2015 (3) TMI 1229 - HC - Income Tax

Maintainability of the writ petition against the show- cause notice - Held that - It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under article 226 - In the instant case, admittedly, the procedure as per provisions of the Income-tax Act is adhered to. In view of series of judgments, the plea of the respondents regarding maintainability of writ petition is rejected. Validity of notice u/s 143 - change of jurisdiction - right to choose principal place of profession - notice issued by the DCIT, Range-II, Lucknow u/s 143(2) on the ground that the said notice is de hors the provisions contained in section 124 of the Act and in excess of the jurisdiction vested in opposite party No. 2 (Deputy Commissioner of Income- tax, Range-II, Lucknow) - According to the petitioner, he is practising legal profession at the hon'ble Supreme Court and Delhi High Court besides having practice at Lucknow. He has offices at New Delhi and Lucknow ; and has a right to choose his principal place of profession, which he has chosen and shifted to Delhi where he has taken premises on lease and his address is D-27, East of Kailash, New Delhi - HELD THAT - the territorial jurisdiction which has to be vested with the assessing authority is to be determined by the Chief Commissioner or Commissioner on the basis of principal place at which the assessee is carrying on his business or profession and in respect of others, the person residing within the area. In case where the assessee raises any dispute, with regard to jurisdiction of any Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of claim, refer the matter for determination under section 124(2) before the assessment is made in view of the provisions of section 124(4). Here, there is complete departure from the settled procedure. It comes out from the record that when the petitioner refused to submit to the jurisdiction of the said Assessing Officer at Lucknow, the authority/respondent No.2 proceeded ex parte and dispatched a demand of almost ₹ 52 lakhs. At the cost of repetition, we would like to mention that in the notice dated September 11, 2013, which is computer generated clearly reveals that the Delhi address of the petitioner was scored out and in handwriting, the local address has been added. Therefore, it is incorrect to say that the Delhi address was not in the knowledge of the respondents and we find force in the submissions of the petitioner that local address was inserted deliberately to create jurisdiction, which, in fact, legally was not vested with the opposite party No. 2. Therefore, the opposite party No. 2 exceeded its jurisdiction, which not only vitiates the impugned show-cause notice but the entire proceedings. In these circumstances, the entire proceedings being ab initio illegal, without jurisdiction and in violation of section 143(1)(a) of the Income-tax Act. Writ petition is allowed and the impugned notice is quashed.

Issues Involved:
1. Maintainability of the writ petition against the show-cause notice.
2. Jurisdiction of the Deputy Commissioner of Income-tax, Range-II, Lucknow to issue notice under section 143(2) of the Income-tax Act, 1961.
3. Compliance with the procedural requirements under section 124 of the Income-tax Act, 1961.
4. Validity of the proceedings and demand created by the Deputy Commissioner of Income-tax, Range-II, Lucknow.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The court addressed the preliminary objection raised by the Revenue regarding the maintainability of the writ petition against the show-cause notice. Citing precedents such as Whirlpool Corporation v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corporation Ltd., the court reiterated that the rule of exclusion of writ jurisdiction due to the availability of an alternative remedy is discretionary and not compulsory. The court emphasized that writ jurisdiction could be invoked in cases involving the enforcement of fundamental rights, failure of natural justice principles, or actions wholly without jurisdiction. The court concluded that the writ petition was maintainable as the petitioner's case involved questions of jurisdiction and procedural adherence under the Income-tax Act.

2. Jurisdiction of the Deputy Commissioner of Income-tax, Range-II, Lucknow:
The petitioner challenged the jurisdiction of the Deputy Commissioner of Income-tax, Range-II, Lucknow, to issue a notice under section 143(2) of the Income-tax Act, 1961. The petitioner argued that after shifting his principal place of business to New Delhi, the jurisdiction should lie with the assessing authority in New Delhi. The court examined section 124 of the Income-tax Act, which outlines the jurisdiction of assessing officers based on the principal place of business or residence. The court found that the petitioner had duly informed the authorities about the change in his principal place of business and had filed returns in New Delhi. Therefore, the Deputy Commissioner of Income-tax, Range-II, Lucknow, lacked jurisdiction to issue the notice.

3. Compliance with Procedural Requirements under Section 124:
The court scrutinized the procedural compliance under section 124 of the Income-tax Act. It noted that upon receiving the petitioner's objection to the jurisdiction, the assessing officer should have referred the matter for determination under section 124(2) before proceeding further. The court observed that the Deputy Commissioner of Income-tax, Range-II, Lucknow, failed to refer the jurisdictional dispute to the Chief Commissioner or Commissioner, thereby violating the statutory procedure. This non-compliance rendered the subsequent proceedings and the issuance of the notice under section 143(2) invalid.

4. Validity of the Proceedings and Demand Created:
The court found that the issuance of the notice dated September 11, 2013, by the Deputy Commissioner of Income-tax, Range-II, Lucknow, was palpably without jurisdiction. The court noted that the notice initially included the petitioner's New Delhi address, which was later altered to a Lucknow address, indicating a deliberate attempt to create jurisdiction. The court held that the entire proceedings, including the demand created, were ab initio illegal, without jurisdiction, and in violation of section 143(1)(a) of the Income-tax Act. Consequently, the court quashed the impugned notice and any consequential orders.

Conclusion:
The writ petition was allowed, and the impugned notice dated September 11, 2013, was quashed. The court held that the Deputy Commissioner of Income-tax, Range-II, Lucknow, exceeded his jurisdiction, rendering the entire proceedings invalid. The court emphasized the importance of adhering to statutory procedures and jurisdictional boundaries under the Income-tax Act.

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