2022 (4) TMI 810 - SCH - Income Tax

Validity of assessment u/s 144 r.w.s. 144B - as submitted High Court ought not to have entertained the Writ Petition and ought to have relegated the original writ petitioner to avail statutory remedy of appeal before the CIT(A) - HELD THAT - As one of the grounds on which the High Court has set aside the assessment order was sub-section (9) of Section 144B of the Income Tax Act, 1961 which, at the relevant time, provided that any assessment made shall be non est, if such assessment is not made in accordance with the procedure laid down under the said Section and as submitted that, as such, sub-section (9) of Section 144B of the Act has been deleted with effect from 01.04.2021 and the provision to declare the assessment as non est if such assessment is not made in accordance with the procedure laid down under Section 144B of the Act has been deleted. Issue notice, returnable on 04.05.2021. Dasti, in addition, is permitted. In the meantime, the observations made by the High Court in para 9 of the impugned judgment and order are ordered to be stayed.

Summary

Issues: Jurisdiction of High Court in entertaining Writ Petition against assessment order; Relevance of sub-section (9) of Section 144B of the Income Tax Act, 1961; Legality of High Court's observations; Retrospective deletion of sub-section (9) of Section 144B.

In this judgment by the Supreme Court of India, the primary issue revolved around the jurisdiction of the High Court in entertaining a Writ Petition against an assessment order, instead of directing the petitioner to avail the statutory remedy of appeal before the CIT(A). The petitioner argued that the High Court erred in setting aside the assessment order based on sub-section (9) of Section 144B of the Income Tax Act, 1961, which was subsequently deleted with retrospective effect from 01.04.2021. The petitioner contended that the deletion of this provision rendered the ground for setting aside the assessment order invalid, and the assessee should have pursued an appeal before the CIT(A) if aggrieved.

The Court noted the submission made by the learned ASG and observed that the High Court's decision to set aside the assessment order may not have been warranted, especially considering that the assessment procedure was duly followed, and the legislature had retrospectively deleted sub-section (9) of Section 144B of the Act. The Court directed the issuance of notice for further proceedings returnable on 04.05.2021 and allowed Dasti in addition. Furthermore, the Court stayed the observations made by the High Court in paragraph 9 of the impugned judgment and order until further proceedings.

The judgment highlights the significance of adhering to statutory remedies and the impact of legislative amendments on the validity of assessment orders. It underscores the principle that the High Court should exercise jurisdiction judiciously, especially when statutory remedies are available to aggrieved parties. The retrospective deletion of a statutory provision can have a crucial bearing on the legal validity of decisions based on such provisions, emphasizing the need for alignment with current legal provisions.