1983 (9) TMI 76 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction under Section 230(1) of the Income Tax Act.
2. Arbitrariness and violation of Article 14 due to lack of notice.
3. Reasonableness of restriction under Articles 19 and 21.
4. Consistency regarding the amounts due.

Issue-wise Detailed Analysis:

1. Jurisdiction under Section 230(1) of the Income Tax Act:
The petitioner challenged the notice issued by the Income Tax Officer (ITO) to Pan American Airways, arguing that the foundation of jurisdiction under Section 230(1) depends on the formation of an opinion by the ITO that the assessee is not likely to return to India. The court found that the ITO's opinion must be based on some material. The petitioner had lived mostly outside India, and his presence could not be secured during prosecutions, necessitating extradition proceedings. The court concluded that these facts were sufficient to warrant the formation of an opinion by the ITO that the petitioner was not likely to return to India.

2. Arbitrariness and violation of Article 14 due to lack of notice:
The petitioner argued that the action was arbitrary and violative of Article 14 as no notice was given before issuing the impugned notice. The court acknowledged that the right to go abroad is part of the right to liberty under Article 21. However, it held that while the law does not explicitly require notice before forming an opinion under Section 230(1), a post-decisional hearing can satisfy the mandate of natural justice. The court emphasized that an opportunity of being heard after the issuance of the notice under Section 230(2) to the owner of the aircraft would suffice.

3. Reasonableness of restriction under Articles 19 and 21:
The petitioner contended that the imposition of a restriction by way of an income-tax clearance certificate was unreasonable, especially for an assessee without assets. The court noted that the petitioner had been given multiple opportunities to appear before the tax authorities to disclose his assets but had failed to do so. The income-tax clearance certificate had not been refused, as the petitioner had not cooperated in the inquiry. Therefore, the question of the reasonableness of the restriction could not be addressed at this stage.

4. Consistency regarding the amounts due:
The petitioner argued that there were inconsistencies in the amounts claimed as due. The court found that this issue did not relate to the validity of the impugned notice and could be settled at a hearing. It was not disputed that some amounts were due from the petitioner.

Conclusion:
The court dismissed the writ petition, stating that the notice issued under Section 230(1) was valid and that the petitioner had not been deprived of his rights without due process. The court held that the petitioner could still make a representation to the concerned ITO, which would be considered within four weeks. The court also clarified that the issuance of a fresh passport did not absolve the petitioner of his tax liabilities. The writ petition was dismissed without costs, and advocates' fees were set at Rs. 500.