Whether where addressee of a Sec 148 notice has failed to question AO’s jurisdiction within stipulated time, provisions of Sec 124(3)(b) take away addressee’s right to question AO’s authority – YES: HC

THE issue is – Whether where addressee of a Sec 148 notice has failed to question AO’s jurisdiction within stipulated time, provisions of Sec 124(3)(b) take away addressee’s right to question AO’s authority. YES is the verdict.

Facts of the case
The assessee although accepted the ITO, Ward- 46(1), Kolkata to be the appropriate AO prior to the issuance of a CBDT notification of October 22, 2014, however, by virtue of the said notification which came into effect from November 15, 2014, the assessee claimed that the jurisdiction over it ought to have been exercised by ITO Ward-22(2), Kolkata as the AO. Hence, upon receipt of the notices u/s 148 from the ITO Ward-46(1), the assessee sought to question the authority of such AO.
Having heard the parties, the High Court held that,
++ since there is no dispute that the assessee had received the notices on March 27, 2015 itself, the assessee ought to have furnished the returns demanded within 30 days from the date of service of such notice to the AO. Such period of 30 days expired on April 28, 2015 since the date of receipt of the notice has to be disregarded for the purpose of counting 30 days therefrom and the month of March has 31 days. Section 124(3)(b) permits a person to call in question the jurisdiction of an AO at any stage prior to the expiry of the time allowed by a notice u/s 148 for the making of the return. There is no dispute that clause (a) of Section 124(3) does not apply to this case and the other situations in clause (b) pertaining to Sections 115WD, 142 and 115WH also do not apply. The assessees have sought to question the authority of the ITO, to issue the notices u/s 148 and the consequent steps. As far as the CBDT notification which took effect from November 15, 2014 is concerned, the concerned ITO has only referred to Section 124(3) to suggest that the assessee could not have questioned the officer’s authority. The assessees say that they did not question the authority of any AO within the meaning of Section 2(7A). Thet assert that since the ITO, Ward-22(2), Kolkata was the appropriate ITO to assume the authority of AO qua the petitioning assessee, Section 124(3) of the Act would not be applicable;
++ with respect, as incomprehensible as the submission may be, the same appears to be absurd. A particular ITO issued one or more notices to the assessee u/s 148 assuming the role of an AO. In so doing, it is possible that such ITO may not have had the jurisdiction as the AO qua the assessee to whom the notice was addressed; but there can be no doubt that the authority was exercised by the ITO as an AO. When the assessee received the notice, the assessee could question the authority of the ITO issuing the notice as an appropriate AO within the time that the assessee was required to respond to such notice u/s 148. Once the addressee of a notice failed to question the jurisdiction of AO who issued the notice u/s 148 within the time stipulated in the notice u/s 148 to do the thing required thereby, by virtue of Section 124(3)(b), the assessee was precluded from questioning the authority of the addressor of the notice as an AO. As noticed earlier, the assessee did not respond to the notice u/s 148 within the stipulated period of 30 days from the date of receipt thereof. Thus, upon such delay on the part of the assessee, the right to question the authority of the issuer of the notice u/s 148 stood extinghished. Since it is evident that the assessee was precluded by Section 124(3)(b) from questioning the authority of the AO who had issued the notices u/s 148 to the petitioning assessee, the contents of the letters and the objection as to jurisdiction contained therein had been rightly disregarded by the ITO.