Arvind Kumar v. Principal Chief Commissioner Of Income Tax And Another

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH CWP No.13037 of 2022Date of Decision : 02.06.2022 Arvind Kumar ….Petitioner Versus Principal Chief Commissioner of Income Tax and another …..Respondents CORAM : HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSAHON’BLE MR. JUSTICE PANKAJ JAIN Present :Mr. Nilesh Bhardwaj, Advocate for the petitioner. PANKAJ JAIN, J. By way of present writ petition, the petitioner has laidchallenge to the notice dated 7[th] April, 2022 under Section 148 of theIncome Tax Act, 1961 (for short, 'the Act') (Annexure P-6), and order dated6[th] April, 2022 passed under Section 148A(d) of the Act, alleging that thesame has been passed in derogation to the provisions contained in Section149 prescribing limitation of 3 years from the end of the relevantassessment which in the present case is 2015-16.2.We have heard Ld. Counsel for the petitioner and havecarefully gone through the records of the case. 3.The plea w.r.t. to power under Section 149 of the 1961 Act,cannot be attracted in the facts of the present case as the case of thepetitioner would fall within the ambit of Section 149(1)(b) and not underSection 149(1)(a) as the income which is alleged to have escaped assessment is more than Rs.50.00 lacs. So far as challenge to the orderdated 6[th] of April, 2022 (Annexure P-5) passed under Section 148A(d) andnotice under Section 148 is concerned, Counsel for the petitioner has notbeen able to make out a case warranting interference under Article 226 ofthe Constitution of India. 4.The primary issue that arises in the present writ petition is :-“Whether at this stage of notice under Section 148, writCourt should venture into the merits of the controversywhen AO is yet to frame assessment/reassemment indischarge of statutory duty casted upon him under Section147 of the Act ?” 5.The debate is not new. While dealing with the similar situationunder the old Act i.e. Indian Income Tax Act, 1922, Division Bench of thisCourt in 'Lachhman Das Nayar and others vs. Hans Raj Puri, Income-Tax Officer, Amritsar and others, 1953 AIR (P&H) 55, held that - “An examination of the scheme of the Act and the words usedin section 34 of the Act and the various cases that I havereferred to above show that the legislature has entrusted thedetermination of facts and of law to the Income-tax Officers.A particular machinery has been set up under the Act “by theuse of which alone” total assessable income for the purposesof the Income-tax is to be ascertained and jurisdiction toquestion the assessment otherwise than by the use of thismachinery is incompatible with the scheme of the Act. Thechallenge of the action of the Income-Tax Officer by a writprohibition or mandamus is , therefore, not available to theassessee.” 6.In 'Rasulji Buxji Kathawala vs. Income Tax Commissioner, Delhi and another' (Civil Writ No.44 of 1955, D/d. 2.4.1956)whiledealing with the similar situation under the 1922 Act, Division Bench ofRajasthan High Court held that - “But where as in this case no part of the Act is beingattacked, there is, in our opinion, no justification for us tointervene at this stage when other remedies which arc notnecessarily onerous are still open to the applicant under theAct. We, therefore, refuse to intervene at this stage in thiscase, and leave it to the applicant to pursue his remediesunder the Income-tax Act so far as the question of his charge-ability to income-tax under the Act, or other matters areconcerned.” 7. Division Bench of this Court in the case of 'Sumit Passi vs. Assistant Commissioner of Income-Tax', (2016) 386 ITR, held that - “29. ....[he reasons assigned by the Assessing Officer totentatively believe that taxable income has escaped assessmentcannot be brushed aside at the threshold without a fact-findingprocedure, more-so when the petitioners are not remediless andhave got equally efficacious recourses under the Act. 7. Division Bench of this Court in the case of 'Sumit Passi vs. Assistant Commissioner of Income-Tax', (2016) 386 ITR, held that - “29. ....[he reasons assigned by the Assessing Officer totentatively believe that taxable income has escaped assessmentcannot be brushed aside at the threshold without a fact-findingprocedure, more-so when the petitioners are not remediless andhave got equally efficacious recourses under the Act. 30. A somewhat similar dictum is discerniblefrom CIT v. ChhabilDass Agarwal (2014) I SCC 603 as it holds that the Act providescomplete machinery for the assessment/reassessment of tax,imposition of penalty and for obtaining relief in respect of anyimproper orders passed by the Revenue Authorities, and theassessee could not be permitted to abandon that machinery and toinvoke the jurisdiction of the High Court under Article 226 of theConstitution when he had adequate remedy open to him by an appeal to the Commissioner ofIncome Tax (Appeals). 31. Having held so, it is not expedientfor this Court to express itsopinion on the rival submissions as it may unwittingly causeprejudice to either party. Suffice it to say that no case to quash thenotice(s) issued under Section 148 read with Section 147 of the Actor the order(s) rejecting the objections, is made out at thispremature stage. 8.Delhi High Court in W.P.(C) 5787/2022 titled as Gulmuhar Silk Pvt. Ltd. vs. Income Tax Officer Ward 10(3) Delhi, whileconsidering the same question held that - “6.Though it is the petitioner's case that the impugnedorder is erroneous on facts, yet this Court is of the opinionthat the petitioner would have ample opportunity during thecourse of proceedings before different statutory forums toshow that the finding of fact arrived at was erroneous.Moreover, at this stage, no assessment order has been passedand it has only been observed that it is a fit case for issuanceof notice under Section 148 of the Act. In fact, the SupremeCourt in Commissioner of Income Tax and Ors. Vs. ChhabilDas Agarwal, (2014) 1 SCC 603 has held that as the IncomeTax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon thatmachinery and invoke jurisdiction of High Court underArticle 226.” 9.Supreme Court in the case of 'Raymond Woollen Mills Limited vs. Income Tax Officer, Centre XI, Range Bombay and others'(Civil Appeals No.1972 of 1992 with No.1973 of 1992. D/d 17.12.1997), held that - “3. In this case, we do not have to give a final decision as towhether there is suppression of material facts by the assesseeor not. We have only to see whether there was prima faciesome material on the basis of which the Department couldreopen the case. The sufficiency or correctness of thematerial is not a thing to be considered at this stage. We areof the view that the court cannot strike down the reopening ofthe case in the facts of this case. It will be open to theassessee to prove that the assumption of facts made in thenotice was erroneous. The assessee may also prove that nonew facts came to the knowledge of the Income-tax Officerafter completion of the assessment proceeding. We are notexpressing any opinion on the merits of the case. Thequestions of fact and law are left open to be investigated anddecided by the assessing authority. The appellant will beentitled to take all the points before the assessing authority.” 10.Thus, the consistent view is that where the proceedings havenot even been concluded by the statutory authority, the writ Court shouldnot interfere at such a pre-mature stage. Moreover it is not a case wherefrom bare reading of notice it can be axiomatically held that the authorityhas clutched upon the jurisdiction not vested in it. The correctness of orderunder Section 148A(d) is being challenged on the factual premisecontending that jurisdiction though vested has been wrongly exercised. Bynow it is well settled that there is vexed distinction between jurisdictionalerror and error of law/fact within jurisdiction. For rectification of errorsstatutory remedy has been provided. 11.In the light of aforesaid settled proposition of law, we find thatthere is no reason to warrant interference by this Court in exercise of thejurisdiction under Article 226/227 of the Constitution of India at thisintermediate stage when the proceedings initiated are yet to be concludedby a statutory authority. Hence, the instant writ petition stands dismissed. 12.Needless to say that nothing herein observed shall be construedas an opinion on the merits of the case. (TEJINDER SINGH DHINDSA)JUDGE (PANKAJ JAIN) JUDGE June 02, 2022 Dpr Whether speaking/reasoned:Yes/NoWhether reportable:Yes/No