2022 (4) TMI 596 - HC - Income Tax

Validity of order u/s 148A(d) - fit case for issuance of notice under Section 148 - jurisdiction of High Court under Article 226 to pursue the issue raised - petitioner states that the impugned order is a non-speaking order which does not deal with the contentions raised by the Petitioner in reply to the impugned Show Cause Notice - HELD THAT - Though it is the petitioner s case that the impugned order is erroneous on facts, yet this Court is of the opinion that the petitioner would have ample opportunity during the course of proceedings before different statutory forums to show that the finding of fact arrived at was erroneous. Moreover, at this stage, no assessment order has been passed and it has only been observed that it is a fit case for issuance of notice under Section 148. Supreme Court in Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal 2013 (8) TMI 458 - SUPREME COURT has held that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226. Consequently, the present case does not fall under the exceptional grounds on which a writ petition is maintainable at the interim stage in tax matters. See Ghanashyam Mishra And Sons Private Limited Vs. Edelweiss Assetre Construction Company Limited, 2021 (4) TMI 613 - SUPREME COURT and M/S Radha Krishan Industries vs. State of Himachal Pradesh and Ors,. 2021 (4) TMI 837 - SUPREME COURT . The present writ petition along with pending application stands dismissed with liberty to the petitioner to raise all its grounds before the Assessing Officer and the subordinate forums.

Summary

Issues:
Challenge to order under Section 148A(d) of Income Tax Act for AY 2018-19, validity of Show Cause Notice under Section 148A(b), issuance of notice under Section 148, sufficiency of material for reopening case, opportunity to challenge findings, jurisdiction of High Court under Article 226 in tax matters.

Analysis:
1. The petitioner challenged the order dated 28th March, 2022, issued under Section 148A(d) of the Income Tax Act for the assessment year 2018-19, along with the Show Cause Notice under Section 148A(b) and a notice under Section 148. The petitioner contended that the order was non-speaking and failed to address their contentions raised in response to the Show Cause Notice. Reference was made to the Supreme Court judgment in Kranti Associates Pvt. Ltd. & Anr. Vs. Mashook Ahmed Khan and Ors, emphasizing the importance of reasoned orders.

2. The petitioner argued that the order was issued mechanically without an independent application of mind, relying on information from the investigation wing that lacked a rational nexus with the petitioner. The information used in the Show Cause Notice dated back to the Assessment Year 2014-15, which was utilized to allege income escapement for the year 2018-19. The petitioner emphasized the need for a proper assessment based on relevant and current information.

3. The respondent's order mentioned the petitioner's failure to refute statements made by an entry provider under oath and referenced a search and seizure action by DGGI, Ghaziabad under the CGST Act, 2017. The Court found the order to be speaking and reasoned, distinguishing it from the case cited by the petitioner. Additionally, the petitioner had only submitted bank statements, not books of accounts, which led the Court to apply the principles from the Supreme Court judgment in Raymond Woollen Mills Ltd. vs. Income-tax Officer, emphasizing the sufficiency of material for reopening proceedings.

4. Despite the petitioner's claim that the order was factually incorrect, the Court held that the petitioner would have opportunities in subsequent proceedings to challenge the findings. It was noted that no assessment order had been issued yet, only a notice under Section 148. Citing Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal, the Court highlighted that the Income Tax Act provides a complete mechanism for assessment, discouraging the invocation of High Court jurisdiction under Article 226 prematurely in tax matters.

5. Consequently, the Court dismissed the writ petition, granting the petitioner the liberty to raise their grounds before the Assessing Officer and other relevant forums. The judgment emphasized the importance of following the statutory assessment/reassessment procedures provided under the Income Tax Act, limiting the circumstances under which a writ petition could be entertained at the interim stage in tax matters.