Law:

Section:

Section 124 of the income-tax act, 1961-Income-tax officer-Jurisdiction of-Whether an assessment completed without deciding assessee's objection to ITO's jurisdiction under section 124(4) will be valid if otherwise ITO has territorial jurisdiction under section 124(7)-Held, yes-Whether an assessment will have to be annulled if ITO concerned neither has jurisdiction in terms of section 124(7) nor has complied with the requirements of section 124(4)-Held, yes Facts The assessee-firm was running a jewellery shop in Delhi, with branches in New Delhi and Mussoorie. On receipt of some information regarding unaccounted transactions by the assessee, two ITOs simultaneously issued notices under section 148 to the assessee for the assessment year 1948-49. Action subsequently taken by one of the ITOs was not known. In reply to the other ITO, the assessee, while asking for more time to file returns, raised an objection about the ITO's jurisdiction in view of the notice from another ITO and sought a decision by the Commissioner under section 124(4). While no action was taken on this objection, the ITO issued notice under section 142(1) to the assessee. In reply to this also, the assessee raised the question of the ITO's jurisdiction. Without taking any action on these representations, the ITO completed the reassessment. In its appeal to the AAC, the assessee raised several objections, one of which questioned the jurisdiction of the ITO to make the reassessment, when he had failed to refer the question of jurisdiction to the Commissioner and obtain his orders under section 124(4). The AAC, accepting the contention of the assessee, however, set aside the assessment to be made afresh after following the legal procedure laid down in the Act. Against this decision, the assessee filed an appeal to the Tribunal, contending that without an appropriate order from the Commissioner under section 124(4), the ITO could not complete a valid assessment and since the assessment was ab initio void for want of proper jurisdiction, the AAC could not give it a new lease of life by setting it aside and directing the ITO to remove the illegality. While the Tribunal held that the assessment made…

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