Court No.24 Writ Petition No.9525 (MB) of 2013 Prashant Chandra ... Petitioner Versus Commissioner of Income Tax 1 and others ... Opposite parties -------------- Hon'ble Rajiv Sharma,J. Hon'ble Rakesh Srivastava,J. Supplementary affidavit filed by petitioner is taken on record. Heard Mr.J.N. Mathur, Senior Advocate duly assisted by Mr.Mudit Agarwal and Mr.Anand Prakash Sinha, learned Counsel for petitioner and Mr.Alok Mathur, learned Counsel for Revenue. Through instant writ petition, petitioner assails impugned notice dated 11.9.2013 issued by opposite party No.2/Deputy Commissioner of Income Tax, Range -2, Lucknow, contained in Annexure No.1 to writ petition. petitioner is assessee with Income Tax Department and has been discharging his obligations under Income-tax Act, 1961. petitioner had filed his returns at Lucknow upto Assessment Years 2011-12 as his place of principal business was within territorial area which was assigned to Assessing Officer, Range- 2, Lucknow by competent authority in exercise of powers under Section 120 (3) of Income-tax Act, 1961. From Assessment Year 2012-13, related to Financial Year 2011-12, petitioner has shifted his place of business at New Delhi and accordingly filed his income-tax return at Delhi. Later on, notice under Section 143 (2) of Income-tax Act was issued by Assessing Officer, Range 2, to which petitioner tendered his reply that he had already filed his return through e-filing at New Delhi, as he has shifted his place of principal business from Lucknow to New Delhi, copy whereof has been annexed as Annexure No.SA3 2 to supplementary affidavit. Thus, it has been contended that Assessing Authority at Lucknow has no jurisdiction to issue impugned show cause notice dated 11.9.2013 in view of provisions of Section 124 of Income-tax Act. Mr.Alok Mathur, learned Counsel for Revenue raised preliminary objection regarding maintainability of writ petition against show-cause notice. According to petitioner, writ petition against show cause notice is not maintainable. He further pointed out that during pendency of instant writ petition, demand has also been created and as such petitioner has equally efficacious alternative remedy by assailing said order in Statutory Appeal. Before dealing with merits of case, first of all, we would like to deal with preliminary objection regarding maintainability of writ petition. In case of Whirlpool Corporation Versus Registrar of Trade Marks, Mumbai and others [(1998) 8 Supreme Court Cases 1], Hon'ble Suprme Court in Para-15 of judgment has held as follows :- 15. Under Article 226 of Constitution, High Court, having regard to facts of case, has discretion to entertain or not to entertain writ petition. But High Court has imposed upon itself certain restrictions one of, which is that if effective and efficacious remedy is available, High Court would not normally exercise its jurisdiction. But alternative remedy has been consistently held by this Court not to operate as bar in at least three contingencies, namely, where writ petition has been filed for enforcement of any of fundamental Rights or where there was been violation of principle of natural justice or where order or proceedings are wholly without jurisdiction or vires of Act is challenged. In Harbanslal Sahnia & another v. Indian Oil Corporation Ltd. & others [(2003) 2 SCC 107], Apex Court opined that rule of exclusion of writ jurisdiction by availability of alternative remedy is rule of discretion and not one of compulsion and Court must consider pros and cons of case and then may interfere if it comes to 3 conclusion that writ seeks enforcement of any of fundamental rights; where there is failure of principle of natural justice or where orders or proceedings are wholly without jurisdiction or vires of Act is challenged. While deciding said case, Apex Court placed reliance upon its earlier judgment in Whirpool Corporation (supra). In M. P. State Agro Industries Development Corporation Ltd. v. Jahan Khan [(2007) 10 SCC 88], Apex Court again reiterated held that rule of exclusion of writ jurisdiction due to availability of alternative remedy is rule of discretion and not of compulsion. In appropriate case, in spite of availability of alternative remedy, writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely (i) where writ petition seeks enforcement of any of fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) Where orders or proceedings are wholly without jurisdiction or vires of Act is challenged. In these circumstances, alternative remedy does not operate as bar. In Kamlakar Bhimrao Patil v. Maharashtra Industrial Development Corporation [(2009) 2 SCC 655], Apex Court, while considering question as to whether matter under Specific Relief Act, 1963 is entertainable by writ Court, held that writ petition is maintainable. It is settled law that non-entertainment of petitions under writ jurisdiction by High Court when efficacious alternative remedy is available is rule of self-imposed limitation. It is essentially rule of policy, convenience and discretion rather than rule of law. Undoubtedly, it is within discretion of High Court to grant relief under Article 226 despite existence of alternative remedy. However, High Court must not interfere if there is adequate efficacious alternative remedy available to petitioner and he has approached High Court without availing same unless he has made out exceptional case warranting such interference or there exist sufficient grounds to invoke extraordinary 4 jurisdiction under Article 226. (See: State of U.P. vs. Mohammad Nooh, AIR 1958 SC 86; Titaghur Paper Mills Co. Ltd. vs. State of Orissa, (1983) 2 SCC 433; Harbanslal Sahnia vs. Indian Oil Corpn. Ltd., (2003) 2 SCC 107; State of H.P. vs. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499). Constitution Benches of Apex Court in K.S. Rashid and Sons vs. Income Tax Investigation Commission, AIR 1954 SC 207; Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425; Union of India vs. T.R. Varma, AIR 1957 SC 882; State of U.P. vs. Mohd. Nooh, AIR 1958 SC 86 and K.S. Venkataraman and Co. (P) Ltd. vs. State of Madras, AIR 1966 SC 1089 have held that though Article 226 confers very wide powers in matter of issuing writs on High Court, remedy of writ is absolutely discretionary in character. If High Court is satisfied that aggrieved party can have adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. Court, in extraordinary circumstances, may exercise power if it comes to conclusion that there has been breach of principles of natural justice or procedure required for decision has not been adopted. In instant case, admittedly, procedure as per provisions of Income-tax Act is adhered too. In view of series of judgments, plea of respondents regarding maintainability of writ petition is rejected. Now, we proceed to deal with controversy involved in instant writ petition. We have considered rival contentions made by parties' counsel to lis. petitioner in instant writ petition has assailed notice issued by Deputy Commissioner of Income-tax, Range II, Lucknow under Section 143 (2) of Income-tax Act, 1961 in respect of Assessment Year 2012-13 inter-alia on ground that said notice is de hors provisions contained in Section 124 of Act and in excess of jurisdiction vested in opposite party No.2 (Deputy Commissioner of Income-tax, Range II, Lucknow). According to petitioner, he is 5 practicing legal profession at Hon'ble Supreme Court and Delhi High Court besides having practice at Lucknow. He has offices at New Delhi and Lucknow; and has right to choose his principal place of profession, which he has chosen and shifted to Delhi where he has taken premises on lease and his address is D-27, East of Kailash, New Delhi. Elaborating his submissions, learned Counsel for petitioner has pointed out that after shifting of place of profession, petitioner has filed return of income for Assessment Year 2012-13 at New Delhi. Even return of income for Assessment Year 2013-14 has been filed at New Delhi. It has also been pointed out that petitioner has carried out all formalities for shifting place of profession from Lucknow to New Delhi and requisite amendment in PAN details has also been made. Inviting our attention towards Section 143 of Act, learned Counsel for petitioner has submitted that notice can be issued by Assessing Officer having jurisdiction over assessee. According to him, since petitioner is assessee having its principal place of profession at New Delhi, Deputy Commissioner of Income-tax, Range II, Lucknow has no jurisdiction over petitioner as Assessing Authority at New Delhi has territorial jurisdiction over principal place of profession of petitioner. It has been contended that once notice itself is without jurisdiction, opposite party No.2 has no jurisdiction to conduct any proceedings in pursuance of same but to transfer file to New Delhi. impugned notice does not record satisfaction of Assessing Officer and also does not specify particulars in respect of which evidence is to be produced by petitioner in support of his claim. Suffice to submit, opposite party No.2 is not vested with jurisdiction to hold roving enquiry and to fish-out material against petitioner by requiring him to place all possible records before him, even while he does not have jurisdiction to enquire into matter as he is not Assessing Officer of petitioner. 6 It has also been pointed out that from reading of notice dated 11.9.2013, it is apparently clear that opposite party No.2 was aware that petitioner is assessee at New Delhi, which is apparent from address incorporated in said notice but has been scored out and Lucknow address has mischievously been mentioned on account of extraneous consideration and in arbitrary manner. To strengthen his above assertions, Mr.J. N. Mathur, Senior Advocate has relied upon legal proposition laid down in Commissioner of Income-tax v. All India Children Care and Educational Development Society [2013] 357 ITR 134 (All); Commissioner of Sales Tax v. M/s Moti and Jawahar, Varanasi 1981 U.P.T.C. 428; and Bidi Supply Co. v. Union of India and others AIR 1956 SC 479. In contrast, learned Counsel for Revenue submitted that case of petitioner falls under jurisdiction of Deputy Commissioner of Income Tax, Range II, Lucknow as PAN of petitioner is lying in jurisdiction of Deputy Commissioner of Income-tax, Range II, Lucknow and also his last known office address 26/I-G, Wazir Hasan Road, Near Gokhale Marg, Lucknow falls under territorial jurisdiction of Deputy Commissioner of Income-tax, Range II, Lucknow. Mere change in address in return of income does not give any right to petitioner to change his jurisdiction. It has further been argued that case of assessee can be transferred from one Assessing Officer to another by Competent Authority only after passing order under provisions of Section 127 of Act and Deputy Commissioner understands that no such order has been passed in this case so far. Therefore, it is evident from above that case of assessee falls in jurisdiction of Deputy Commissioner of Income-tax, Range II, Lucknow and notice under Section 143 (2) was rightly issued by him under provisions of Act. At this juncture, it would be useful to reproduce Section 124 of Act on which much emphasis has been laid:- 7 124. Jurisdiction of Assessing Officers (1) Where by virtue of any direction or order issued under sub- section (1) or sub-section (2) of section 120, Assessing Officer has been vested with jurisdiction over any area, within limits of such area, he shall have jurisdiction -- (a) in respect of any person carrying on business or profession, if place at which he carries on his business or profession is situate within area, or where his business or profession is carried on in more places than one, if principal place of his business or profession is situate within area, and (b) in respect of any other person residing within area. (2) Where question arises under this section as to whether Assessing Officer has jurisdiction to assess any person, question shall be determined by Director General or Chief Commissioner or Commissioner, or where question is one relating to areas within jurisdiction of different Directors General or Chief Commissioners or Commissioners, by Directors General or Chief Commissioners or Commissioners concerned or, if they are not in agreement, by Board or by such Director General or Chief Commissioner or Commissioner as Board may, by notification in Official Gazette, specify. (3) No person shall be entitled to call in question jurisdiction of Assessing Officer -- (a) where he has made return [under sub- section (1) of section 115WD or] under sub- section (1) of section 139, after expiry of one month from date on which he was served with notice under sub-section (1) of section 142 or sub-section (2) of section 115WE or sub-section (2) of section 143 or after completion of assessment, whichever is earlier; (b) where he has made no such return, after expiry of time allowed by notice under sub-section (2) of section 115WD or sub- section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for making of return or by notice under first proviso to section 115WF or under first proviso to section 144 to show cause why assessment should not be completed to best of judgment of Assessing Officer, whichever is earlier. (4) Subject to provisions of sub-section (3), where 8 assessee calls in question jurisdiction of Assessing Officer, then Assessing Officer shall, if not satisfied with correctness of claim, refer matter for determination under sub-section (2) before assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under section 120, every Assessing Officer shall have all powers conferred by or under this Act on Assessing Officer in respect of income accruing or arising or received within area, if any, over which he has been vested with jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120.] On perusal of aforesaid statutory provisions of Section 124 (1) (a) and (b), it is abundantly clear that territorial jurisdiction which has to be vested with Assessing Authority is to be determined by Chief Commissioner/Commissioner on basis of principal place at which assessee carrying his business or profession and in respect of others, person residing within area. In case where assessee raises any dispute, with regard to jurisdiction of any Assessing Officer, then Assessing Officer shall, if not satisfied with correctness of claim, refer matter for determination under Section 124 (2) before assessment is made in view of provisions of Section 124 (4). As regard question of determining jurisdiction, we may be point out that in Commissioner of Sales Tax v. M/s Moti and Jawahar, Varanasi, 1981 U.P.T.C. 428, which has been relied upon by petitioner, Court observed that point which goes to root of matter and which affects very existence of jurisdiction of authority can be raised at any time, be it in appeal or revision. In instant case assessee was claiming total exemption that he was not making any sales at all but whatever he was preparing he was serving it at his own premises and hence in respect of same sales tax was not eligible. This contention goes to very root of matter and certainly it could be taken for first time even in revision. Thus, question of jurisdiction with regard to place of assessment is to be decided first. In case of Commissioner 9 of Income-tax v. All India Children Care and Educational Development Society; 1981 U.P.T.C. 428, Division Bench of this Court observed that no benefit can be given when question regarding jurisdiction is not raised at first instance. Division Bench observed as under:- question of jurisdiction could have been raised before Assessing Officer within period of one month from date of filing of return as envisaged under sub-section (3) (a) of Section 124, but it was not raised. Even after assessment before first appellate authority, any such plea was not put forward. This fact finds mention in paragraph 5 of order of Commissioner of Income-tax that no objection regarding jurisdiction or otherwise was raised during all these proceedings. In instant case, admittedly, on receiving notice under Section 143 (2) of Act, petitioner tendered his reply, contained in Annexure No.SA1 to supplementary affidavit, and same has not been controverted by department by filing affidavit. In reply, it has been specifically stated by petitoner that he has shifted his place of business to Delhi and as such, Assessing Authority at Lucknow, has no jurisdiction to issue notice under Section 143 (2) of Act at Lucknow. In case, Assessing Officer was not satisfied with reply then he should have referred matter as required under Section 124 (2) of Act. Thus, in absence of any return for income, Assessing Authority cannot proceed further by passing assessment order and creating demand. It may be added that, as per Scheme of Income-tax Act, after filing of return, same has to be processed under Section 143 (1) of Act within one year from date of filing and if there is any concealment of income or income is exorbitant, then notice under Section 143 (2) of Act has to be issued. In absence of return, no such exercise was carried out by Assessing Authority prior to issuing notice under Section 143 (2) of Act. Further, no notice requiring assessee to file returns under Section 148 of Act has been issued. Thus, we are of opinion that Assessing Authority has exceeded its jurisdiction while issuing notice under Section 143 (2) of 10 Act. issuance of notice dated 11.9.2013 by opposite party No.2 is palpably without jurisdiction inasmuch as perusal of notice itself indicates that address of petitioner has been printed as D/27, East of Kailash, New Delhi which has been scored out and substituted by Lucknow address of petitioner. We are also of view that assertion of respondents that assessment can be transferred from one Assessing Officer to another pursuant to orders passed by competent authority under Section 127 of Act is in respect of proceedings which may be transferred from one Assessing Officer to another subordinate to same CIT. said Section is not attracted in respect of matters falling beyond jurisdiction of CIT. It may be pointed out that from record, it emerges out that during pendency of writ petition, notice dated 3.11.2014 was sent to petitioner by present Assessing Officer in which information has been required to be submitted on several points. said notice is cyclostyled format which is reportedly sent to assessees who are manually selected for scrutiny and does not conform to requirements as prescribed in Section 142 and 143 and seek to hold roving enquiry to fish out material against assessee. perusal of Annexure SA-3 annexed with supplementary affidavit dated 31.3.2015 shows that in response to notice dated 3.11.2014, petitioner preferred written objection to Assessing Officer bringing to his notice pendency of aforesaid writ petition and also apprising him that Section 127 was not even remotely attracted. Therefore, it was incumbent upon opposite party No.2 to have waited for outcome of writ petition, but he proceeded with matter which shows prejudicial and impartial attitude of authority. It may be noted that transparency and fairness is essence of state action. Therefore, authorities are expected to proceed in disciplined manner without creating any doubt in mind of asseessees. As averred above, it was 11 duty of Assessing Officer to have referred question of jurisdiction to Chief Commissioner or Commissioner as case may be under sub-section (2) of Section 124 of Act and not doing so, this vitiated further proceedings. Here, there is complete departure from settled procedure. It comes out from record that when petitioner refused to submit to jurisdiction of said Assessing Officer at Lucknow, authority/respondent No.2 proceeded ex parte and dispatched demand of almost Rs.52 lacs. At cost of repetition, we would like to mention that in notice dated 11.9.2013, which is computer generated clearly reveals that Delhi address of petitioner was scored out and in handwriting, local address has been added. Therefore, it is incorrect to say that Delhi Address was not in knowledge of respondents and we find force in submissions of petitioner that local address was inserted deliberately to create jurisdiction, which, in fact, legally was not vested with opposite party No.2. Therefore, opposite party No.2 exceeded its jurisdiction, which not only vitiates impugned show cause notice but entire proceedings. In these circumstances, entire proceedings being ab initio illegal, without jurisdiction and in violation of Section 143 (1) (a) of Income-tax Act. For reasons aforesaid, writ petition is allowed and impugned notice dated 11.9.2013 is quashed. As notice notice has already been quashed, consequential orders, if any, are also quashed. Dt.31.3.2015 lakshman Prashant Chandra v. Commissioner of Income-tax – 1 and other