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2019 (11) TMI 873 - HC - Income TaxRevision u/s 263 - assessment order of the AO pursuant to DRP decision or not? - HELD THAT - In view of Section 263 of Act 1961 read with the principles laid down by the Apex Court in various decisions, the cited decision on behalf of the petitioner would not aid or support the contention of the petitioner that Principal Commissioner/respondent has no jurisdiction to invoke Section 263 of Act 1961, is not appreciable. Consequently, the contention of the petitioner that Principal Commissioner has no jurisdiction to invoke Section 263 of Act 1961 is hereby rejected. The other contention is that impugned notice dated 08.02.2016 do not contain the ingredients and notice is liable to be set-aside. Petitioner has a remedy before the Principal Commissioner if there is any shortcoming in respect of ingredients stated in Section 263 of Act 1961. Writ Court cannot examine the validity of notice on merit. Petitioner has a remedy before the very same authority by submitting explanation to the notice. Writ Court can interfere in respect of notice only, if, there is any violation of statutory provision. In view of the principle laid down in HARBANSLAL SAHNIA AND ANR. VERSUS INDIAN OIL CORPN. LTD. AND ORS. 2002 (12) TMI 564 - SUPREME COURT the petitioner has not apprised this Court that he need not exhaust a remedy of submitting explanation/reply to the notice dated 08.02.2016. The power conferred on the High Court under Article 226 of the Constitution of India is to advance justice and not to thwart it. The very purpose of such Constitutional powers being conferred on the High Court is that no man should be subjected to injustice by violating law. This Court does not sit as an appellate authority over the decision of the authorities below. Further, while exercising extra-ordinary jurisdiction by the High Court under Article 226 of the Constitution of India, it should examine whether the impugned action is per se illegal or vitiated by errors apparent on the face of the record. In view of above narrated facts and circumstances read with the legal issues, petitioner has not made out a case so as to interfere with the impugned notice dated 08.02.2016. Resultantly I. Writ Petition stands rejected reserving liberty to the petitioner to approach the respondent in filing explanation/reply within a period of four weeks from the date of receipt of this order. II. Rule is made absolute in the preceding terms.
Issues Involved:
1. Jurisdiction of the Principal Commissioner of Income Tax to invoke Section 263 of the Income Tax Act, 1961. 2. Validity of the notice dated 08.02.2016 under Section 263 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Jurisdiction of the Principal Commissioner of Income Tax to invoke Section 263 of the Income Tax Act, 1961: The petitioner contended that the Principal Commissioner of Income Tax (PCIT) had no jurisdiction to invoke Section 263 of the Income Tax Act, 1961, as the draft assessment order was scrutinized by the Dispute Resolution Panel (DRP), which consists of three Commissioners. The petitioner argued that the decision of the DRP, which is a higher authority, cannot be reviewed by a single Principal Commissioner, thus making the notice issued under Section 263 invalid. The court examined the relevant provisions of the Income Tax Act, including Sections 92CA, 144C, and 263. The court noted that Section 263(1) empowers the Principal Commissioner to revise an order passed by the Assessing Officer if it is erroneous and prejudicial to the interests of the revenue. The court emphasized that the jurisdiction of the Principal Commissioner under Section 263 is not barred by the involvement of the DRP in the assessment process. The court referred to various judicial precedents, including the Supreme Court’s decisions in Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd. and Assistant Commercial Taxes Officer vs. Makkad Plastic Agencies, which upheld the principle that statutory powers must be exercised in the manner provided by the statute. The court concluded that there is no statutory provision barring the Principal Commissioner from invoking Section 263 to revise an assessment order, even if the order was made pursuant to the DRP’s directions. The court held that the petitioner’s contention that the Principal Commissioner lacked jurisdiction was untenable and rejected this argument. 2. Validity of the notice dated 08.02.2016 under Section 263 of the Income Tax Act, 1961: The petitioner argued that the notice issued under Section 263 did not contain the necessary ingredients, such as the identification of an erroneous decision by the Assessing Officer and how it was prejudicial to the interests of the revenue. The petitioner contended that the notice should be set aside on these grounds. The court noted that the petitioner has the remedy of submitting an explanation or reply to the notice before the Principal Commissioner. The court emphasized that the writ jurisdiction under Article 226 of the Constitution of India should not be exercised to examine the validity of the notice on its merits, especially when an alternative remedy is available. The court referred to the Supreme Court’s decision in Harbanslal Sahnia and Another vs. Indian Oil Corporation Limited and Others, which outlined the circumstances under which writ jurisdiction can be exercised despite the availability of an alternative remedy. The court held that the petitioner had not demonstrated any violation of statutory provisions or principles of natural justice that would warrant interference by the writ court. The court concluded that the petitioner should exhaust the remedy of submitting an explanation to the Principal Commissioner and that the writ petition was not maintainable. Conclusion: The court rejected the writ petition, upholding the jurisdiction of the Principal Commissioner to invoke Section 263 of the Income Tax Act, 1961, and directed the petitioner to approach the Principal Commissioner with an explanation or reply to the notice within four weeks. The court emphasized the importance of adhering to statutory provisions and the availability of alternative remedies in such cases.
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