2022 (6) TMI 248 - HC - Income Tax

Reopening of assessment u/s 147 - validity of order passed under Section 148A(d) - assessee contented on Non considering the objections raised by the petitioner - HELD THAT - The consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed.

Issues:
Challenge to notice under Section 148A(b) of the Income Tax Act, 1961 and order under Section 148A(d) dated 31.03.2022.

Analysis:

1. Primary Issue - Merits of Controversy at Notice Stage:
The primary issue in the present writ petition was whether the court should delve into the merits of the controversy at the stage of notice under Section 148 when the Assessing Officer (AO) is yet to frame the assessment/reassessment under Section 147 of the Act. The court referred to past judgments to address this issue. Notably, the court cited a Division Bench ruling under the Indian Income Tax Act, 1922, emphasizing that challenging an assessment at this stage through a writ petition is not permissible as the Act provides a specific machinery for determining assessable income. The court also highlighted a similar stance taken by the Rajasthan High Court in a case under the 1922 Act, indicating that intervening at this stage is unwarranted when other remedies under the Act are available.

2. Precedents and Judicial Interpretations:
The court further discussed various judicial precedents to support its decision. It referenced a case where the Delhi High Court held that challenging an order at the notice stage is premature, and the assessee has opportunities during subsequent proceedings to contest any factual inaccuracies. Additionally, the court cited a Supreme Court case emphasizing that the sufficiency or correctness of material prompting the reopening of a case is not to be evaluated at the notice stage. The court reiterated that the assessing authority must be given the opportunity to investigate and decide on the facts and law involved.

3. Distinction Between Jurisdictional Error and Error of Law/Fact:
The court highlighted the distinction between jurisdictional errors and errors of law or fact within jurisdiction. It noted that for rectifying errors, statutory remedies are available, underscoring the importance of allowing the statutory authority to complete the proceedings before seeking judicial intervention. The court emphasized that challenging the correctness of an order under Section 148A(d) based on factual premises should be addressed through statutory remedies.

4. Court's Decision and Conclusion:
Based on the settled legal principles and precedents discussed, the court concluded that there was no justification for interference at the current stage of the proceedings. It dismissed the writ petition, emphasizing that the statutory authority should be allowed to conclude the proceedings before seeking judicial intervention. The court clarified that its decision should not be construed as an opinion on the merits of the case, maintaining the distinction between the court's role and the statutory authority's jurisdiction in tax matters.

5. Final Remarks:
In the final remarks, the court reiterated the importance of respecting the statutory process for assessment and reassessment of taxes under the Income Tax Act, 1961. It underscored the need for allowing the assessing authority to complete the proceedings and address any errors through the statutory remedies provided, rather than seeking premature judicial intervention. The court's decision was based on upholding the established legal principles and ensuring the proper application of the statutory framework in tax matters.

This detailed analysis of the judgment from the High Court of Punjab and Haryana addresses the issues raised regarding the challenge to the notice under Section 148A(b) of the Income Tax Act, 1961 and the order under Section 148A(d). The court's decision was grounded in established legal principles, judicial precedents, and the need to respect the statutory process in tax assessments.

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