SHINGHAL, J. - (1.) THE Rajasthan Industrial & Scientific Corporation ( Water Meter Division ), hereinafter referred to as "the assessee", voluntarily furnished a return of its income for the assessment year 1964-65 on November 17, 1964, to Income-tax Officer, Special Survey Circle, Jaipur. It is not disputed before us that that Officer had the jurisdiction to assess the income. He issued a notice under sections 143 (2) of the Income tax Act, 1961, hereinafter referred to as the Act, to the assessee, for its appearance on February 9, 1966 THE notice was returned unserved. THE file was thereafter transferred to Income-tax Officer H-ward, Jaipur, who fixed another date for the appearance of the assessee and ordered the service of its notice. That notice was also not served on the assessee. THE Income-tax Officer then directed the issue of notice at both the addresses of the assessee, bat without success. A report was submitted by the Income-tax Inspector in regard to the service which led the Income-tax Officer to make an ex-parte assessment against which the assessee felt aggrieved.
(2.) THE assessee did not however think it proper to make an application for re--opening the ex parte assessment under section 146 of the Act, and did not also call in question the jurisdiction of Income-tax Officer H-ward, Jaipur, within the time prescribed by section 124 5 ). On the other hand, it filed an appeal to the Appellate Assistant Commissioner and raised an objection against the jurisdiction of Income-tax Officer H-ward on the ground, inter alia, that his jurisdiction extended to the left side of the S. M. S. Road whereas the premises of the petitioner were located on the right side and fell within the jurisdiction of Income tax Officer F-ward, Jaipur. The Appellate Assistant Commissioner did not examine the question whether the objection of the assessee was tenable by way of appeal. He all the same, held that the assessment was "defective" and directed the Income-tax Officer having jurisdiction to make a fresh assessment according to the law. The order of the Appellate Assistant Commissioner is dated March 10, 1971 and is on the record as Ex. F. In making that order, the Appellate Assistant Commissioner expressly rejected the argument that the earlier assessment was void ab initio, or that it was not permissible for him to direct a fresh assessment because of the expiry of the period of Imitation prescribed by section 153 (1) (a) (i) of the Act. The assessee filed a second appeal to the Income-tax Appellate Tribunal. The Tribunal took note of the provisions of section 124 of the Act and held that there was no inherent lack of jurisdiction in the Income tax Officer so that the assessment proceedings were "validly" commenced. It gave its reasons, and held that the order of assessment was not a nullity and there was no justification for raising the bar of limitation against the direction for making a fresh assessment according to the law. The order of the Tribunal is dated May 4, 1972 and is on the record as Annexure H. The assessee made an application for rectification under section 254 (2), but without success. It then made an application for statement of the case under section 256 (1 ). That application has been rejected by the Tribunal's order Annexure L dated September 29, 1972, and that has led to the present application under sub-section (2) of sec. 256 for requiring the Appellate Tribunal to state the case and refer it to this Court on the following questions of law - " (1) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the order of the Income Tax Officer was rightly set aside by the Appellate Assistant Commissioner of Income Tax and that the same was not a nullity ? (ii) Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the Appellate Assistant Commissioner of Income Tax was competent to direct the present Income Tax Officer to pass a fresh assessment order according to law ? and (iii) Whether there was any evidence before the Tribunal to hold that the order of the Income Tax Officer was not a nullity and whether the Tribunal misdirected itself in law in arriving at this conclusion ?" Mr. Mehta, learned counsel for the applicant, has frankly conceded before us that he is not in a position to press the application in so far as it relates to questions numbers (i) and (iii ). He has therefore confined his arguments to question No. (ii), and has clarified that the question really is whether it was permissible for the Appellate Assistant Commissioner to direct, in the facts and circumstances of this case, that the Income-tax Officer having jurisdiction will make a fresh assessment according to the law inspite of the expiry of the period of 4 years prescribed by sec. 153 (1) (a) (i) ? It has been argued by Mr. Mehta that as Income-tax Officer H. Ward, Jaipur, had no jurisdiction to make the assessment, the assessment made by him was a nullity and stood annulled by the appellate order of the Appellate Assistant Commissioner within the meaning of sec. 251 (1) (a) and that the Appellate Tribunal has erred in taking a contrary view and in holding that the question of law was academic and was concluded by the judgment of their Lordships of the Supreme Court referred to in Annexure L. The learned counsel has tried to support his argument by reference to the decisions in N. Naganatha Iyer vs. Commissioner of Income Tax Madras (l), M/s Shree Gopal Industries Ltd. vs. The State of Rajasthan (2) and Narinder Singh Dhingra vs. Commissioner of Income-tax. New Delhi (3 ).
(3.) WE find that the question of annulling, and not merely setting aside, the assessment made by Income-tax Officer H. Ward, was raised before the Appellate Assistant Commissioner, but he took the view that as the assessment proceedings had commenced lawfully with the filing of a voluntary return by the assessee, the assessment was merely "defective in asmuch as it had been framed by Income tax Officer who had no jurisdiction over it", and was not void ab initio. The Appellate Tribunal upheld that view for the reasons that (i) it was not disputed that Income tax Officer Special Survey Circle, Jaipur, before whom the voluntary return was filed by the assessee, had the jurisdiction to commence the assessment proceedings, (ii) the Income-tax Officer Special Survey Circle commenced the assessment proceedings in 1966 and issued a notice under section 143 (2) at the correct address, (iii) the assessee did not make an application for re-opening the assessment under sec. 146, and (iv) there was "nothing to assume that the business premises fell towards the right side of the S. M. S. Road. The Tribunal therefore took the view that the question was merely academic, and rejected the application under sec. 256 (1 ). As we shall show presently, we have no reason to take a different view. Sec. 124 of the Act deals with the jurisdiction of Income-tax Officers. Sub-sec. (1) of that section provides, inter alia, that the Income-tax Officers shall perform their functions in respect of such areas as the Commissioner may direct. Sub-sec. (4) provides further that where a question arises as to whether an Income-tax Officer has jurisdiction to assess any person, the question shall, inter alia, be determined by the Commissioner. Sub-sec. (5) provides further that no person shall be entitled to call in question the jurisdiction of an Income-tax Officer after the expiry of the period prescribed by it. It is not in dispute that the question of jurisdiction was not challenged by the assessee within that time limit. Moreover their Lordships of the Supreme Court have examined in Rai Bahadur Seth Teomal vs. Commissioner of Income-tax and another (4) the true meaning of similar provisions in sec. 64 (3) of the Income-tax Act, 1922, and upheld the view taken by the Federal Court in Wallace Brothers & Co. , Ltd. vs. Commissioner of Income-tax, Bombay, Sind and Baluchistan (5) that the 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. It is true that in the present case the Appellate Assistant Commissioner lost sight of the provisions of sec. 124 (4) of the Act, and the Revenue did not prefer an appeal, but an objection to that effect was taken before the Appellate Tribunal to support the order appealed against as that was clearly permissible under rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. That, in fact, appears to be the reason why the Tribunal has upheld the order of the Income tax Officer. Reference may also be made to the decision in Guduthur Bros. vs. Income-tax Officer, Special Circle, Bangalore (6 ). There the Income-tax Officer proceeded to impose the penalty without affording a hearing. He had however taken care to issue a notice to the assessee to show cause why the penalty should not be imposed. The Appellate Assistant Commissioner pointed out the illegality which vitiated the proceedings after they had been lawfully initiated, and the Income-tax Officer issued a further notice calling upon the asses sees to appear before him so that they might be given an opportunity of being heard. It was held by their Lordships of the Supreme Court that the earlier notice did not cease to be operative and it was open for the Income tax Officer to take up the matter at the point at which the illegality supervened, and to correct his proceedings. This pronouncement of the law has a direct bearing on the present controversy as it settles the law in so far as the question of annulling the assessment is concerned. ;