1996 (9) TMI 34 - HC - Income Tax

Assessing Officer, Cause Of Action, High Court, Retrospective Effect, Scientific Research, Writ Petition

Issues Involved:

1. Notification withdrawing approval under sections 35(1)(ii) and 10(21) of the Income-tax Act, 1961.
2. Notices issued under sections 148 and 139(2) of the Income-tax Act.
3. Order under section 263 of the Income-tax Act setting aside assessments.
4. Notice issued for assessment year 1983-84 asking for information.
5. Jurisdiction of the High Court at Allahabad.

Issue-wise Detailed Analysis:

1. Notification Withdrawing Approval Under Sections 35(1)(ii) and 10(21) of the Income-tax Act, 1961:
The petitioner challenged the retrospective withdrawal of approval granted for scientific research purposes. The approval was initially granted for specified periods but was withdrawn retrospectively from January 17, 1980, by a notification dated January 2, 1986. The petitioner argued that the withdrawal was without jurisdiction, violated principles of promissory estoppel, and was not supported by any valid reasons. The court found that the prescribed authority did not have the power to revoke the approval retrospectively as there was no provision in the Act authorizing such revocation. The court also noted that the approval was granted after due scrutiny and that the withdrawal notification was a non-speaking order. Consequently, the court quashed the notification dated January 2, 1986.

2. Notices Issued Under Sections 148 and 139(2) of the Income-tax Act:
The petitioner contested the notices issued by the Income-tax Officer, Faizabad, under sections 148 and 139(2) for the assessment years 1981-82 to 1985-86. The court noted that the petitioner was being assessed by the Income-tax Officer II(3), Kanpur, and not by the Income-tax Officer, Faizabad. Therefore, the notices issued by the Faizabad officer were without jurisdiction. The court quashed these notices.

3. Order Under Section 263 of the Income-tax Act Setting Aside Assessments:
The Commissioner of Income-tax, Kanpur, had set aside the petitioner's assessments for the years 1981-82 and 1982-83, directing fresh assessments due to the retrospective withdrawal of approval. The court found that since the notification withdrawing approval was quashed, the orders under section 263 lost their basis and were also quashed. The court observed that the Commissioner's orders were perfunctory as they did not address whether the Assessing Officer had failed to verify the application of income as required by section 10(21).

4. Notice Issued for Assessment Year 1983-84 Asking for Information:
The petitioner sought to quash a notice dated July 25, 1986, issued by the Assessing Officer II(3), Kanpur, for the assessment year 1983-84. The court held that the Assessing Officer had the jurisdiction to issue the notice under section 142 of the Act for making necessary verifications regarding the application of income. The petitioner's counsel conceded that this notice was valid, and the court dismissed this part of the petition.

5. Jurisdiction of the High Court at Allahabad:
A preliminary issue was raised regarding the jurisdiction of the High Court at Allahabad to entertain the writ petition, given that the petitioner's research center was located in Faizabad, a district under the jurisdiction of the Lucknow Bench. The court rejected this contention, noting that the petitioner's registered office was in Kanpur, within the jurisdiction of the Allahabad Bench, and that the assessments and actions under section 263 were conducted in Kanpur. Therefore, the writ petition was properly filed at Allahabad.

Conclusion:
The writ petition was partly allowed. The court quashed the notification dated January 2, 1986, the notices issued by the Income-tax Officer, Faizabad, and the orders under section 263 of the Act. The petition was dismissed concerning the notice for the assessment year 1983-84, and the parties were ordered to bear their own costs.

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