INCOME TAX ACT, 1961

Transfer of case- Income tax authorities-Reassessment proceedings

AO made an addition by rejecting claim of assessee that investment in construction of the house was out of agricultural income and not unexplained income. CIT (A) partly allowed the appeal but upheld the addition, whereas Tribunal remanded the matter to AO. The assessee submitted that the order of transfer of jurisdiction under section 127 being void, therefore, reassessment proceedings were void on that ground. Held: The scope of assessment proceedings under the Act is confined to determining the income of the assessee and liability to tax. The officer to whom jurisdiction is transferred and who derives jurisdiction from such an order, cannot question the validity of such an order. If the assessee is aggrieved by an order of transfer, the remedy of the assessee is to challenge such an order in independent proceedings either before the higher administrative authorities as per the Act or in any independent proceedings by way of writ petition or otherwise. If no such challenge is made at the initial stage, the issue cannot be raised in appeal against the assessment order. While upholding the power of transfer that inconvenience to the assessee or likelihood of misuse of provision could not be a ground to declare the said provision to be void but if there was abuse of the power, appropriate remedy could be taken. If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the Constitution and what can be struck down is not the provision contained in section 5(7A) of the Act but the order passed thereunder which may be mala fide or violative of these fundamental rights. The assessee having not raised the objection as to jurisdiction at the appropriate time before AO, therefore AO could not permit the issue in appeal.

Income Tax Act, 1961 Section 127

Case Law Analysis:Followed:Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC) [Para 6] and Ajantha Industries v. CBDT AIR 1976 SC 437,Distinguished:Ajantha Industries v. CBDT (1976) 102 ITR 281 (SC) ; AIR 1976 SC 437

Decision: In favour of Revenue.
A.Y. 1993-94

Smt. Jaswinder Kaur Kooner v. CIT (Appeals)