Cwp v. Income Tax Officer, Ward

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Shree Radhey Poly Fab CWP No. 8751 of 2022(O&M)Date of Decision : 02.06.2022 ….Petitioner Versus Income Tax Officer, Ward No.1, Panipat ..Respondent CORAM : HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSAHON’BLE MR. JUSTICE PANKAJ JAIN Present :Mr. S. K. Mukhi, Advocatefor the petitioner. for the petitioner. Mr. Sandeep Goyal, Senior Standing Counsel assisted byMr. Vaibhav Gupta, Junior Standing Counselfor the respondents-IT department. PANKAJ JAIN, J. 1.By way of present writ petition the petitioner seeks issuance ofwrit in the nature of certiorari for quashing notice issued to the petitionerunder Section 148 of the Income Tax Act, 1961 (for short 'the Act') dated07.04.2022 (Annexure P-7 ) and order passed under Section 148A (d) dated07.04.2022 (Annexure P-8 ) for the assessment year 2015-16. 2.Petitioner, a partnership firm is an assessee under the Act.Return filed by the petitioner for the assessment year 2015-16 wasprocessed under Section 143 (1) of the Act. The petitioner received noticeunder Section 148 dated 07.04.2022 (Annexure P-7 ). The details of theinformation and the enquiry on the basis of issuance of notice were suppliedto the petitioner along with the said notice. The challenge to the order CWP No. 8751 of 2022(O&M) erroneous in facts having been passed without considering stand of thepetitioner. 3.We have heard learned counsel for the parties and havecarefully gone through the records of the case. 4.The primary issue that would 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 this Court 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 used insection 34 of the Act and the various cases that I have referred toabove show that the legislature has entrusted the determination offacts and of law to the Income-tax Officers. A particular machineryhas been set up under the Act “by the use of which alone” totalassessable income for the purposes of the Income-tax is to beascertained and jurisdiction to question the assessment otherwisethan by the use of this machinery is incompatible with the scheme ofthe Act. The challenge of the action of the Income-Tax Officer by awrit prohibition 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) while dealing 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 - dealing 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. 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 anappeal 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. ��������������������������������������������������������������������������������� �! �"�# �$%%��!�������&��'��(!���) �������������������������������������������������������������������� �! �"�# �$%%��!�������&��'��(!���) ���������������������������������������������� “6.Though it is the petitioner's case that the impugned order iserroneous on facts, yet this Court is of the opinion that the petitionerwould have ample opportunity during the course of proceedingsbefore different statutory forums to show that the finding of factarrived at was erroneous. Moreover, at this stage, no assessmentorder has been passed and it has only been observed that it is a fitcase for issuance of notice under Section 148 of the Act. In fact, theSupreme Court in Commissioner of Income Tax and Ors. Vs.Chhabil Das Agarwal, (2014) 1 SCC 603 has held that as theIncome Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon thatmachinery and invoke jurisdiction of High Court under Article 226.”erroneous on facts, yet this Court is of the opinion that the petitionerwould have ample opportunity during the course of proceedingsbefore different statutory forums to show that the finding of factarrived at was erroneous. Moreover, at this stage, no assessmentorder has been passed and it has only been observed that it is a fitcase for issuance of notice under Section 148 of the Act. In fact, theSupreme Court in Commissioner of Income Tax and Ors. Vs.Chhabil Das Agarwal, (2014) 1 SCC 603 has held that as theIncome Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon thatmachinery and invoke jurisdiction of High Court under Article 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 - 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 be CWP No. 8751 of 2022(O&M) entitled 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 should notinterfere at such a pre-mature stage. Moreover it is not a case where frombare reading of notice it can be axiomatically held that the authority hasclutched 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 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 archanaWhether speaking/reasoned:Yes/NoWhether reportable:Yes/No