1985 (7) TMI 81 - HC - Income Tax

Summary

Issues:
1. Challenge to the showcause notice under the Income Tax Act.
2. Interpretation of the time limit for initiation of proceedings under Section 269D(1) of the Income Tax Act.
3. Justification for initiating proceedings under Chapter XXA of the Income Tax Act.

Detailed Analysis:

1. The petitioner challenged a showcause notice issued by the Inspecting Assistant Commissioner of Income-tax under the Income Tax Act, primarily on the grounds that the proceedings were not initiated within the permitted time and that the transaction was genuine. The petitioner contended that the proceedings should be reckoned from a later date, relying on a ruling of the Allahabad High Court. The respondents, represented by the senior standing counsel for the Income-tax Department, argued that the date of publication in the Official Gazette should be considered as the initiation date, citing Supreme Court and Gujarat High Court rulings. The High Court examined the facts and held that the notice of acquisition was published within the stipulated time, rejecting the petitioner's contention.

2. The court delved into the interpretation of Section 269D(1) of the Income Tax Act, which mandates the initiation of proceedings within a specified period from the registration of the transfer instrument. Referring to the Supreme Court's decision in Mayer Hans George's case and the Gujarat High Court ruling in Shilaben Kanchanlal Ran's case, the court determined that the notice of acquisition was deemed published on a specific date, concluding that the initiation was within the statutory time limit.

3. The petitioner also contested the justification for initiating proceedings under Chapter XXA of the Income Tax Act, arguing that the facts and circumstances did not warrant such action. The court emphasized that the authority's satisfaction, based on relevant material, was not subject to review as an appeal. It directed the petitioner to contest the matter before the appropriate authorities, granting time for filing objections and staying the proceedings. The court rejected the petitioner's contentions and disposed of the writ petition, instructing the parties to bear their own costs and communicating the order to the concerned authority within a specified timeframe.