2004 (9) TMI 87 - HC - Income Tax

Revision issuance of a show cause notice by commissioner in exercise of the powers u/s 263 petitioner relies upon the decision of the Madras High Court in the case of CWT v. Sampathmal Chordia Executor to the Estate of Late Neni Kavur Bai to show that the show cause notice itself would be without jurisdiction - We feel that the decision of the Madras High Court would not be of any help to the petitioner. In the said decision the revision had been held to be invalid as the subject-matter of the revision was the same as that of the pending appeal. Therefore it does not hold that in all cases and particularly where the issues in the revision are different from those in the appeal proceedings under section 263 would be invalid during the pendency of an appeal. - The Commissioner after taking notice of the objections shall pass an order in accordance with law. Our interference at this stage is not called for.

Summary

Issues:
1. Validity of show cause notice issued by Commissioner of Income-tax under section 263 of the Income-tax Act, 1961 during the pendency of block assessment appeal.

Analysis:
The High Court judgment dealt with the challenge to a show cause notice issued by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961 during the pendency of a block assessment appeal. The petitioner, who is the assessee, filed a writ petition aggrieved by the issuance of the show cause notice. The petitioner relied on a decision of the Madras High Court to argue that the show cause notice was without jurisdiction. However, the High Court found that the Madras High Court decision cited by the petitioner did not apply in this case. The High Court clarified that the Madras High Court decision invalidated a revision when the subject matter was the same as the pending appeal, but it did not establish a blanket rule that all proceedings under section 263 would be invalid during the pendency of an appeal, especially when the issues in the revision differ from those in the appeal.

The High Court emphasized that the petitioner could raise other grounds apart from the Madras High Court decision in response to the show cause notice. The Court stated that the Commissioner, after considering the objections raised by the petitioner, would pass an order in accordance with the law. The Court concluded that interference at that stage was not warranted and disposed of the writ petition. Importantly, the High Court clarified that its decision did not express any opinion on the merits of the case, leaving the assessment and decision-making process to proceed as per the law.

In summary, the judgment highlighted the importance of considering the specific circumstances of each case when assessing the validity of proceedings under section 263 of the Income-tax Act, 1961 during the pendency of an appeal. It underscored the need for a case-by-case analysis to determine the jurisdiction and validity of such proceedings, emphasizing that different issues in the revision compared to the pending appeal could warrant the continuation of proceedings under section 263.