1994 (3) TMI 77 - HC - Income Tax

Income Tax Act, Jurisdiction Of High Court, Notice Of Reassessment, Rectification Proceedings, Writ Jurisdiction

Summary

Issues:
1. Validity of notice under sections 147 and 148 of the Income-tax Act, 1961 for the assessment years 1989-90 and 1990-91.
2. Jurisdiction of the court under article 226 of the Constitution of India in tax matters.
3. Availability of alternative remedy to the petitioner under the Income-tax Act.

Analysis:
The High Court judgment addressed the challenge against a notice dated March 2, 1993, issued under sections 147 and 148 of the Income-tax Act, 1961, for income that had escaped assessment in the assessment years 1989-90 and 1990-91. The petitioner, a sole proprietor of an enterprise, had claimed deductions under section 80-I of the Act, which later faced objections leading to the issuance of a rectification notice. The petitioner contended that the reopening of assessment through sections 147 and 148 was illegal and without jurisdiction, as the matter had been considered earlier under section 154 of the Act. The Revenue justified the notice by arguing that the petitioner was not entitled to the deductions claimed. The court emphasized that the petitioner had alternative remedies available under the Act and questioned the maintainability of the writ petition under article 226 of the Constitution solely based on show-cause notice objections. The court highlighted that the jurisdiction under article 226 in tax matters is limited, and the petitioner should exhaust remedies available under the taxing statute before seeking court intervention.

The judgment delved into the legal precedents cited by the petitioner's counsel, emphasizing that the mere contention of lack of jurisdiction was not enough without specific legal impediments from the Act itself. The court stressed that unless a clear bar or legal obstacle was identified in the Act, show-cause notices should not be interfered with under article 226. It was noted that the petitioner had not pinpointed any provision in the Act invalidating the notice under sections 147 and 148. The court highlighted the importance of allowing the assessee to utilize statutory remedies available under the Act rather than invoking constitutional provisions prematurely.

Furthermore, the judgment referenced a Supreme Court decision emphasizing that when an assessee has effective remedies through appeals against assessment orders or show-cause notices, resorting to writ jurisdiction is not appropriate. The court directed the petitioner to avail of the statutory remedy under the Act by responding to the notice issued, without expressing any opinion on the case's merits to avoid prejudicing either party. Ultimately, the petition was dismissed on the grounds of the availability of an alternative remedy, emphasizing the importance of exhausting statutory avenues before seeking judicial intervention.