Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO

Issue before Court:

• Whether AO has lack of jurisdiction to complete the assessment.

Brief facts:

• Assessee company was incorporated on 27.02.2003 in the name of Shalom Exim Pvt. Ltd. Later on the name was changed to Mamram Developers Pvt. Ltd. on 03.11.2003. The name of the assessee again changed to ShriShyam Sunder Infrastructure Pvt. Ltd. on 27.11.2010.
• For the year in concern assessee filed return on 30.05.2003. A notice u/s 148 was issued to the assessee against which assessee responded that he would like to stand by his return filed on 30.05.2003.
• Assessment was completed under section 144 of the act.
• Assessee appealed on ground of lack of jurisdiction before CIT (A) which was rejected and later on accepted by ITAT.

Contention of the revenue:

• The findings of the ITAT are unsupportable in law and relied upon Section 124(3) to this effect which is reproduced as below:

“(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer-where.”

(a)…..

(b)…..

• Revenue further relied upon the judgment of Allahabad High Court in Commissioner of Income-Tax vs. British India Corporation Ltd. (2011) 337 ITR 64.

Contention of the assessee:

• AO lacks jurisdiction since the original assessee was subject to assessment by AO of Ward 6(2) whereas in the present instance the office of Ward 8(1) issued notice and Ward 8(3) completed the proceedings.
• ITAT possessed jurisdiction to return a finding on whether the AO‟s order was a nullity, and can give the verdict that such adjudication cannot go into the merits of such of the proceedings.

Held by the Court:

• Section 124(3) stipulates a bar to any contention about lack of jurisdiction of an AO.
• It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold.
• The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub-section 3 of Section 124 of the Income-tax Act has the option to urge the question of jurisdiction.
• The two points of time specified in Section 124(3)(a) are as under: (i) Within one month from the date of service of notice or; (ii) After completion of assessment – whichever is earlier.

Conclusion:

It is provided in section 124 (3) that no person shall entitled to call in question the jurisdiction of AO after the expiry of the time allowed by the notice under section 148 for the making of the return or by the notice under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier.