S.C. Mathur, J.
1. An income-tax assessee whose assessment for the assessment year 1985-86 was completed by the Inspecting Assistant Commissioner of Income-tax (Assessment), Central Circle-I, Lucknow, respondent No. 1, has approached this court under Article 226 of the Constitution of India to challenge the said assessment on the ground that the officer lacked jurisdiction to make the assessment. In the description of respondent No. 1, the word 'assistant' appears to have been wrongly used in place of 'assessment' as from annexure-3 which is the impugned order, it appears that his correct designation is Inspecting Assistant Commissioner of Income-tax (Assessment), Central Circle I, Lucknow. The assessment was made on March 30, 1988. The petitioner admits that, against the impugned order, he has preferred an appeal under Section 246 of the Income-tax Act, 1961 (43 of 1961) (for short 'the Act'), but hejustifies the filing of the instant petition on the ground that the petitioner cannot raise the question of jurisdiction therein, a plea which is not disputed by learned counsel for the Income-tax Department ; according to him, the question cannot be raised even in the present proceedings. A few facts necessary for the disposal of the petition, may now be stated.
2. For the assessment year in question, the petitioner filed his return showing an annual income of Rs. 82,749. The assessment proceedings were pending before respondent No. 1 who passed an order on February 25, 1988, under Section 131(3) of the Act detaining certain books of account and documents for verification and another order on March 11, 1988, detaining certain vouchers under the same provision. The final order of assessment was passed, as stated earlier, on March 30, 1988, whereby the petitioner's income-tax was assessed at Rs. 15,05,580.
3. Much prior to the passing of the earliest of the aforesaid three orders, the Central Board of Direct Taxes, New Delhi, for short 'Board' passed an order dated December 31, 1987, under Section 127 of the Act, transferring the petitioner's assessment case from respondent No. 1 to E-Ward, Luck-now Circle, Lucknow ; a copy of this order is annexure-4. It is mentioned in the order that the same shall take effect from January 20, 1988.
4. Now, the submission of learned counsel for the petitioner is that, in view of the above transfer order, respondent No. 1 ceased to have jurisdiction to deal with his assessment case with effect from January 20, 1988, and, therefore, the order of assessment passed on March 30, 1988, is without jurisdiction.
5. In the counter-affidavit filed on behalf of the respondent, the facts stated hereinabove have not been contravened. It has however been stated that, although the Board passed the order of transfer at Delhi on December 31, 1987, it was issued from Delhi only on March 25, 1988, and was received at Kanpur on March 30, 1988, wherefrom it was endorsed to various officers including the office of respondent No, 1 with its endorsement dated April 12, 1988, and the endorsement with the copy of the transfer order was received in the office of respondent No. 1 on April 19, 1988. It is asserted that the transfer order operates from the date it is communicated and since, much prior to that date, the assessment proceedings had been completed, it was an infructuous order. Section 124 of the Act is relied upon for submitting that the plea of lack of jurisdiction cannot be raised after the completion of the assessment ; the writ petition is alleged to be not maintainable as the petitioner has availed of the alternative remedy of appeal.
6. Learned counsel for the petitioner has tried to draw a distinction between an order of transfer which does not fix a date for its coming into effect and an order which fixes such a date. According to him, in theformer case, the transfer order may take effect from the date of communication but, in the latter case, it will have to take effect from the date mentioned in the order, otherwise the fixation of date would become meaningless.
7. It is not necessary to pronounce on the abstract legal proposition canvassed by learned counsel for the petitioner as the material questions requiring consideration, are--
(i) What is the nature of the power of transfer conferred by the Act and
(ii) How the Act itself views a defect of the nature involved in the present case ?
8. To arrive at an answer to these questions, a few provisions of the Act prescribing the income-tax authorities and their jurisdiction will require, consideration.
9. Chapter XIII of the Act contains the relevant information. Its main heading is 'income-tax authorities'. The Chapter is divided into four parts 'A', 'B', 'C' and 'D'. These parts have the heading--'Appointment and Control', 'Jurisdiction', 'Powers' and 'Disclosure of Information'. Part 'A' contains Sections 116 to 119, Part 'B' contains Sections 120 to 130A, Part 'C' contains Sections 131 to 136 and Part 'D' contains Section 138, Section 137 having been omitted with effect from April 1, 1964.
10. Section 116 mentions the income-tax authorities. The authorities mentioned are (i) Central Board of Direct Taxes, (ii) Directors of Inspection, (iii) Commissioners of Income-tax, Commissioners of Income-tax (Appeals) and Additional Commissioners of Income-tax, (iv) Assistant Commissioners of Income-tax who may be either Appellate Assistant Commissioners of Income-tax or Inspecting Assistant Commissioners of Income-tax, (v) Income-tax Officers ; and, (vi) Inspectors of Income-tax.
11. At the apex is the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (Act 54 of 1963), and at the bottom is the Inspector. Section 118 deals with the control of income-tax authorities. It provides who is subordinate to whom. Under Section 119, the Board is competent to issue orders, instructions and directions to the income-tax authorities and the latter are enjoined to follow them.
12. Part 'B', as already stated, bears the title 'Jurisdiction'. Sections 120, 121, 121A and 122, falling in this part, prescribe that the Directors of Inspection, Commissioners, Commissioners (Appeals) and Appellate Assistant Commissioners shall perform such functions as may be assigned to them by the Board. As would appear from the language of these sections, the assignment may be with reference to the (1) areas, (2) persons or classes of persons, (3) incomes or classes of income, and (4) cases or classes of cases.
13. Sections 123, 124, 125, 128 deal with the assignment of work by the Commissioner to Inspecting Assistant Commissioners, Income-tax Officers and Income-tax Inspectors. This assignment may also be with reference to (i) areas, (ii) persons or classes of persons, (iii) incomes or classes of income, or (iv) cases or classes of cases. Under Section 125A, the Commissioner is competent to confer concurrent jurisdiction upon Income-tax Officers and Inspecting Assistant Commissioners. This assignment may also be on the same basis of area, etc. When concurrent jurisdiction is conferred upon an Income-tax Officer and an Inspecting Assistant Commissioner, the Income-tax Officer shall perform such functions as are assigned to him by the Inspecting Assistant Commissioner. In the end, a general power of assignment of functions is conferred upon the Board under Section 126. When power is exercised under this provision, the assignments made under the sections mentioned hereinbefore are nullified and stand substituted by the assignment made under Section 126.
14. Section 127 also, falling under Chapter XIII, deals with transfer of cases. Under Sub-section (i), the power to transfer cases is conferred upon the Commissioner and the Board. In cases not covered by the 'proviso', the power of transfer is to be exercised after giving the assessee a reasonable opportunity of being heard. An opportunity is to be given wherever it is possible to do so. Reasons are also required to be given for transferring cases. This is the position where the case is transferred outside the 'same city, locality or place'. The proviso covers a situation where the offices of the transferee officers are situate in the same city, locality or place. In other words, it covers local transfers. In such transfers, neither is opportunity of hearing required to be given to the assessee nor are reasons required to be recorded. In the case on hand also, the transfer was local.
15. We may now turn back to Section 124 and consider two of its Sub-sections, viz., (4) and (5). Under Sub-section (4), a question relating to the jurisdiction of an Income-tax Officer is to be decided by the Commissioner and a question relating to the jurisdiction of Commissioners is to be decided by the concerned Commissioner or by the Board. Sub-section (5) provides the limit of time up to which objection on jurisdiction may be raised. Under Clause (a), where the assessee has filed a return of income, the objection on jurisdiction must be raised within one month of the filing of the return or before the assessment is completed, whichever is earlier. Thus Sub-section (5) places an embargo against raising of me plea of jurisdiction after the assessment has been completed. In the case in hand, the petitioner had filed a return of income and, therefore, his case will be covered by Clause (a) of Sub-section (5) of Section 124.
16. A survey of the above provisions of the Act highlights the following situations. After creating the various income-tax authorities, the Act doesnot prescribe their respective jurisdiction or functions. Any case can be dealt with by any income-tax authority with the possible exception of the Board. Accordingly, the various income-tax authorities are of co-ordinate jurisdiction. What function or functions, which authority or officer, shall perform is left to be decided either by the Board or by the Commissioner. On what principles the Board and the Commissioner will allocate the functions is not indicated in the Act. The principle is, however, apparent from the nature of the enactment. The Act has been enacted with a view to collect revenue. Income-tax is the main source of revenue for the State. It is through revenue that the machinery of the State is run. It is desirable that the tax should be collected as early as possible. Collection of tax is preceded by assessment thereof. It is consequently desirable that the assessment proceedings should be completed expeditiously but expeditious disposal of an assessment does not mean that the assessee may be put to unwarranted harassment or prejudice. Therefore, the Board and the Commissioner shall take into account the convenience of the assessee also. It is with this purpose in view that it has been provided in Sub-section (1) of Section 127 that, whenever possible, an opportunity of hearing may be given to the assessee while transferring a case from one place to another. Since the assessee does not suffer any inconvenience or prejudice if a case is transferred locally, no such opportunity has been prescribed. From these provisions it is obvious that the Board and the Commissioner will exercise the power of allocation of functions to various authorities or officers in the exigency of tax collection with due regard to the convenience of the assessee. In other words, the allocation is a measure of administrative convenience. In such a situation, the concept of jurisdiction cannot be imported and, certainly, not in the sense of invalidating the resultant action on account of the defect in the exercise of functions.
17. Being an enactment aimed at collecting revenue, the Legislature did not intend collection of revenue to be bogged down on account of technical plea of jurisdiction. It has, therefore, prescribed the limit up to which the plea of jurisdiction may be raised. As provided in Section 124(5)(a), the right is lost as soon as the assessment has been completed. Even where the right is exercised before the assessment is completed, the question is to be decided by the Commissioner or by the Board. Courts do not come into the picture.
18. From the above provisions of the Act, it is apparent that the Act does not treat the allocation of functions to various authorities or officers as one of substance. It treats the matter as one of procedure and a defect of procedure does not invalidate the end action. The answer to the first question, therefore, is that the power is administrative and procedural and is to be exercised in the interest of exigencies of tax collection and the answerto the second question is that, under the Act, a defect arising from allocation of functions is a mere irregularity which does not affect the resultant action.
19. In taking the above view, we are fortified by the decisions reported in Wallace Brothers and Co. Ltd. v. CIT and Pannalal Binjraj v. Union of India : [1957]31ITR565(SC) . In both the cases, their Lordships dealt with the predecessor Act, viz., the Indian Income-tax Act, 1922 (XI of 1922). The provisions of that Act are very much similar to the provisions of the present Act. Under that Act, the income-tax authorities are mentioned in Section 5. They are (i) Central Board of Revenue ; (ii) Directors of Inspection ; (iii) Commissioners of Income-tax ; (iv) Assistant Commissioners of Income-tax who may be either Appellate Assistant Commissioners of Income-tax or Inspecting Assistant Commissioners of Income-tax ; (v) Income-tax Officers ; and (vi) Inspectors of Income-tax. The functions of these authorities are not prescribed by the Act itself. These authorities perform such functions as may be assigned to them either by the Central Government or by the Central Board of Revenue or by the Commissioner of Income-tax or by the Income-tax Officers as provided under Sub-sections (1A), (2), (3) and (5A). From this it would appear that the various income-tax authorities, with the possible exception of the Central Board of Revenue, are of co-ordinate jurisdiction. Sub-section (7) provided the hierarchy or subordination of the income-tax authorities. Sub-section (7A) confers power upon the Central Board of Revenue and the Commissioner of Income-tax to transfer a case from one Income-tax Officer to another. Section 64 prescribed the place of assessment. Sub-section (1) of this section provided that, where an assessee was carrying on a business, profession or vocation at any place, he would be assessed by the Income-tax Officer and where the business, professsion or vocation was carried on in more places than one, by the Income-tax Officer of the area in which the principal place of his business, profession or vocation was situated. Under Sub-section (2), in all other cases, the assessment was to be made by the Income-tax Officer of the area where the assessee resided. Subsection (3) laid down that, where any question arose as to the place of assessment, such question would be decided by the Commissioner or Commissioner concerned or the Central Board of Revenue depending on the situation envisaged in the sub-section. This is equivalent to Sub-section (4) of Section 124 of the present Act, The third proviso to Sub-section (3) laid down that 'if the place of assessment is called in question by an assessee, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made' meaning thereby that no reference can be made after the assessment is completed.
20. Taking note of the above scheme of the Act, their Lordships overruled the plea of jurisdiction raised in Wallace Brothers and Co. Ltd. as follows :
'It however seems to us open to serious doubt whether the appellant is entitled to raise this question at all and whether it is really a matter for decision by the court. Clause (3) of Section 64 provides that any question as to the place of assessment shall be determined by the Commissioner or by the Central Board of Revenue. The third proviso to the clause enacts that if the place of assessment is called in question by the assessee, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section, before assessment is made. These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the court. The second proviso to Clause (3) further enacts that the place of assessment shall not be called in question by an assessee if he. has made a return in response to the notice under Sub-section (1) of Section 22, or if he has not made such a return, it shall not be called in question after the expiry of the time allowed by the notice for the making of a return. This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made.'
21. From the underlined portion, it is clear that their Lordships considered parallel provisions in the 1922 Act relating to administrative convenience only and not jurisdiction.
22. The above observation in Wallace Brothers' case [1945] 13 ITR 39 has been referred to with approval by their Lordships of the Supreme Court in Pannalal Binjraj's case : [1957]31ITR565(SC) , Certain observations made in this case bear reproduction. In para 20 of the report, at page 406, it has been observed as follows (at p. 580 of 31 ITR) :
'Prima facie it would appear that an assessee is entitled under those provisions to be assessed by the Income-tax Officer of the particular area where he resides or carries on business. Even where a question arises as to the place of assessment such question is under Section 64 to be determined by the Commissioner or the Commissioners concerned if the question is between places in more States than one or by the Central Board of Revenue if the latter are not in agreement and the assessee is given an opportunity of representing his views before any such question is determined. This provision also goes to show that the convenience of the assessee is the main consideration in determining the place of assessment. Even so the exigencies of tax collection have got to be considered and the primary object of the Act, viz., the assessment of income-tax, has got to be achieved. The hierarchy of income-tax authorities which is set up underChapter II of the Act has been so set up with a view to assess the proper income-tax payable by the assessee and whether the one or the other of the authorities will proceed to assess a particular assessee has got to be determined not, only having regard to the convenience of the assessee but also the exigencies of tax collection. In order to assess the tax payable by an assessee more conveniently and efficiently, it may be necessary to have him assessed by an Income-tax Officer of an area other than the one in which he resides or carries on business. It may be that the nature and volume of his business operations are such as require investigation into his affairs in a place other than the one where he resides or carries on business or that he is so connected with various other individuals, or organizations in the way of his earning his income as to render such extraterritorial investigation necessary before he may be properly assessed. These are but instances of the various situations which may arise wherein it may be thought necessary by the income-tax authorities to transfer his case from the Income-tax Officer of the area in which he resides or carries on business to another Income-tax Officer, whether functioning in the same State or beyond it.' (emphasis* supplied).
23. Again, in paragraph 23, (at p. 581 of 31 ITR) it is observed :
'The position, therefore, is that the determination of the question whether a particular Income-tax Officer should assess the case of the assessee depends on (1) the convenience of the assessee as posited in Sections 64(1) and (2) of the Act, and (2) the exigencies of tax collection and it would be open to the Commissioner of Income-tax and the Central Board of Revenue who are the highest amongst the income-tax authorities under the Act to transfer the case of a particular assessee from the Income-tax Officer of the area within which he resides or carries on business to any other Income-tax Officer if the exigencies of tax collection warrant the same.' Paragraph 24 (at p. 582 of 31 ITR) contains the following material ; 'it is further to be noted that the infringement of such a right by the order of transfer under Section 5(7A) of the Act is not a material infringement. It is only a deviation of a minor character from the general standard and does not necessarily involve a denial of equal rights for the simple reason that, even after such transfer, the case is dealt with under the normal procedure which is prescribed in the Act.' (emphasis* supplied).
24. In paragraph 27 (at p. 584 of 31 ITR), their Lordships referred to the purpose of the Act, the same being to levy income-tax on the assessee, and collect the same and made the following observations regarding the power of transfer of cases conferred under Sub-section (7A) of Section 5 of the Act :
'There is, therefore, considerable force in the contention which has been urged on behalf of the State that Section 5(7A) is a provision for administrative convenience.'
25. The above view was taken by their Lordships even after treating Section 64 of the old Act as creating a right in favour of the assessee in respect of the place of assessment. This treatment was made in view of an earlier decision of their Lordships of the Supreme Court in Bidi Supply Co. v. Union of India : [1956]29ITR717(SC) . In the present Act, there is no provision parallel to Sub-sections (1) and (2) of Section 64. Therefore, the petitioner's plea of jurisdiction is further weakened.
26. In view of the above, the petitioner's plea that the impugned assessment is without jurisdiction fails.
27. The plea of alternative remedy pressed by learned counsel for the Department is equally untenable. The authorities constituted under the Act could not have ignored the provisions contained in Sub-section (5) of Section 124. In respect of the parallel provisions of appeal or bar against raising the plea of jurisdiction after completion of assessment, their Lordships of the Federal Court have observed in the last sentence of the passage extracted above that 'the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made.' Interpreting the provisions of Section 124(5) of the present Act, a Full Bench of the Gauhati High Court held in Sohani Devi Jain v. ITO , that Section 124 of the Act covers territorial jurisdiction as well as other kinds of jurisdiction and that an objection raised at the appellate stage as to the jurisdiction of the particular Income-tax Officer to assess the assessee is hit by Sub-section (5) of Section 124 of the Act. We are in respectful agreement with the view expressed in this case. Accordingly, the instant petition is not barred on account of the filing of appeal by the petitioner under Section 246 of the Act. However, the petition will have to be dismissed, in view of the finding on merits recorded hereinabove.
28. The petition is, accordingly, dismissed with costs to the opposite parties.