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Issues:
- Jurisdiction of the Income-tax Officers under section 34 of the Income-tax Act - Interference of High Court under article 226 at the assessment stage - Applicability of alternative remedies under the Income-tax Act - Imposition of penalty under section 46(1) and adequacy of appeal remedy Jurisdiction of the Income-tax Officers under section 34: The applicant challenged the jurisdiction of the Income-tax Officer to issue a notice under section 34 of the Income-tax Act. The main contention was whether the Officers had the authority to assess the applicant. The Court considered the self-contained nature of the Income-tax Act, providing for appeals and references, and the need to exhaust remedies under the Act before seeking intervention under article 226. The Court emphasized that interfering at this stage would disrupt the statutory assessment and appeal process, rendering the statutory provisions ineffective. Interference of High Court under article 226 at the assessment stage: The Court deliberated on whether to exercise powers under article 226 in a matter governed by a self-contained statute like the Income-tax Act. It was noted that the applicant had already filed an appeal against the assessment order, which was pending. The Court opined that intervening at this stage, without questioning the validity of the Act's provisions, would disrupt the statutory assessment and realization procedures. The Court highlighted the importance of following the statutory appeal and reference mechanisms provided under the Act. Applicability of alternative remedies under the Income-tax Act: The Court rejected the plea for interference under article 226, citing the availability of other remedies within the Income-tax Act. Reference was made to the case law emphasizing that immediate relief from the High Court is warranted only in cases of patent want of jurisdiction, which was not established in the present matter. The Court underscored that the applicant should exhaust the remedies provided under the Act, including the option of seeking reference under section 66, before resorting to article 226. Imposition of penalty under section 46(1) and adequacy of appeal remedy: Regarding the penalty imposed under section 46(1), the applicant argued that the appeal remedy provided under section 30 was inadequate as it required payment of tax before filing an appeal. The Court referred to precedent highlighting the inadequacy of remedies that necessitate full payment before appeal. However, the Court reasoned that the question of penalty was intertwined with the correctness of the tax assessment, which was under appeal. The Court emphasized that the main issue to be resolved was the correctness of the assessment under section 34(1), which would impact the penalty. Consequently, the Court declined to delve into the penalty issue separately at this stage, stating that it would be addressed based on the outcome of the assessment appeal. In conclusion, the High Court dismissed the application, emphasizing the need to follow the statutory procedures and exhaust remedies under the Income-tax Act before seeking intervention under article 226. The Court underscored the importance of maintaining the statutory assessment and appeal framework, declining to interfere at the present stage.
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