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Issues:
1. Legality of Revenue's action in calling for income tax returns under the Income-tax Act, 1961. 2. Validity of notices issued to petitioners and their liability to be quashed. Analysis: 1. The High Court considered whether the Revenue's action in calling upon the petitioners to file income tax returns under the Income-tax Act, 1961, was illegal. The petitioners, Chandigarh Housing Board and Punjab Urban Development Authority, contended that their income was exempt from tax under section 10(20A) of the Act. They sought to quash the notices dated January 29, 2001, March 23, 2001, and June 18, 2001. The Revenue argued that the petitions were premature, and the notices were lawful, emphasizing that the petitioners must file returns for the competent authority to decide the matter. 2. The Court analyzed whether the petitioners' income, primarily from real estate dealings, was subject to income tax despite their claim of exemption under section 10(20A). It noted that the evidence presented by the petitioners before the competent authority would determine the tax liability. The notices issued to the petitioners highlighted potential taxable income derived from activities like selling plots through auctions, raising questions about the applicability of tax exemptions. 3. The Court emphasized that the competent authority, not the Court, should decide the tax liability based on evidence provided by the petitioners. It highlighted the importance of factual findings in determining tax obligations, cautioning against premature judgments. The Court noted that filing returns was necessary for assessment, and failure to do so could not be justified solely on claims of exemption under the Act. 4. The Court referred to relevant case laws to support its decision, emphasizing the importance of filing returns for proper assessment of tax liability. It highlighted the need for the competent authority to consider all evidence before making a decision. The Court concluded that the notices were not illegal, and the petitions were premature. It directed the petitioners to file returns for assessment by the competent authority, which would also decide on refund claims related to tax deductions at source. 5. In conclusion, the High Court disposed of the writ petitions, emphasizing the importance of following due process in tax assessments and decisions. It underscored the role of the competent authority in determining tax liabilities based on factual evidence presented by the petitioners, highlighting the need for proper assessment before reaching any conclusions.
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