2011 (6) TMI 127 - HC - Income Tax

Assessee in default - in respect of indirect acquisition of 51 per cent shares of Sesa Goa Limited without deduction of TDS - It is clear that it is open to the appellant to urge all the facts including jurisdictional fact before the Assessing Authority by placing the version of the appellant with corroborative evidence, documentary or otherwise and wherefore, on a reading of the show-cause notice, no person of ordinary prudence would come to the conclusion that no useful purpose would be served by remitting the matter to the first respondent - Held that the impugned order passed by the learned single Judge is justified and the show-cause notice issued by the first respondent dated 12-10-2009 (Annexure B to the writ petition) does not call for interference in exercise of writ jurisdiction of this Court - the writ appeal is disposed of

Issues Involved:
1. Validity of the show-cause notice issued by the Income-tax Authorities.
2. Jurisdictional fact determination by the High Court or the Assessing Officer.
3. Prejudgment by the Assessing Officer in the show-cause notice.
4. Appellant's right to approach the High Court under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the show-cause notice issued by the Income-tax Authorities:
The appellant challenged the show-cause notice dated 12-10-2009 issued by the first respondent under sections 201(1) and 201(1A) of the Income-tax Act, 1961, concerning the indirect acquisition of 51% shares of Sesa Goa Limited without deduction of TDS. The appellant argued that the notice was not a genuine show-cause notice as the Assessing Officer had already prejudged the matter. However, the High Court held that the show-cause notice was valid, emphasizing that the appellant should respond to the notice and present its case before the Assessing Officer.

2. Jurisdictional fact determination by the High Court or the Assessing Officer:
The appellant contended that the High Court should decide the jurisdictional fact based on the facts and documents presented, as the Assessing Officer had already predetermined the matter. The High Court, referencing the Supreme Court's decision in Vodafone International Holdings B.V. v. Union of India, held that the jurisdictional fact should be determined by the Assessing Officer as a preliminary issue. If the appellant is aggrieved by the finding on the jurisdictional fact, it can then approach the High Court under Article 226 of the Constitution of India.

3. Prejudgment by the Assessing Officer in the show-cause notice:
The appellant argued that the show-cause notice indicated a predetermined conclusion by the Assessing Officer, rendering any response an empty formality. The High Court examined the contents of the show-cause notice and found that it contained a tentative opinion, inviting the appellant to present its facts and objections. The Court concluded that the notice did not reflect a prejudged opinion, and it was appropriate for the appellant to respond to the notice.

4. Appellant's right to approach the High Court under Article 226 of the Constitution of India:
The High Court affirmed that the appellant has the right to approach the High Court under Article 226 if aggrieved by the preliminary finding on the jurisdictional fact by the Assessing Officer. The Court directed that the appellant could raise the jurisdictional fact in its objections to the show-cause notice, which the Assessing Officer must address as a preliminary issue. If the appellant is dissatisfied with the outcome, it can seek judicial review by the High Court.

Conclusion:
The High Court upheld the validity of the show-cause notice and directed the appellant to respond to it, allowing the Assessing Officer to determine the jurisdictional fact as a preliminary issue. The appellant retains the right to challenge the preliminary finding on the jurisdictional fact before the High Court under Article 226 if necessary. The Court emphasized that the show-cause notice did not reflect a prejudged opinion and that the appellant should utilize the opportunity to present its case before the Assessing Officer.

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