settled position in law that mere participation in proceedings or acquiescence will not confer jurisdiction. The Apex Court in Kanwar Singh Saini (supra) made observations, which are apposite to the issue at hand and which read as under :

    "22.There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. (Vide United Commercial Bank Ltd v. Workmen, Nai Bahu v. Lala Ramnarayan, Natraj Studios (P) Ltd. v. Navrang Studios, Sardar Hasan Siddiqui v. STAT, A.R. Antulay v. R.S. Nayak, Union of India v. Deoki Nandan Aggarwal, Karnal Improvement Trust v. Parkash Wanti, UP. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., State of Gujarat v. Rajesh Kumar Chimanlal Barot, Kesar Singh v. Sadhu, Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and CCE v. Flock (India) (P) Ltd.)".

    19. It was lastly submitted that, by virtue of the subsequent Order dated 18.1.2000 passed by the Commissioner of Income Tax, Raipur, the earlier order dt.6.7.1999 passed u/s.127 of the Act by him stands revived. Consequently, all the proceedings taken between 6.7.1999 till the Order dated 18.1.2000 by the Deputy Commissioner of Income Tax, Nagpur become regular and he will retrospectively enjoy the status of the Assessing Officer even on 22.9.1999, when he issued the notice u/s.158 BC of the Act.

    20. Transfer of proceedings u/s.127 of the Act cannot be retrospective so as to confer jurisdiction on a person who does not have it. Section 127 of the Act does not empower the Authorities under the Act to confer jurisdiction on a person who does not have jurisdiction with retrospective effect. In fact, the explanation under Section 127 of the Act clearly provides that all the proceedings under the Act which are pending on the date of such order of transfer and all the proceedings which may be commenced after date of such order of transfer would stand transferred to the Assessing Officer to whom the case is transferred by Section 127(1) of the Act. This provision makes it clear that though transfer would come into effect from the date the order of Commissioner passed under Section 127(1) of the Act, the proceedings already commenced would not abate and continue with new Assessing Officer, who assumes charge consequent to transfer subject of course to the pending notices being within jurisdiction of the Officer issuing the notices. It is not a provision which validates without jurisdiction notice issued by an Income Tax Officer. If the submission of the Revenue on the above account is to be accepted, then an order which is without jurisdiction could be bestowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if they are transferred to a new Officer by an Order under Section 127 of the Act.

    21. For the aforesaid reasons, the above substantial question of law is answered in the negative i.e. in favour of the respondent/assessee and against the appellant/revenue.

    22. Therefore, the appeal is dismissed. No order as to costs.

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    Commissioner of Income tax-1, Nagpur v. Lalitkumar Bardia
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