2023 (6) TMI 1042 - HC - Income Tax

Validity of reopening of assessment - jurisdiction of respondent no.3 (ITO Ward No.1 Shimla) to make an assessment u/s 148 - Transfer of case u/s 127 - HELD THAT - Admittedly the order u/s 127(2) of the Act was passed by respondent no.1 transferring to respondent no.4 at New Delhi the power to assess the petitioner which was with respondent no.3 (ITO Ward No.1 Shimla). It was clearly mentioned therein that the said order would come into effect immediately with effect from 12.03.2022. Therefore with effect from 12.03.2022 the jurisdiction of respondent no.3 to make an assessment under Section 148 of the Act qua the petitioner got extinguished. When respondent no.3 had issued notice under Clause (b) of Section 148A of the Act to the petitioner on 22.03.2022 the petitioner had brought this fact to the notice of respondent no.3 in his response on the Portal given on 28.03.2022. It was further stated that the order dt. 15.03.2022 issued u/s 127(2) of the Act that respondent no.1 was also available on the Income Tax Portal and a copy of the same was also attached to respondent no.3; and the specific plea was raised that notice dt. 22.03.2022 under Section 148 A (b) of the Act issued by respondent no.3 to the petitioner was without jurisdiction. Ignoring the same the impugned notice under Section 148 was issued on 01.04.2022 by respondent no.3. The respondents cannot place reliance on sub-section (4) of Section 127 of the Act and contend that the transfer of the case can be made at any stage of the proceedings and the notice issued under Section 148 of the Act is not invalidated because in the instant case the transfer of jurisdiction was done on 15.03.2022 much prior to the issuance of notice under Section 148A(d) and Section 148 of the Act on 01.04.2022. Had the transfer of jurisdiction happened after the issuance of notice of Sec.148 of the Act the situation would have been otherwise. Writ petition is allowed; the notice issued u/s 148 by respondent no.3 is quashed and respondent no.3 is prohibited from taking any action pursuant thereto.

Summary

Issues involved:
The jurisdiction of the Income Tax Officer to issue notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16 after the transfer of jurisdiction from one officer to another.

Contentions and Consideration:
The petitioner challenged the notice issued by respondent no.3 under Section 148 of the Act, contending that the jurisdiction to assess had been transferred to respondent no.4 prior to the issuance of the notice. The petitioner argued that the notice was without jurisdiction as only respondent no.4 had the authority to assess. Respondent no.3, on the other hand, claimed that the notice was valid as the transfer of jurisdiction information was received after the notice was issued. The petitioner cited the Supreme Court's decision in Jeans Knit Pvt. Ltd. case to support the maintainability of the writ petition against the notice under Section 148 of the Act.

Court's Decision:
The High Court considered the maintainability of the writ petition to challenge the notice under Section 148 of the Act. It noted that a writ petition can be entertained if the show cause notice is issued without jurisdiction. Referring to previous judgments, the Court highlighted that High Courts have the power to issue a writ to prohibit an authority from acting without jurisdiction. The Court also discussed the Supreme Court's ruling in Jeans Knit Pvt. Ltd. case, emphasizing that a writ petition challenging notices under Section 148 of the Act is maintainable. The Court concluded that the notice issued by respondent no.3 was without jurisdiction as the transfer of jurisdiction had already taken place, and therefore, quashed the notice. The Court allowed respondent no.4 to take action against the petitioner in accordance with the law for the alleged income escaping assessment, while granting the petitioner the right to contest the proceedings.

Conclusion:
The High Court allowed the writ petition, quashing the notice issued by respondent no.3 under Section 148 of the Act for the assessment year 2015-16. The Court prohibited respondent no.3 from taking any action based on the notice and granted liberty to respondent no.4 to proceed with the assessment. The Court clarified that it did not express any opinion on the claims of both parties and disposed of any pending miscellaneous applications.