S.K. Jha, J. - (1.) THESE two reference applications under Section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as."the Act."), have been made by the Income-tax Appellate Tribunal, Patna Bench, at the instance of the assessee. The common questions in the two references on which our opinion has been sought are these : "(1) Whether, in the facts and circumstances of the case, the files for the assessment years 1960-61 and 1961-62 were legally transferred to the Income-tax Officer, Special Circle, Ranchi ? (2) Whether, in the facts and circumstances of the case, the Income-tax Officer, Special Circle, Ranchi, had jurisdiction to pass an order of assessment or to take any action for the assessment years 1960-61 and 1961-62?"
(2.) THE short facts relevant for the disposal of these two references may be taken from the statement of the case itself. THE assessee is a private limited company owning a mica mine and is carrying on business in mica mining and selling. THE head-office of the assessee's business is at Kodarma in the District of Hazaribagh, and originally the assessments of the income of the assessee were being made by the Income-tax Officer, Hazaribagh. On the 17th of July, 1964, the Commissioner of Income-tax passed an order purporting to be one under Section 127 of the Income-tax Act, 1961, transferring the cases of the assessee from the Income-tax Officer, Ward A, Hazaribagh, to the Income-tax Officer., Special Circle, Ranchi. A copy of that order has been marked annexure "A" to the statement of the case. THE Income-tax Officer, Special Circle, Ranchi, completed the assessment for the two years in question, namely, assessment years 1960-61 and 1961-62, after hearing the assessee's representatives and perusing the books of account produced by him. Assessment orders in the two cases were duly passed, and appeals having been preferred against the orders of the assessing officer to the Appellate Assistant Commissioner, the assessee failed in the appeals also. On further appeals being carried to the Income-tax Appellate Tribunal, Patna Bench, at the hearing of these appeals before the Tribunal, apart from challenging the assessment orders as also the appellate orders of the Appellate Assistant Commissioner on merits, a new objection by way of a preliminary objection was taken before it challenging the assessment proceedings themselves as being without jurisdiction. It was contended on behalf of the assessee before the Tribunal that the power conferred on the Commissioner for transfer of cases under the provisions of Section 127 of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"), merely empowered him to transfer cases under the 1961 Act and did not confer any power on the Commissioner to transfer cases pending under the Act. Consequently, it was argued that the Income-tax Officer, Hazaribagh, alone had jurisdiction to deal with the assessments of income of the assessee with regard to these two assessment years and the orders assessing the income of the assessee for these years passed by the Income-tax Officer, Special Circle, Ranchi, suffered from lack of jurisdiction. THE Tribunal, while deciding the appeals on merits against the assessee also went into the question of this preliminary objection and held that the action of the Commissioner under Section 127 was perfectly valid. It was further held that even assuming for the sake of argument that Section 127 of the 1961 Act was not applicable, the Commissioner undoubtedly had jurisdiction under Section 5(7A) of the Act, and, therefore, the order passed may also be deemed to be an order under Section 5(7A) of the Act. It was further held by the Tribunal that it was not open to the assessee to raise a question with regard to the place of assessment at the appellate stage, no such objection having been raised before the assessing officer. At the outset I must state that the admitted position at the Bar was that the returns of income for the two assessment years in question were filed before the Income-tax Officer, Hazaribagh, before the 1st of April, 1962, which was the date from which the 1961 Act came into force. Section 297(2)(b) of the 1961 Act clearly lays down that where a return of income is tiled after the commencement of this Act excepting in pursuance of ;\ notice under Section 34 of the repealed Act in respect of any assessment year, the assessment for that year shall be made in accordance with the procedure specified in the 1961 Act. Section 297(2)(a) of the 1961 Act, on the contrary, lays down that where a return of income has been filed before the commencement of the 1961 Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if the 1961 Act had not been passed. In the instant cases, therefore, obviously, the provisions of the Act will apply in so far as the assessments for these years are concerned and not the provisions of the 1961 Act, except in so far as they may be expressly made applicable, with which exceptions we are not concerned in the present cases. Learned counsel for the assessee submitted, firstly, that the order of transfer passed by the Commissioner did not specify the assessment years with regard to which the cases of the assessee had been transferred from the file of the Income-tax Officer, Hazaribagh, to that of the Income-tax Officer, Special Circle, Ranchi. Secondly, since admittedly these two assessment years will be governed by the old Act, the order of transfer under Section 127 of the 1961 Act could not relate to the two years in question, as any order of transfer with regard to cases under the Act must be passed under Section 5(7A) of the Act; and since no such order had been passed under Section 5(7A) aforesaid, the two assessment years in question could not be covered by the order incorporated in annexure "A". Nor it was contended that any reason has been given in the order (annexure "A") for making the transfer. It was next contended that since it was a matter relating to the fundamental jurisdiction of the assessing officer in making the assessment orders under challenge, it amounted not merely to raising an objection with regard to the place of assessment but with regard to the inherent lack of jurisdiction in the assessing officer in passing the impugned assessment orders. I am afraid, there is no substance in either of the points raised by the learned counsel for the assessee. It is true that the order of transfer passed by the Commissioner of Income-tax (annexure "A") has been purported to be passed under Section 127 of the 1961 Act, but obviously for the reasons hereinafter mentioned, although it was labelled as in exercise of the powers conferred under the aforesaid Section 127(1), in the very nature of things this order must be deemed to be a composite order both under Section 5(7A) of the Act with regard to cases covered by that Act and under Section 127 of the 1961 Act in relation to such cases which may be covered by the provisions of the 1961 Act. The omission of the nomenclature of the section, namely, Section 5(7A) of the Act, along with Section 127(1) of the 1961 Act was at best a mere irregularity ; it did not affect the substance of that action. An Explanation to Sub-sections (2), (5), and (7A) of Section 5 was added at the end of the section by the Taxation Laws (Amendment) Act, 1960 (Act 28 of 1960), which formerly found place only as an Explanation to Section 5(7A) by the amendment of 1956, which had given it retrospective operation since the inception of the Act. That Explanation was evidently inserted in order to get over the difficulty created by the decision of the Supreme Court in Bidi Supply Co. v. Union of India, 1956 29 ItR 717(SC). Since the Supreme Court had decided in that case that an order of transfer expressed in general terms without reference to a case for a particular assessment year actually pending before an Income-tax Officer was invalid, the provision in the Explanation was inserted by the 1956 Act. The placing was merely changed by the Amendment Act of 1960, so that not only in Sub-section (7A) but also in Sub-sections (2) and (5) of Section 5 "case" in relation to any person whose name was specified in the order of transfer meant all proceedings under the Act in respect of any year which may be pending on the date of the transfer and also included all proceedings under the Act which may be commenced after the date of the transfer in respect of any year. The same provision was given its due place in the 1961 Act by way of Explanation to Section 127, wherein also substantially the same meaning of the word "case" was also retained in the new statute. Since the order of transfer in the instant cases was passed by the Commissioner of Income-tax on the 17th of July, 1964, as already stated, the cases of the assessee mentioned therein with regard to assessment proceedings "which were pending as also the future assessment proceedings" were sought to be transferred. On the date of the transfer, namely, the 17th of July, 1964, obviously there must have been the cases of the assessee for the assessment years, returns of which had been filed before the 1st of April, 1962. The order of transfer, therefore, read in the light of the Explanation to Section 127 of the 1961 Act as also the Explanation to Section 5(7A) of the Act meant that the pending cases under both the Acts were as much sought to be transferred as the future assessments after the date of transfer. In this view of the matter, I would hold that the order of transfer (annexure "A") must be deemed to be a composite order of transfer both under Section 5(7A) of the Act and under Section 127 of the 1961 Act. The contention of learned counsel for the assessee that no reasons have been recorded by the Commissioner in the order of transfer is not well-founded, for the order explicitly states that for reasons of proper assessments in the cases the order of transfer has been found necessary in the interest of revenue. There is thus no infirmity in the order of transfer. Be that as it may, the contention of the learned counsel for the assessee that the nature of the objection raised before the Tribunal was not with regard to a matter of the place of assessment but with regard to the inherent lack of jurisdiction of the assessing officer is wholly fallacious. Both in form and in substance the grievance of the assessee is that its income ought not to have been assessed by the Income-tax Officer, Special Circle, Ranchi, but by the Income-tax Officer, Ward A, Hazaribagh. This is certainly, in my opinion, a challenge with regard to the place of assessment. The question then arises as to whether this point was available to the assessee to raise before the Tribunal. The point is now well-settled by the decisions of the Supreme Court to one of which I shall presently refer. In the case of Seth Teomal v. Commissioner of Income-tax, 1959 36 ITR 9 (SC), the Supreme Court laid down that under Section 64(3) of the Act the question of determination as to the place of assessment only arose if an objection was taken by the assessee and the Income-tax Officer had any doubt as to the matter, but such a determination was to be made by the Commissioner of Income-tax or the Central Board of Revenue ; the Act did not contemplate any other authority. It was further held at page 17 : "The question then arises whether the objection as to the place of assessment, i.e., by the Income-tax Officer of Calcutta, could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal. In our opinion it could not be. The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of Section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner tinder Section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in Section 30 but no appeal is there provided against orders made under Section 64(3). Similarly, appeals to the Appellate Tribunal which lie under Section 33 of the Act also do not provide for any appeal on the question of the place of assessment." It would thus be seen that the matter with regard to the place of assessment has been held by the Supreme Court to be absolutely without the purview of the appellate court in the scheme of the Act. Cases may arise in which an objection to the place of assessment is taken before the assessing officer and he either refuses to refer to the Commissioner or such a reference having been made the Commissioner refuses to determine the correct place of assessment. In such cases, of course, in exercise of powers not under the Income-tax Act but under the constitutional provisions this court may be invited to interfere. But one thing which has been set at rest is that the objection with regard to the place of assessment cannot be the subject-matter before the appellate court which is concerned with the legality and propriety of the assessment order.
(3.) BEFORE answering the questions referred for our opinion, I think it necessary, in order to bring out the real issues involved in these two references to reframe the questions referred to us in these terms : "(1) Whether, on the facts and in the circumstances of the case, the files for the assessment years 1960-61 and 1961-62 were legally transferred to the Income-tax Officer, Special Circle, Ranchi, and the Income-tax Officer, Special Circle, Ranchi, had jurisdiction to pass an order of assessment or to take any action for the assessment years 1960-61 and 1961-62 ? (2) Whether an objection with regard to the place of assessment could be taken before the appellate authority, no such objection having been raised before the Income-tax Officer ?" Having thus reframed the questions, I must answer the first question in the affirmative and hold that the files for the years in question were legally transferred to the Income-tax Officer, Special Circle, Ranchi, who had jurisdiction to pass an order of assessment and to take action for the assessment years 1960-61 and 1961-62. The second question must be answered in the negative, and I would accordingly hold that the objection with regard to the place of assessment could not be taken at the appellate stage, such an objection not having been raised before the assessing officer. Both the questions thus reframed are answered in favour of the department and against the assessee. The assessee must pay the costs of these references. Consolidated hearing fee is assessed at Rs. 200. Untwalia, C.J. I agree. ;