2006 (9) TMI 173 - HC - Income Tax

Challenge to the notice issued under section 148 - petitioner did not file any reply before the authority taking any objection against initiation of proceedings u/s148 but filed only his return, which was originally filed by him procedure not followed by petitioner - writ petition is dismissed as premature with liberty to the petitioner to file objections to the show-cause notice issued u/s 148 before the concerned officer and on filing thereof, the same shall be dealt with

Summary

Issues:
1. Quashing of notice under section 148 of the Income-tax Act, 1961.
2. Allegation of income escaping assessment for the assessment year 1979-80.
3. Disallowance of statutory deduction under section 24(1)(i)(a) of the Act for the assessment year 1983-84.
4. Grounds for challenge to the notice issued under section 148 of the Act.
5. Respondents' stand on the petitioner's entitlement to deduction and procedural compliance.

Analysis:
1. The petitioner sought the quashing of a notice dated June 2, 1987, issued under section 148 of the Income-tax Act, 1961. The petitioner claimed that the notice was beyond the statutory period prescribed under the Act and that no reasons were recorded before its issuance. The petitioner argued that there was no failure to disclose material facts necessary for the assessment of taxable income. The respondents contended that prior approval and reasons were duly recorded before issuing the notice, and the petitioner had the alternative remedy of presenting objections and appealing the decision.

2. The petitioner, an income-tax assessee, had claimed a statutory deduction for repairs in the assessment year 1983-84 under section 24(1)(i)(a) of the Act. The Assessing Officer disallowed the deduction, leading to an appeal by the petitioner. The Commissioner of Income-tax (Appeals) accepted the petitioner's plea and set aside the assessment order. However, before the appeal decision, the Assessing Officer issued a notice under section 148 for the assessment year 1979-80, alleging income escaping assessment. The respondents argued that the petitioner was not entitled to the deduction claimed as no expenses were incurred on repairs.

3. The petitioner's challenge to the notice under section 148 was based on the absence of recorded reasons, the purported failure to disclose material facts, and the notice being beyond the statutory limitation period. The respondents maintained that the notice was issued with proper approval and recording of reasons. The court cited precedents emphasizing the procedure for objections to notices under section 148 and directed the petitioner to file objections before the concerned officer for further consideration.

4. The court dismissed the writ petition as premature, granting the petitioner liberty to file objections to the show-cause notice issued under section 148 before the concerned officer. The court emphasized adherence to the procedure laid down by the Supreme Court regarding objections to notices under section 148 and the requirement for a speaking order after considering the petitioner's objections. The petitioner was advised to follow the prescribed procedure before any further action could be taken in the matter.