2005 (3) TMI 57 - HC - Income Tax

Petitioner seeks to challenge the issuance of notice under section 263 - it is the duty of the Commissioner, i.e.., the issuing authority of the impugned notice to decide the preliminary objection raised by the assessee in regard to the validity of the notice - When the issue raised by the assessee relates to the question of jurisdiction then, it is always desirable to decide the said issue prior in point of time as a preliminary issue before embarking upon the merits or demerits of the controversy. It is only when the preliminary issue is held against the assessee, that the assessing authority gets jurisdiction to proceed on the merits of the case - Commissioner, i.e., the respondent herein is directed to decide the preliminary objection raised by the petitioner in his objection, about the legality of the notice impugned in this petition

Summary

Issues: Challenge to notice under section 263 of the Income-tax Act, 1961 for assessment year 2000-01; Jurisdiction of the Commissioner of Income-tax to set aside the assessment order; Duty of the Commissioner to decide preliminary objection raised by the assessee.

Analysis:
The petitioner sought to challenge the notice issued under section 263 of the Income-tax Act, 1961, for the assessment year 2000-01, proposing to set aside the assessment order passed by the Assessing Officer. The petitioner contended that the notice was without jurisdiction and raised objections pointing out the grounds on which the notice could be deemed invalid. The petitioner relied on legal precedents from the Full Bench of the court to support their case.

The petitioner, through their counsel, requested the court to either quash the notice considering the objections raised or direct the Commissioner of Income-tax to decide the preliminary objection, emphasizing its significance in the matter. After hearing the petitioner's counsel and examining the case record, the court was inclined to accept the latter submission. The court emphasized the duty of the Commissioner to address the preliminary objection regarding the notice's validity, especially when it pertains to jurisdiction. Resolving such issues beforehand is crucial before delving into the merits of the case, as it determines the assessing authority's jurisdiction to proceed further.

Consequently, the court directed the Commissioner to decide the preliminary objection raised by the petitioner regarding the legality of the notice, as stated in the petitioner's objection dated March 9, 2005. The court disposed of the petition with this direction, without issuing any notice to the respondent, as the primary purpose was to address the issue of jurisdiction and not to rule against the respondent. The decision underscored the importance of resolving jurisdictional matters as preliminary issues before delving into the substantive aspects of a case.