2022 (7) TMI 1407 - HC - Income Tax

Writ petition maintainability against notice issued u/s 148 - Validity of reopening of assessment - petitioner seeks issuance of writ in the nature of certiorari for quashing notice issued to the petitioner u/s 148A (b) - Whether at this stage of notice under Section 148 writ Court should venture into the merits of the controversy when AO is yet to frame assessment/re-assemment in discharge of statutory duty casted upon him under Section 147 of the Act ? HELD THAT - The aforesaid question already stands answered by this Court in Gian Castings Pvt. Ltd. Vs. Central Board of Direct Taxes and others 2022 (6) TMI 246 - PUNJAB HARYANA HIGH COURT where the proceedings have not even been concluded by the statutory authority the writ Court should not interfere at such a pre-mature stage - there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Also upheld by SC 2022 (7) TMI 1272 - SC ORDER Admittedly in the present case the procedure as contemplated of the 1961 Act was followed and the authority acted within jurisdiction though petitioner alleges that it erred as the petitioner claims that the order passed under section 148A (d) warrants interference owing to error of fact. No reason to interfere at this stage.

Summary

Issues:
1. Challenge to notice issued under Section 148A(b) of the Income Tax Act, 1961 for the assessment year 2018-19.
2. Whether the writ Court should intervene at the notice stage under Section 148 before the assessment is completed by the Assessing Officer (AO).

Analysis:
The petitioner, a company under the Companies Act, filed an income tax return for the assessment year 2018-19, declaring total income of Rs.2,26,23,550. Subsequently, a notice under Section 148A(b) was issued on 09.03.2022, alleging that income chargeable to tax had escaped assessment. The petitioner responded to the notice, but the explanation was rejected under Section 148A(d) on 31.3.2022. The petitioner approached the High Court seeking a writ of certiorari against the proceedings initiated under Section 148A(b) for the assessment year 2018-19, culminating in the notice under Section 148. The primary issue was whether the Court should intervene at the notice stage under Section 148 before the AO completes the assessment under Section 147 of the Act.

The Court referred to a previous judgment in Gian Castings Pvt. Ltd. Vs. Central Board of Direct Taxes, holding that interference at a premature stage is not warranted when proceedings are yet to be concluded by the statutory authority. The distinction between jurisdictional error and errors within jurisdiction was emphasized, with statutory remedies available for rectification. The Supreme Court upheld this view in a subsequent appeal. The petitioner relied on Jeans Knit (P) Ltd. Vs. Deputy Commissioner of Income Tax, arguing that writ petitions are maintainable against notices under Section 148. However, the Court found that the authority acted within jurisdiction, even if the petitioner alleged errors in fact. Citing settled law and the specific facts of the case, the Court concluded that there was no justification for interference at that stage.

In light of the above analysis, the Court dismissed the writ petition, clarifying that the decision should not be construed as an opinion on the case's merits. The judgment highlighted the importance of allowing the statutory authority to complete the assessment process before judicial intervention, emphasizing the availability of alternative remedies for addressing errors or grievances in the assessment proceedings.