2022 (5) TMI 1288 - HC - Income Tax

Reopening of assessment u/s 147 - scope of amended procedure u/s 148A - disallowing the loss so computed and reducing the same from the business loss of the assessee entitled to be carried forward under Section 72 for set off in future - HELD THAT - This Court finds that the Petitioner has not brought on record anything to prove that the impugned notice issued shall be governed by the amended procedure under Section 148A of the Act. This Court is also of the view that Petitioner is basically challenging the impugned order on merits. The Supreme Court in Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal 2013 (8) TMI 458 - SUPREME COURT has held that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226. This Court is further of the view that the present case does not fall under the exceptional grounds on which a writ petition is maintainable at the interim stage in tax matters.

Summary

Issues Involved:
Challenging Notice under Section 148 of Income Tax Act, 1961, Order under Section 147 read with Section 144B, and demand notice under Section 156 dated March 30, 2022.
Allegations of illegal, mechanical, and mindless issuance of impugned order and notice.
Dispute regarding treatment of short term capital loss and business loss for set off under Section 72.
Contention of error in issuing notice under old Section 148 and converting to new Section 147/148 without due process.
Discrepancy between returned loss and tax demand.
Jurisdictional challenge and maintainability of writ petition in tax matters.

Analysis by Issue:

1. The petitioner challenged the Notice under Section 148, Order under Section 147 with Section 144B, and demand notice under Section 156, alleging illegal issuance without proper consideration. The petitioner argued that the short term capital loss should not be disallowed for set off against business loss under Section 72 for future years. The court noted the absence of proof for the notice falling under amended procedure Section 148A and dismissed the challenge.

2. The petitioner contended errors in issuing the notice under old Section 148 and converting it to new Section 147/148 without following statutory requirements. The court observed that the petitioner primarily challenged the order on merits, citing a Supreme Court precedent that the Income Tax Act provides a complete assessment machinery, barring the invocation of High Court jurisdiction under Article 226. The court held that the case did not meet the exceptional grounds for maintaining a writ petition in tax matters.

3. The discrepancy between the returned loss and the tax demand was highlighted, with the petitioner facing a substantial increase in tax liability. The respondent-revenue mentioned the petitioner's pending appeal and rectification application. The court dismissed the writ petition and applications, granting liberty to raise contentions in the ongoing appeal and rectification proceedings, emphasizing the proper forum for addressing tax assessment disputes.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the court's decision and the legal principles applied in the case.