1977 (6) TMI 1 - HC - Income Tax

Summary

Issues Involved:
1. Preliminary Objection on Abatement of Petition under Article 226.
2. Validity of Returns Filed by the Appellant.
3. Jurisdiction of the ITO to Issue Notices under Section 148.

Summary:

Preliminary Objection on Abatement of Petition under Article 226:
The respondents contended that the petition under Article 226 had abated by virtue of Section 58(2) of the Constitution (Forty-Second Amendment) Act, 1976. The court examined clauses (i) and (3) of Article 226 as substituted by Section 38 of the Constitution (Forty-Second Amendment) Act, 1976. It was argued that the appellant had other remedies under the I.T. Act, 1961, such as appealing against the assessment order. However, the court held that the remedy referred to in clause (3) of Article 226 contemplates an immediate remedy for the redress of the injury complained of and not a remote or farfetched remedy. The court concluded that the writ petition had not abated as the I.T. Act, 1961, did not provide any immediate remedy for the redress of the injury that might be caused by reopening the assessments.

Validity of Returns Filed by the Appellant:
The appellant argued that the returns filed were not invalid and that the ITO had no jurisdiction to ignore the same and issue notices under Section 148 without completing the assessments. The court examined Sections 139 and 143 of the I.T. Act, 1961, and concluded that an incorrect and incomplete return is not a return in the eye of law only if it is so incomplete that it cannot be regarded as a return, such as a return not signed by the assessee or a blank return. In this case, the returns were signed and verified by the appellant, and the court held that the ITO could not ignore these returns and proceed to issue notices under Section 148.

Jurisdiction of the ITO to Issue Notices under Section 148:
The court held that when a return has been filed by an assessee, it cannot be ignored by the ITO, and he will have no jurisdiction to issue a notice under Section 148 without completing the assessment on the return filed by the assessee. The court found that the ITO acted on the returns filed by the appellant, issued notices under Section 143(2), and heard the appellant under Section 143(3), but without completing the assessments, he took recourse to reopen the assessments under Section 147 by issuing the impugned notices under Section 148. The court concluded that the ITO acted without jurisdiction in issuing the impugned notices.

Conclusion:
The court set aside the judgment of the learned judge and made the rule absolute. A writ in the nature of certiorari was issued quashing the impugned notices under Section 148 of the I.T. Act, 1961. Additionally, a writ in the nature of mandamus was issued commanding the respondents not to give any effect or further effect to the said notices or to any proceedings started thereon or any orders made pursuant to the same. The appeal was allowed with no order for costs.