Dinesh Verma v. Income Tax Officer

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH CWP No.10395 of 2022Date of Decision : 02.06.2022 Dinesh Verma ….Petitioner Versus Income Tax Officer …..Respondent CORAM : HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSAHON’BLE MR. JUSTICE PANKAJ JAIN Present :Mr. Pankaj Jain, Senior Advocate with Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the petitioner. . PANKAJ JAIN, J By way of present writ petition the petitioner has challengednotice issued under Section 148A(b) of the Income Tax Act, 1961 (for short'the Act') dated 21.03.2022 (Annexure P-1) and that order passed underSection 148A(d) dated 04.04.2022 (Annexure P-3) along with notice underSection 148 dated 04.04.2022 (Annexure P-4). The petitioner is an assessee under the Act. He has been servedwith a notice under Section 148A(b) of the Act (Annexure P-1) to showcause as to why notice under Section 148 of the Act should not be issued tohim as the income chargeable to tax for the assessment year 2015-2016 hasescapement assessment. Along with the show cause notice the petitionerhas also been supplied with the information which forms basis ofproceedings against the petitioner. The petitioner claims thatthough he prayed for more time to respond to the notice but the respondent proceededon to pass order under Section 148A(d) on 04.04.2022. On the same datenotice under Section 148 of the Act was also issued requiring the petitionerto file return of the income. We have heard learned senior counsel for the petitioner andhave carefully gone through the records of the case. It needs to be noticedthat even in the present writ petition the petitioner has opted not to open hiscards on merits. Moreover by way of impugned notice the petitioner hasonly been asked to file return. No assessment order has been passed underSection 147 of the Act as yet. The primary issue that would arises in the present writ petitionis :- “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 ?” 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 purposes of 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.” 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.” Division Bench of this Court in the case of 'Sumit Passi vs. Assistant Commissioner of Income-Tax', (2016) 386 ITR, held that - Delhi High Court in W.P.(C) 5787/2022 titled as Gulmuhar “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.” Division Bench of this Court in the case of 'Sumit Passi vs. Assistant Commissioner of Income-Tax', (2016) 386 ITR, held that - 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.” 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 to whether 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.” 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. In the light of aforesaid settled proposition of law, we find that by a statutory authority. Hence the writ petition stands dismissed. Needless to say that nothing herein observed shall be construed as an opinion on the merits of the case. (TEJINDER SINGH DHINDSA)JUDGE (PANKAJ JAIN) JUDGE June 02, 2022 Pooja sharma-I Whether speaking/reasoned:Yes/NoWhether reportable:Yes/No