DELHI BENCH (SMC) JAGDISH KARNANY v. INCOME TAX OFFICER July 29, 2005 JUDGMENT 1.The assessee is in appeal before us against orderof learned CIT (Appeals) dated 6-9-2004 for assessment year 1998-99. Thebasic grievance of assessee is that AssessingOfficer has wrongly made assessment on protective basis without anyjurisdiction. 2.In this case, information was received from DDI (Inv.) that assessee had taken bogus entries of long-term capital gainsthrough bank account in Corporation Bank at Karol Bagh,New Delhi amounting to Rs. 1,08,845. Accordingly,notice under section 148 of Income-tax Act, 1961 ('the Act') was issued tothe assessee which was served on him on 28-3-2003. Inresponse to this notice, assessee filed replydated 29-4-2003 stating that he was regularly filing his return with ITO, Ward-I,Jorhat and alongwith it acopy of acknowledgement of having filed return for assessment year 1998-99was enclosed. Assessing Officer referred matter to concerned ITO atJorhat but received no response. Since there was noresponse after several reminders, Assessing Officer completed theassessment at total income of Rs. 2,50,170 onprotective basis. 3.The CIT (Appeals) referred to provisions of section 124 of Act and heldthat since assessee had filed his return of incomefor assessment year 1998-99 at Jorhat on 30-3-2000,it was not return filed under section 139(1) and, therefore, he had lost hisright to question jurisdiction after 27- 4-2003, i.e., after theperiod of 30 days allowed to him to file return as per notice under section148 of Act. Thus, assessee's challenge to theAssessing Officer's jurisdiction was negatived by theCIT (Appeals) and on merits also he confirmed addition. 4.The learned counsel for assessee referred to thedocuments placed in paper book to buttress point that assessee was assessed and Jorhatand therefore, present assessment was bad in law. submission of thelearned DR was that Assessing Officer tried his best to find correctjurisdiction but having failed to get any response from ITO at Jorhat,he was left with no alternative but to complete assessment on protectivebasis. 5.We have duly considered rival contentions and material on record.Firstly, simply because present Assessing Officer could not confirm aboutthe correct jurisdiction, that does not ipso facto grant him thejurisdiction to make assessment, that too when assesseehad placed on record cogent evidence in support of his claim. Secondly, theinterpretation placed by CIT (Appeals) on provisions of section 124(3)is misplaced. As per clause (a), time of one month given to assessee to question jurisdiction is to be understoodas time given to him to question that jurisdiction under which he has filedthe return under section 139(1) of Act. Thus, in present case when hehad filed return at Jorhat, he could havequestioned Jorhat jurisdiction had he filed thereturn there under section 139(1) of Act. On other hand, in presentappeal, assessee is challenging jurisdictionof present ITO where no return has been filed. In that case, clause (b)of section 124(3) would be applicable. As per said clause he should havequestioned jurisdiction by 27-4-2003. If this date is considered, thencertainly, assessee was late by two days when hesent reply to present Assessing Officer vide letter dated 29-4-2003 stating his correctjurisdiction to be Jorhat. So, now questionarises as to whether delay of these two days can be condoned or not. Assuch, there is no specific provision to condone such delay. However,considering fact that right from day one, assessee has been questioning present AssessingOfficer's jurisdiction and not having acquiesced in proceedings, lenientview can be taken. lenient view which we are taking is more because of thefact that assessee has already been issued anotice under section 148 of Act by JorhatAssessing Officer on 9-2-2005. Thus when Assessing Officer having correctjurisdiction over assessee is already seized ofthe matter, there is no point in sustaining present assessment which hasbeen done by Assessing Officer having no jurisdiction over assessee. There is one more point in favourof assessee. As per section 124(4) of Act, ifthe present Assessing Officer was not satisfied with correctness of assessee's claim, he should have referred matter fordetermination under sub-section (2) of section 124 of Act instead ofproceeding to make assessment. Thus, considering all these aspects of thematter, we cancel present protective assessment. 6.Since we have cancelled assessment on legal ground, ground Nos. 6 and 7which pertain to merits of addition, are not dealt with. Further,ground Nos. 3, 4 and 5 which challenge validity of notice under section 148were not pressed at time of hearing and hence same are rejected assuch. 7.In result, appeal of assessee is partlyallowed. *** Jagdish Karnany v. Income-tax Officer