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(a) Constitution of Pakistan (1973)-= Art. 185 (3)-Income-tax Act (XI of 1922), S. 64-Territorial jurisdiction-Leave to appeal granted to examine question whether High Court had correctly affirmed decision of Tribunal that assessment was a nullity as same had been finalised by Income-tax Officer who had no territorial jurisdiction in the matter, registered office of assessee being located elsewhere.

(6) income tax Act (XI of 1922)

-- S. 64 (3), proviso -Assessee having himself disclosed its principal place of business to be located in an area was precluded from objecting to territorial jurisdiction of Income-tax Officer, within whose territorial jurisdiction cases of that area fell-S. 64(3), proviso second, being a special provision as compared to third proviso, fully governed assessee and he could not derive benefit from third proviso -Assessee, after having once unsuccessfully agitated and having not subsequently pressed his objection to territorial jurisdiction, could not have revived same at a late stage of proceedings with a view to avoid assessment -Assessment made by Income-tax Officer in whose jurisdiction assessee himself disclosed his place of business, held, could not be annulled on point of jurisdiction in circumstances.

Mr. Ilyas Muhammad Khan for Appellant.

Nemo for Respondents.

Date of hearing : 28th April, 1985.

SHAFIUR RAHMAN, J.-Leave to appeal was granted to the Commissioner of Income-tax, Rawalpindi, to examine whether the High Court had correctly affirmed the decision of the Tribunal that the assessment of the respondent for the Assessment Year, 1963-64 was a nullity as it had been finalised by the Income-tax Officer, Gujranwala who had no territorial jurisdiction in the matter, the registered office of the respondent being located in Lahore.

The respondent-assessee filed its return for the Assessment Year, 1963-64 disclosing its address as "Railway Road, Gujrat". The return was submitted to the Income-tax Officer, Companies Circle III, Lahore. At that time, Companies Circle III, Lahore fell within the Northern Circle. Subsequently, the Northern Circle was bifurcated into Lahotte Circle and Rawalpindi Circle. On account of the principal place of business disclosed in the return being Gujrat and the address provided by the assessee itself being of Gujrat its return was transferred to the Rawalpindi Zone and :subsequently when Gujranwala Circle was created within Rawalpindi Zone, it was transferred there. Initially, the assessee objected to the transfer of its case from Lahore to Rawalpindi Zone and then to Gujranwala on the ground that the registered office of the limited company was at Lahore and so was its principal place of business. This objection of the respondent did not prevail with the Income-tax Officer and it appears that be did not pursue it thereafter till the question of his assessment reached the Tribunal where for the first time he was allowed to revive his objection with regard to the territorial jurisdiction. The Tribunal held that as a reference under section 64 (3) of the Income-tax Act was not made to the Commissioner of Income-tax on the jurisdiction being disputed the assessment so finalised was a nullity and set it aside.

A reference under section 66 was filed at the instance of the appellant and the following question of law arising out of Tribunal's order was referred to the High Court

"Whether on facts and in the circumstances the Tribunal was legally justified in annulling the assessment on the point of jurisdiction specifically when the assessee has shown its principal place of business in the return and was barred to question it under the 2nd proviso to subsection (3) of section 64 of the Income-tax Act ".

The High Court noted that the Tribunal had permitted the assessee to raise this objection to the territorial jurisdiction of the Income-tax Officer for the first time by way of additional plea and had exercised its discretion in the matter in favour of the respondent but considered itself unable to sit in appeal against the discretion so exercised by the Tribunal and concluded the reference by holding as follows

"For the foreoging reasons we find that the order passed by the Tribunal is unexceptionable. This position of law under section 64(3) of the Act does not admit of any doubt and there can be no t-6 opinions on it. In the circumstances we find that on the facts found by the Tribunal the above question of law does not even arise. The petition is accordingly rejected in limine."

The assessee has been proceeded ex parte. The learned counsel for the appellant contended that in the presence of second proviso, a special

provision, resort to the third proviso could not be had. Besides, as the objection to the territorial jurisdiction was not pressed subsequently it could not be revived and in any case the assessment so finalised could not be declared to be a nullity.

Certain facts are established from the record. The first is that the assessee while filing the return under section 22 of the Income-tax Act had shown its address and the place of business as Railway Road, Gujrat'. It had not in its return indicated any other place, as principal place of business or as seat of its registered office. Secondly, when the return was filed Companies Circle Lahore happened to be in the Northern Circle and had jurisdiction over Gujrat cases. Thirdly, on bifurcation, the Northern Circle was divided into Rawalpindi Circle and Lahore Circle and District Gujrat's cases were all allocated to Rawalpindi Circle. Finally, on further division of Rawalpindi Circle and creation of an Income-tax Circle at Gujranwala, Gujrat was allocated to Gujranwala Income-tax Circle. Further, it is also established that having raised an objection with regard to the transfer of its case from Lahore Circle to Rawalpindi Circle and after its rejection, the respondent had not agitated the question further though the case had at one stage been remanded by the Assistant Commissioner. He revived it finally before the Income-tax Tribunal.

In this factual background the second proviso to section 64(3) of the Income-tax Act is attracted rather than the third proviso. The second proviso contains the following provision with regard to such an objection

"Provided further that the place of assessment shall not be called in question by an assessee if he has made a return under subsection (1) of section 22 and has stated therein the principal place wherein he carries on his business, profession or vocation, or if he has not made such a return shall not be called in question after the expiry of the time allowed by the notice under subsection (2) of section 22 or under section 34 for the making of a return."

On the strength of this proviso the assessee having itself disclosed its principal place of business as Railway Road, Gujrat' was precluded from objection to the territorial jurisdiction of the Income-tax Officer, Gujranwala within whose territorial jurisdiction cases of Gujrat fell. This proviso being a special provision as compared to third proviso fully governed the respondent-assessee and he could not derive benefit from third proviso. e Besides, after having once unsuccessfully agitated and having not subsequently pressed his objection to the territorial jurisdiction, he could not have revived the same at a late stage of the proceedings with a view to avoid the assessment. In the circumstances and for the reasons recorded, this appeal is accepted, the judgment of the High Court is set aside and answer is returned that the Tribunal was not legally justified in annulling this assessment on the point of jurisdiction. No order as to costs.

< [if supportLists]>M. s. A Appeal accepted,

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