Punjab & Haryana H.C : Impugned notice could not be held to be barred by limitation

High Court Of Punjab & Haryana

Amarjit Singh Tut. vs. Union of India

Assessment Year : 2007-08

Section : 143

Adarsh Kumar Goel And Ajay Kumar Mittal, JJ.

C.W.P. Nos. 19294, 19295, 19302 And 19314 Of 2009

August 11, 2010


Adarsh Kumar Goel, J. – This order will dispose of C.W.P. Nos. 19294, 19295 19302 and 19314 of 2009, as all the said petitions involve common questions of law.

2. In C.W.P. No.19314 of 2009, the petitioner sought quashing of notice dated 17.9.2008, Annexure P-4, under Section 143(2) of the Income Tax Act, 1961 (for short, “the Act”) on the ground that the same was barred by limitation.

Prayer has also been made for further consequential orders.

3. Case of the petitioner is that he is an NRI and filed return for the assessment year 2007-08 on 31.7.2007 at Jalandhar, which was processed on 7.2.2008. The petitioner filed an application dated 2.4.2008 under Section 154 of the Act, which is said to be still pending. Notice dated 17.9.2008 was issued under Section 143(2) of the Act by the Assistant Commissioner of Income Tax, Jalandhar, to which the petitioner filed his objection on 20.10.2008 on the ground that the same was barred by limitation. Thereafter, he was served with a notice alongwith a questionnaire calling for further information, which was followed by notice dated 24.11.2009 by the Director of Income Tax (International Taxation), Chandigarh.

4. Contention raised in the writ petition is that vide notification dated 28.9.2007 under Section 120 of the Act, the Central Board of Direct Taxes authorized the officers specified therein to exercise powers of Assessing Officers and other authorities. Inspite of said notification, power has been exercised by respondent No. 2 i.e. Joint Commissioner of Income Tax (International Taxation). It is submitted that notice under Section 143(2) of the Act issued by respondent No.2 was barred by limitation and that the authority at Jalandhar had no jurisdiction to issue notice under Section 143(2) of the Act after issuance of notification dated 28.9.2007.

5. In the reply filed, stand of the revenue is that Notice dated 30.9.2008 was within limitation in view of amended provision of Section 143(2)(ii) of the Act. The limitation was available upto a period of six months from the end of financial year in which return was filed i.e. upto 30.9.2008, whereas notice was in fact issued on 17.9.2008. As regards notification, transferring jurisdiction from Jalandhar to Chandigarh under Section 120 of the Act, stand taken is that notwithstanding the said notification, the files were actually transferred to Chandigarh only on 29.10.2009. Thereafter, notice dated 5.11.2009 was issued by the Joint Director of Income Tax (International Taxation), Chandigarh under Section 143(2) of the Act.

6. We have heard learned counsel for the parties and perused the record.

7. Questions for consideration are:-

“(i)Whether Notice, Annexure P-4, dated 17.9.2008 is barred by limitation and its effect?

(ii)Whether Notice, Annexure P-4, dated 17.9.2008 is without jurisdiction?

(iii)What is the effect of notification dated 28.9.2007, Annexure P-14, under Section 120 of the Act, transferring jurisdiction from Jalandhar to Chandigarh?”

Re: (i)

8. Learned counsel for the petitioner submitted that limitation had to be seen on the date of filing of return and not thereafter, for which reliance was placed on following judgments:-

(i) Dy. CIT v. Mahi Valley Hotels & Resorts [2006] 287 ITR 360 (Guj.);

(ii) CIT v. M. Chellappan [2006] 281 ITR 444 (Mad.);

(iii) Brij Mohan v. CIT [1979] 120 ITR 1 1 (SC);

(iv) S.S. Gadgil v. Lal & Co. [1964] 53 ITR 231 (SC);

(v) K. M. Sharma v. ITO [2002] 254 ITR 772 2 (SC);

(vi) Virtual Soft Systems Ltd. v. CIT [2007] 289 ITR 83 3 (SC);

(vii) Ajantha Industries v. CBDT [1976] 102 ITR 281 (SC);

(viii) Rajesh Mahajan v. CIT [2002] 257 ITR 577 4 (Punj. & Har.) and

(ix) CIT v. Greenworld Corpn. [2009] 7 SCC 69 5.

9. The submission cannot be accepted. Under section 143(2) of the Act, limitation for issuing notice was 12 months from the end of the month in which the return was filed. In the present case, return was filed on 31.7.2007 and limitation for issuance of notice under Section 143(2) of the Act was upto 31.7.2008. However, by virtue of amendment by Finance Act, 2008, w.e.f. 1.4.2008, limitation stood extended upto six months from the end of the financial year in which the return was furnished i.e. upto 30.9.2008.

10. It is well settled that a statute of limitation is a procedural statute and is applicable to pending proceedings. However, limitation law is prospective as it does not revive an action which may have become time barred on the date of enforcement of the changed law nor the changed law extinguishes a subsequent cause of action. Position of law has been summed up in ‘Principles of Statutory Interpretation’ by Justice G.P. Singh, Tenth Edition:-

“…Statutes of Limitation are thus retrospective in so far as they apply to all legal proceedings brought after their operation for enforcing causes of action accrued earlier, but they are prospective in the sense that they neither have the effect of reviving a right of action which is already barred on the date of their coming into operation, nor do they have the effect of extinguishing a right of action subsisting on that date. But a statute may, expressly or impliedly by retrospectively extending limitation, revive a barred claim….”

11. The judgments relied upon do not take any contrary view and are not to the effect that limitation law will not apply to pending proceedings. In Mahi Valley Hotels, case ( supra) notice issued after limitation was held to be void. Similar is the position in M. Chellapan. Brij Mohan’s case (supra) is not a case dealing with amendment to law of limitation and does not hold that the changed limitation law does not apply to pending proceedings. S.S. Gadgil’s case (supra) deals with the principle that an amendment has to be prospective and does not have the effect of reviving proceedings which may have become time barred. There is no dispute with this proposition. In the present case, proceedings had not become time barred before the amendment came into force. In K.M. Sharma’s case (supra) it was observed that principle of strict interpretation of the taxing statute applies also to law regulating limitation. Virtual Soft Systems Ltd.’s case (supra) deals with the general principle of an amendment being prospective in absence of express or implied intention to the contrary. Judgments in Ajantha Industries case (supra) and Rajesh Mahajan’s case (supra) do not deal with the issue of limitation. Greenworld Corpn.’s case (supra) only holds that reassessment has to be within limitation and that the assessment order could not be passed at the instance of a higher authority. It has been further held that effect of jurisdiction in the context of transfer under section 120 of the Act would be governed by the principle akin to section 21 CPC and in absence of any prejudice, objection of lack of jurisdiction at a belated stage could not be entertained.

This aspect will be considered under Question (ii).

12. In view of above, the plea on behalf of the petitioner cannot be accepted and the notice Annexure P.4 could not be held to be beyond limitation. Accordingly, the question has to be decided against the assessee.

Re: (ii)

13. It is undisputed that notification dated 28.9.2007 was issued which had the effect of transferring jurisdiction to corresponding authorities in place of original authorities exercising territorial jurisdiction. Inspite of this, order under Section 143(1) of the Act was passed by the original authority on 7.2.2008, to which no objection on account of lack of jurisdiction has till date been raised by the assessee. Application under Section 154 of the Act was filed on 2.4.2008 by petitioner at Jalandhar itself pointing out errors in the order of assessment on merits. In these circumstances, even though order under Section 143(1) of the Act was after notification dated 28.9.2007 under Section 120 of the Act, the said order cannot be held to be nullity. It is well settled that objection as to territorial jurisdiction has to be raised at the earliest and is otherwise deemed to have been waived. On the same analogy, notice under section 143(2) cannot be held to be void for want of jurisdiction. Reference may be made not only to Section 21 CPC but also to Section 124(3) of the Act. In the objection raised by the petitioner, Annexure P-5, only plea raised was that the notice was beyond limitation and there was no objection to the jurisdiction. On being asked, learned counsel for the petitioner was unable to show the question of territorial jurisdiction having been raised at any time prior to 2.12.2009 when such objection was put forward for the first time in reply of the petitioner, Annexure P-12 put forward to Chandigarh authority. By the time objection was raised for the first time, notice had already been issued by the Chandigarh authority. The Chandigarh authority while issuing notice under Section 142(1) of the Act, was acting in continuation of the notice already issued by the adjudicating authority. This being the factual position, plea of lack of territorial jurisdiction did not vitiate notice under Section 143(2) of the Act. No prejudice is shown to have been caused to the assessee.

14. A distinction has to be made between a situation when there is inherent lack of jurisdiction and a situation where jurisdiction is irregularly assumed and plea of want of jurisdiction can be waived by a party. In the later situation, question arises whether party who could waive the plea of jurisdiction, raised such a plea and whether such a party had been prejudiced on account of erroneous assumption of jurisdiction.

15. Reference may be made to judgment of the Hon’ble Supreme Court in Kiran Singh v. Chaman Paswan AIR 1954 SC 340, para 7, wherein it was observed:-

“7. …….With reference to objections relating to territorial jurisdiction, Section 21 of the Civil Procedure Code enacts that no objection to the place of suing should be allowed by an appellate or revisional court, unless there was a consequent failure of justice. It is the same principle that has been adopted in Section 11 of the Suits Valuation Act with reference to pecuniary jurisdiction. The policy underlying Sections 21 and 99, C. P. C. and Section 11 of the Suits Valuation Act is the same namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in failure of justice and the policy of the legislature has been to treat objections to jurisdiction both territorial and pecuniary as technical and not open to consideration by an appellate court, unless there has been a prejudice on the merits. The contention of the appellants, therefore, that the decree and judgment of the District Court, Monghyr, should be treated as a nullity cannot be sustained under Section 11 of the Suits Valuation Act.”

16. Same view has been taken by the Hon’ble Supreme Court in Greenworld Corpn. Referring to earlier judgment in Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, in para 63, it was observed:-

“63.In Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2008 (16) SCALE 197], this Court held:

“17. The Tribunal is a court subordinate to the High Court. An appeal against the Tribunal lies before the High Court. The High Court, while exercising its appellate power, would follow the provisions contained in the Code of Civil Procedure or akin thereto. In view of sub-section (1) of Section 21 of the Code of Civil Procedure, it was, therefore, obligatory on the part of the appellate court to pose unto itself the right question, viz., whether the first respondent has been able to show sufferance of any prejudice. If it has not suffered any prejudice or otherwise no failure of justice had occurred, the High Court should not have entertained the appeal on that ground alone.

18. We, however, while taking that factor into consideration must place on record that we are not oblivious of the fact that a decision rendered without jurisdiction would be coram non juris. Objection in regard to jurisdiction may be taken at any stage. (See Chief Engineer, Hydel Project v. Ravinder Nath, [(2008) 2 SCC 350]) wherein inter alia the decision of this Court in Kiran Singh v. Chaman Paswan, [AIR 1954 SC 340] was followed, stating:

“26. The Court also relied upon the decision in Kiran Singh v. Chaman Paswan [AIR 1954 SC 340] and quoted (in Harshad Chiman Lal case {[(2005) 7 SCC 791], SCC pp. 804-805, para 33} therefrom: Kiran Singh case (supra), AIR p.342, para 6.

6. …It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, …strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties.”

Though in the aforementioned decision these observations were made since the defendants before raising the objection to the territorial jurisdiction had admitted that the court had the jurisdiction, the force of this decision cannot be ignored and it has to be held that such a decree would continue to be a nullity.”

20. A distinction, however, must be made between a jurisdiction with regard to subject matter of the suit and that of territorial and pecuniary jurisdiction.

Whereas in the case falling within the former category the judgment would be a nullity, in the latter it would not be…”

17. Accordingly, question has to be answered against the assessee and impugned notice cannot be held to be vitiated for want of jurisdiction.

Re: (iii)

18. Effect of notification under section 120 of the Act is to transfer jurisdiction to Chandigarh but in absence of prejudice to the assessee, proceedings which took place at Jalandhar prior to actual transfer of record i.e. 29.10.2009 could not be held to be nullity, as already held above.

19. In view of above, the writ petitions are dismissed.

[Citation : 347 ITR 585]

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