1. Kakunuru Venkata Reddy, a resident of Nellore did works contract in Mysore State. He was assessed under the I.T. Act (43 of 1961) for assessment years 1965-66 to 1969-70 as 'individual' by the ITO at Hospet. In December, 1970, the residential house of the assessee at Nellore was searched. The documents recovered in the search disclosed money-lending transactions by the assessee and, based on the documents, notices were issued to Venkata Reddy by the ITO at Nellore but no 'returns' were submitted. Therefore, ex parte assessment orders on July 24, 1973, followed. The assessment orders, however, were questioned in appeal and it transpired in the appeal that the AAC on March 14, 1974, 'ordered a substantial relief'. Aggrieved thereby the revenue approached in further appeal the Tribunal and in that proceeding cross-objections were lodged by the assessee. Before the appellate authority and in the cross-objections before the Tribunal (the order is dated October 31, 1975,) the assessee without having raised a caveat as to territorialjurisdiction, unsuccessfully objected to the jurisdiction of the ITO at Nellore. Then followed the reference at the instance of the assessee. The question referred reads as under :
'Whether, on the facts and in the circumstances of the case, the ITO, D-Ward or E-Ward, Nellore, had jurisdiction to pass valid orders of assessment or to take any action for the relevant assessment years under consideration ?'
2. The proceedings at the intervening stages of assessments were made over from the ITO, E-Ward, Nellore, to the ITO, D-Ward, Nellore, by the CIT. That order of the Commissioner is not challenged. The consequent assessment orders passed by the officer at D-Ward are attacked as an order passed in violation of the provisions of Section 124 of the Act. The orders of reassessment for the years 1965-66 to 1969-70 and the orders of assessment for the years of 1970-71 and 1971-72 are consequently, it is argued, non est and void in law.
3. The assessee did not submit returns after notices were received by him and before the ITO no objection was raised as to the authority of the officer. The objection was raised for the first time before the AAC in appeal. The issue for determination is whether the objections were not belated. The question (extracted above) on the facts of the case does not put the reference in the correct perspective. The question framed seeks answer to the jurisdiction of the ITO, Nellore, whereas in the facts of the case the very right of the assessee is questioned for having not raised the objection before the assessing officer. Therefore, the proper question is to be :
'Whether an objection with regard to the place of assessment could be taken before the appellate authority when no such objection was raised before the Income-tax Officer ?'
4. The answer in our view has to be found in the scheme of Section 124 of the Act.
5. Similar questions arose under the repealed Act, XI of 1922. In the case of Dayaldas Kushiram v. CIT : 8ITR139(Bom) the Bombay High Court construed Section 64 of the Act to have had invested no power in the revenue but soon the amending Ordinance IX of 1939 followed and Sub-section (5) was added. Section 64 was considered by the Allahabad High Court in Dina Nath Hem Raj v. CIT : AIR1927All299 and by the Supreme Court after the amendment in Rai Bahadur Seth Teomal v. CIT : 36ITR9(SC) . Kapur J. observed at page 171.
'The question then arises whether the objection as to the place of assessment, i.e., by the Income-tax Officer of Calcutta, could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal, In our opinion it could not be. The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of Section 64 of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot ba made a ground of appeal to the Appellate Assistant Commissioner under Section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in Section 30 but no appeal is there provided against orders made under Section 64.'
6. The scheme in Section 124 of the Act is found in its Sub-sections (5) and (6). They read as under :
'(5) No person shall be entitled to call in question the jurisdiction of an Income-tax Officer-
(a) after the expiry of one month from the date on which he has made a return under Sub-section (1) of Section 139 or after the completion of the assessment, whichever is earlier ;
(b) where he has made no such return, after the expiry of the time allowed by the notice under Sub-section (2) of Section 139 or under Section 148 for the making of the return.
(6) Subject to the provisions of Sub-section (5) where an assessee calls in question the jurisdiction of an Income-tax Officer, then the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under Sub-section (4) before assessment is made.'
7. A month's time is prescribed 'to begin' with 'at the beginning' for the assessee to object to the jurisdiction of the assessing authority after having submitted the return under Section 139 if assessment 'is not over' before thirty days. If objection is raised the 'authority' is to 'refer'--unless the objection is sustained--to the Commissioner, the authority under Sub-section (4) of the section. Thus, the officer is empowered to consider the caveat and, in the event the officer is not satisfied, the Commissioner is entrusted the duty to decide the objection. Thus, in Section 124 the 'authorities' are prescribed : The time is prescribed and the legislature prescribed other limitations. In that sense a scheme--a self-contained scheme--is evolved to determine the issue 'at the beginning'. The further question at issue is whether the assessee is precluded having regard to the 'scheme', when regular appeals are heard under Section 246 of the Act, Section 246 of the Act recites that the assessee can question an order of 'assessment, reassessment or recomputation' under Section 147 or Section 150 of the Act and in that sense there are no limitations prescribed.
8. The learned counsel for the assessee for an answer in support of his contention invited attention to Section 127 of the Act and to a recent judgment of the Supreme Court in Ajantha Industries v. CBDT : 102ITR281(SC) . Goswarni J., speaking for the court, in that case considered and enumerated the consequences of not communicating an order passed under the section (p. 286) :
'When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated.'
9. The orders under Section 127 of the Act were held quasi-judicial in character and were construed to be operative only on communication to the assessee. The ratio of the case does not touch upon the question at issue in the instant case.
10. In the case of inherent lack of jurisdiction before an authority, the question of jurisdiction can be raised at any stage of the enquiry and even in collateral proceedings is well known. The objecfion based on territory is not in that, sense a fundamental question. The IT. Act (Section 124) evolved a scheme with a view to work out such objections. A procedure is laid down In Sub-sections (5) and (6) of Section 124 : could it be bypassed and said that the assessee is clothed with the right to object to the jurisdiction of the officer and his authority without recourse to the procedure in Sub-sections (5) and (6)? The answer having regard to the scheme, in our view, should be in the negative. The legal maxim generalibus specialist derogant also indicates that the right has to be worked out within the framework of the scheme and it is reasonable to hold that the plea is not entertainable and the assessee is precluded at subsequent stages of the proceedings under the Act.
11. The Patna High Court answered in similar terms a reference in like circumstances in Nund & Samont Co. (P.) Ltd. v. CIT : 102ITR376(Patna) . (The question is extracted at page 381).
12. Lastly, the learned counsel for the assessee in reply-argument (rather belated), raised another facet of the question more with reference to the application of Clause (b) of Sub-section (5) of Section 124 of the Act. The learned counsel argued that Clause (b) of Sub-section (5) has no application in the circumstances of the case. This contention is raised with reference to the orders of reassessment for the years 1965-66 to 1969-70 and the learned counsel conceded that the argument has no' application to the assessment orders of 1970-71 and 1971-72.
13. In the 'statement of facts' the facts are recited as under :
'As the income from money-lending business and also income from contract works was not subjected to tax in his individual assessment for the earlier years, the Income-tax Officer, in the purported exercise of his jurisdiction under Section 147 read with Section 148 of the Income-tax Act, reopened the assessments for the assessment years 1964-65 to 1969-70. He also issued notices under Section 139 of the Act for the assessment years1970-71 and 1971-72. In response to these notices the assessee did not choose to file the returns. (He, however filed some voluntary returns in the status of Hindu undivided family. The Income-tax Officer was at pains to intimate to the assessee that the reopening of the earlier assessments was done in his individual assessments and the individual file was transferred to the Income-tax Officer, Nellore).'
and in the order of the Tribunal on October 31, 1975, it is as of fact found 'returns' were not :
'In response to these notices, the assessee did not choose to file the returns. He, however, filed some voluntary returns in the status of Hindu undivided family.' (1964-65 to 1969-70).
14. Therefore, on the facts it is not possible to hold that Clause (b) of Sub-section (5) is not attracted.
15. Apart from the provisions in the Act the general principles governing appeals indicate objections based as to 'territory' should be decided at the inception and at the earliest opportunity. Section 21 of the Code of Civil Procedure is a pointer in that direction. In Scotland the principle 'Forum non Conveniens' speaks of such a right. The word 'conveniens' in Scottish law is not the same as the word 'convenience' in English. Lord Dunedin points cut that in Scottish law 'conveniens' means 'appropriate' (1926 SC (HL) page 18). That wholesome principle is now being grafted in England. The right to 'object to the seat of judgment' in our jurisprudence must be decided at the inception, otherwise the 'forum shopping' (the expression has no implication in a pejorative sense) in sequel if allowed at later stages brings forth the lamentable consequence of making the entire proceedings in vain. The assessee and the revenue both under the I.T. Act (if objection is not raised before the ITO) have had dissipated in the end their time and energy in sleeveless errand.
16. The question referred is answered against the assessee. No order as to costs. Advocate's fee Rs. 250.