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1966 (7) TMI 16 - HC - Income TaxBar of limitation - order u/s 23A - held that ITO alone have the power to issue the notice calling upon the petitioner to show cause why an order should not be made u/s 23A - there is no bar in law to the issue of the notice
Issues Involved:
1. Validity of the show-cause notice issued under section 23A of the Income-tax Act, 1922. 2. Jurisdiction of the Income-tax Officer to issue the notice considering the bar of limitation under section 34(3) of the Act. 3. Applicability of writ jurisdiction under Article 226 of the Constitution when an alternative remedy exists under the Income-tax Act. Issue-wise Detailed Analysis: 1. Validity of the show-cause notice issued under section 23A of the Income-tax Act, 1922: The petitioner challenged the show-cause notice dated May 13, 1964, issued by the Income-tax Officer (respondent No. 1), arguing that it was illegal and should be recalled. The petitioner contended that the notice was issued for the assessment year 1955-56, and no dividend was declared despite available surplus. The petitioner argued that the notice was invalid as it proposed to apply section 23A of the Income-tax Act, 1922, which they claimed was barred by section 34(3) of the Act. 2. Jurisdiction of the Income-tax Officer to issue the notice considering the bar of limitation under section 34(3) of the Act: The petitioner argued that an order under section 23A is an order of assessment or reassessment and is subject to the limitation period prescribed by section 34(3) of the Act. The petitioner's counsel, Mr. A. K. Sen, argued that the Finance Act of 1955 amended section 23A, making it a charging section, and thus any order under this section would be subject to the bar of limitation under section 34(3). He cited several cases, including the Gujarat High Court's decision in Navanagar Transport and Industries Ltd. v. Income-tax Officer and the Supreme Court's decisions in Commissioner of Income-tax v. Navinchandra Mafatlal and Sardar Baldev Singh v. Commissioner of Income-tax, to support this contention. The petitioner argued that since the assessment was proposed beyond the four-year period prescribed by section 34(3), the notice was invalid. In contrast, the respondent's counsel, Mr. Gouri Mitter, argued that the application was premature as no order had yet been made by the Income-tax Officer. He contended that the Income-tax Officer had the jurisdiction to decide on the applicability of the bar under section 34(3) and that the petitioner should have raised this issue before the Income-tax Officer. He cited the Supreme Court's decisions in Lalji Haridas v. R. H. Bhatt and Chhotalal Haridas v. M.D. Karnik, which held that the question of limitation should be raised before the Income-tax Officer and not in writ proceedings. 3. Applicability of writ jurisdiction under Article 226 of the Constitution when an alternative remedy exists under the Income-tax Act: The petitioner argued that a writ of prohibition should be issued to restrain the Income-tax Officer from proceeding further as he had no jurisdiction to issue the notice. Mr. Sen relied on the Supreme Court's decision in State of Uttar Pradesh v. Mohammad Nooh, which held that the existence of an alternative remedy does not bar the issuance of a writ if justice demands it. However, Mr. Mitter countered that the Income-tax Act provides a complete machinery for relief and that the petitioner should pursue the remedies provided by the Act. He cited the Supreme Court's decisions in C. A. Abraham v. Income-tax Officer and Shivram Poddar v. Income-tax Officer, which emphasized that the Income-tax Act provides adequate remedies and that writ jurisdiction should not be invoked when statutory remedies are available. Conclusion: The court concluded that the contentions of the respondent were well-founded. It held that the Income-tax Officer had the jurisdiction to decide on the question of limitation and that the writ jurisdiction of the court could not supersede the authority of the income-tax authorities. The court also noted that no order of assessment or reassessment had been made yet, and the petitioner had merely been called upon to show cause. Therefore, the petitioner was not entitled to any relief in this application. The application was dismissed, and the rule was discharged, with each party bearing its own costs.
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