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2023 (6) TMI 1139 - HC - Income TaxReopening of assessment u/s 147 - respondent no.3 Jurisdiction to issue notice in lieu of transfer of case u/s 127 - HELD THAT - Admittedly, the order under Section 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 under Section 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 of the Act was issued on 01.04.2022 by respondent no.3. The fact that respondent no.3 had issued notice dt. 22.03.2022 under Section 148A(b) of the Act to the petitioner, would not be relevant because the said provision i.e., Section 148A of the Act deals with conduct of enquiry before issuance of notice under Section 148 of the Act, as rightly contended by the learned counsel for the petitioner. Had the transfer of jurisdiction happened after the issuance of notice of Sec.148 of the Act, the situation would have been otherwise. In the very order dt. 15.03.2022 passed under Section 127(2) of the Act it was mentioned specifically that respondent no.3 should get the PAN as well as relevant records transferred to respondent no.4. Without obeying the said directive of respondent no.1 and without transferring the PAN of petitioner and the relevant records to respondent no.4, respondent no.3 cannot take advantage of his own wrong and take the pretext that since the transfer of the PAN had not happened, he has the jurisdiction to issue the notice under Section 148 of the Act also. No prejudice is caused to the respondents since the limitation for initiating action under Section 148 of the Act, in view of the amended Section 149 of the Act, is ten years, if the alleged income escaping assessment is more than Rs.50.00 lacs and since such period for the assessment year 2015-16 would only end on 31.03.2026. Accordingly, the 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.
Issues involved:
The jurisdictional issue of notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16 and the transfer of jurisdiction from respondent no.3 to respondent no.4. Contentions of petitioner: The petitioner challenged the notice under Section 148 as being without jurisdiction due to the prior transfer of jurisdiction to respondent no.4. Emphasized that respondent no.3 had no authority to issue the notice. Contentions of respondents: Respondents argued against the maintainability of the writ petition, citing the availability of alternative remedies. Admitted the transfer of jurisdiction but claimed lack of knowledge until later. Contended that the notice was issued in accordance with the law. Rejoinder of petitioner: Petitioner cited legal precedents supporting the challenge of notice under Section 148 through a writ petition. Argued that the transfer of jurisdiction was effective before the notice was issued, rendering it invalid. Court's Consideration: The court discussed the maintainability of the writ petition against the notice under Section 148, highlighting exceptions for jurisdictional issues. Referred to legal precedents allowing writs in cases of actions without jurisdiction. The court noted the transfer of jurisdiction from respondent no.3 to respondent no.4, effective from 12.03.2022, extinguishing respondent no.3's authority to assess the petitioner under Section 148. The court found that the notice issued by respondent no.3 on 01.04.2022 was invalid as the transfer of jurisdiction had already occurred. Emphasized that respondent no.3 failed to transfer the PAN and relevant records to respondent no.4 as directed. Given the lack of prejudice to the respondents due to the extended limitation period for initiating action, the court allowed the writ petition, quashing the notice issued by respondent no.3. Granted liberty to respondent no.4 to proceed lawfully against the petitioner for alleged income escaping assessment. The court clarified that it did not express opinions on the claims of either party and disposed of any pending applications.
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