2024 (11) TMI 1391 - HC - Income Tax

Exemption from income tax u/s 10(26) - Petitioner is working as Director in the department of Soil, Government of Meghalaya. She is a resident of Khasi Hills. She claims to be a member of the scheduled tribe as defined under Article 366(25) of the Constitution of India - Petitioner's withdrawal of application for revision under Section 264 - HELD THAT - First of all, the Income Tax Act, 1961 provides very detailed machinery for investigation and determination of income and its assessment to tax. It also provides a structured system for assessment, preferment of appeal from such assessment, revision and so on. Writ petitioner has to avail of that remedy which in our opinion is efficacious. Secondly, as a writ court we should not exercise jurisdiction to adjudicate upon highly disputed facts by evaluating very voluminous evidence, which is involved here. We find from the records petitioner assessee filed an application for revision u/s 264 of the said Act for the assessment year 2014-15. On 9th June, 2022, she withdrew it. Now, petitioner submits that her client had no hand in the withdrawal of that application and that it was the handy work of the respondent No.9. We are not going into the correctness of the allegations made against the respondent No.9, narrated hereinabove. We are of the view that considering the gravity of the dispute, this application for revision under Section 264 of the said Act be treated as pending. We set aside the alleged withdrawal of the Section 264 application purported to have been made by the letter dated 9th June, 2022. We direct the income tax authorities to hear the petitioner, the respondent No.9 and other interested parties, if any and dispose of the Section 264 application by a reasoned order within three months of communication of this order. The petitioner is given liberty to make an application before the income tax authorities for any interim order pending this proceeding under Section 264 of the said Act. All points are kept open before the income tax authorities.

Summary

Issues:
1. Claim of exemption from income tax under Section 10(26) of the Income Tax Act, 1961.
2. Allegations of fraud by respondent No.9 leading to income tax and criminal proceedings.
3. Petitioner's withdrawal of application for revision under Section 264 of the Income Tax Act.
4. Jurisdiction of the writ court to adjudicate on disputed facts and evidence.

Analysis:
1. The petitioner, a Director in the department of Soil, Government of Meghalaya, claims exemption from income tax under Section 10(26) of the Income Tax Act, 1961, as a member of the scheduled tribe residing in a specified area. The petitioner seeks relief from income tax proceedings through the writ petition.

2. The petitioner alleges that respondent No.9, a stock broker, engaged in fraudulent activities by creating fake bank accounts, making fictitious investments, and forging documents to implicate the petitioner in income tax proceedings. The petitioner admits to some genuine investments but denies involvement in the fraudulent activities. The court notes the detailed machinery provided by the Income Tax Act for investigation and assessment of income, emphasizing the need for the petitioner to pursue remedies within the Act.

3. The petitioner had filed an application for revision under Section 264 of the Income Tax Act for the assessment year 2014-15 but later withdrew it. The petitioner claims that the withdrawal was orchestrated by respondent No.9. The court, acknowledging the gravity of the dispute, sets aside the withdrawal of the application and directs income tax authorities to consider the application for revision, allowing the petitioner to seek interim orders if needed.

4. The court refrains from delving into the veracity of the allegations against respondent No.9, highlighting the limitations of the writ court in adjudicating heavily disputed facts and voluminous evidence. The judgment emphasizes the importance of utilizing the established procedures under the Income Tax Act for assessment and resolution of tax-related matters, rather than relying on writ jurisdiction for such disputes.

Overall, the writ petition is disposed of, with the court directing the income tax authorities to hear all concerned parties and decide on the Section 264 application within three months, while keeping all aspects open for further consideration.