V.K. SINGHAL, J. - (1.) THE Tribunal has referred the following questions of law arising out of its order dt. 17th July, 1984, in respect of asst. yrs. 1974-75 and 1975-76 under s. 256(1) of the IT Act, 1961 : "On the facts and in the circumstances of the case, whether the Tribunal was correct in law in holding that the ITO, E-Ward, had jurisdiction to levy the penalties in question ?"
(2.) THE brief facts of the case are that the assessee filed return for the asst. yr. 1976-77 declaring the income at a figure exceeding Rs. 25,000. Vide letter dt. 12th April, 1977, he requested that the file lying with the ITO, E Ward, may be called for as the jurisdiction lies with the ITO, D Ward. THE assessment of the cases in respect of asst. yrs. 1974-75 and 1975-76 were finalised by the ITO, `E' Ward, Jodhpur. When the notice for penalty under s. 271(1)(c) of the IT Act was issued an objection was raised that the ITO `E' Ward has no jurisdiction. In appeal the penalty levied by the ITO was set aside by the CIT(A) on the ground that he had no jurisdiction. When the matter was taken up by the Revenue before the Tribunal it was found that the assessment for the year 1974- 75 was made by the ITO, `E' Ward, Jodhpur, on 27th Nov., 1975. In respect of the year 1975-76 the return was filed on 9th Sept., 1976 which was accepted by the ITO, E-Ward, under s. 143(1) of the IT Act. Both these assessment orders were reopened under s. 147 on the ground that the income earned in the name of Ramchandra & Bros. was the benami income of the assessee which had to be taxed in the hands of the assessee. The reassessment was made on 28th Oct., 1977, by the ITO, E Ward, and no objection with regard to the same was taken at that time. The return for the asst. yr. 1976-77 was filed on 12th April, 1977. The Tribunal called for return and found that the return was addressed to ITO, D Ward, but the word ``D Ward'' used was changed to E ward subsequently. The letter which was alleged to have been sent by the assessee for calling the file from the ITO, E Ward, Jodhpur, was not found with the file of the ITO. The CIT(A) found that filing of the return for the asst. yr. 1976-77 on 12th April, 1977, can be treated as an objection to the jurisdiction of the ITO E Ward, in respect of asst. yrs. 1974-75 and 1975-76 under s. 124(5). The Tribunal observed that this finding of the CIT(A) is contrary to the record because in these two years even the assessee does not claim to have objected to the jurisdiction of the ITO, E Ward, till the reassessment was completed. The order passed by the CIT(A) was set aside. Arguments of the learned counsel for the parties have been heard. The dispute in the present case is covered by the decision of this Court in the case of Indra & Co. vs. CIT (1979) 13 CTR (Raj) 353 : (1982) 134 ITR 466 (Raj), wherein it was held that if the objection with regard to place of assessment has not been taken during the assessment proceedings, then the assessee cannot challenge the jurisdiction of the ITO in penalty proceedings. It was observed in that case that-- "The result of the foregoing discussion is that it cannot be said that the ITO, `D' Ward, Jodhpur, had inherent lack of jurisdiction in issuing notices under s. 22(2) of the Act to the assessees and the notices issued by him cannot be said to be void. The objection as to jurisdiction of the ITO, `D' Ward, to issue notices under s. 22(2) was, in fact and substance, an objection pertaining to the place of assessment. Consequently on the facts and in the circumstances of the case the Tribunal was justified in holding that what the assessee meant by raising the plea of lack of jurisdiction of the ITO, `D' Ward, was an objection as to the place of assessment. We are further of the opinion that the issue of notices under s. 22(2) falls within the purview of the term `assessment' and since the assessee did not object to the place of assessment within the time allowed by the notice the place of assessment (or according to the assessee, the jurisdiction of the ITO, `D' Ward, to issue notices) cannot be called in question in the penalty proceedings." Sec. 124(2) of the Act provides that where a question arises as to whether an ITO has jurisdiction to assess any person, the question shall be determined by the CIT, or where the question is one relating to areas within the jurisdiction of different CsIT, by the CsIT concerned, or if they are not in agreement, by the Board. Under sub-s. (5) it has been provided that no person shall be entitled to call in question the jurisdiction of an ITO (a) after the expiry of one month from the date on which he has made a return under sub-s. (1) of s. 139 or after the completion of the assessment, whichever is earlier, and (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-s. (2) of s. 139 or under s. 148 for the making of the return. Sub- s. (6) provides that subject to provisions of sub-s. (5) where an assessee calls in question the jurisdiction of an ITO, then the ITO shall, if not satisfied with the correctness of the claim refer the matter for determination under sub-s. (4) before the assessment is made. From a perusal of various provisions referred to above it is clear that the jurisdiction of the ITO could be challenged with reference to assessment within, the time prescribed therefor. If the assessee has not raised any objection with regard to the jurisdiction of the ITO during the assessment proceedings, it could be an implied waiver and once the jurisdiction has not been challenged in the assessment proceedings then the penalty proceedings which emanate during the course of assessment proceedings cannot be challenged on that ground. The provisions of s. 274(2) were omitted w.e.f. 1st April, 1976. An objection with regard to inherent lack of jurisdiction can be raised at any stage and even in colletaral proceedings and the order has to be considered as non est, but the objection with regard to territorial jurisdiction is to be raised within the period specified under s. 124 and in the case of Indra & Co. (supra) the question with regard to territorial jurisdiction was held not to be of inherent lack of jurisdiction. In view of the decision of this Court in the case of Indra & Co. (supra) we are of the opinion that the Tribunal was justified in holding that the ITO, E Ward, had jurisdiction to levy the penalties in question. Consequently, the reference is answered in favour of the Revenue and against the assessee. No order as to costs. ;