M/S LIBERTY SHOES LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX, KARNAL

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CWP/12720/2023HC Punjab & HaryanaPHHC01074246202310 December 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
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What did the High Court hold?

The High Court, following its own decision in Jasjit Singh vs. Union of India and others (decided on 29.07.2024) and a Coordinate Bench's decision in Jatinder Singh Bhangu vs. Union of India and others (decided on 19.07.2024), allowed the writ petition. The Court reiterated its agreement with the view that circulars or instructions issued by the Board cannot override statutory provisions or render them obsolete. It held that legislative enactments with financial implications must be strictly followed. The Court found that authorities cannot usurp legal provisions for their convenience, causing hardship, and that instructions and circulars can only supplement statutory provisions. Consequently, notices issued by the JAO under Section 148 of the Act, 1961, and subsequent proceedings initiated without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, were found to be contrary to the Act and set aside for want of jurisdiction. The specific order passed by the JAO under Section 148A(d) dated 24.04.2023 and the notice under Section 148 dated 24.04.2023, along with consequential proceedings, were set aside. The revenue was granted liberty to follow the procedure laid down under the Act, 1961, if so advised. The Court expressly left no issue undecided.

What were the facts?

The petitioner, M/s Liberty Shoes Ltd., filed a writ petition before the High Court of Punjab and Haryana at Chandigarh. The petition challenged an order passed by the Jurisdictional Assessing Officer (JAO) under Section 148A(d) of the Income Tax Act, 1961, dated 24.04.2023, and a notice issued under Section 148 of the Act, also dated 24.04.2023, along with consequential proceedings. The revenue was represented by the Deputy Commissioner of Income Tax, Karnal. Both parties agreed that the issue had been previously examined and concluded by the High Court in a similar case, Jasjit Singh vs. Union of India and others, decided on 29.07.2024, and by a Coordinate Bench in Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024.

What were the issues?

1. Whether notices issued by the JAO under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated without conducting faceless assessment as envisaged under Section 144B of the Act, are contrary to the provisions of the Act, 1961, and thus liable to be set aside for want of jurisdiction. Assessee's Contention: The assessee, by agreeing that the issue was concluded by previous judgments, implicitly argued that the notices and proceedings were invalid. The judgments cited by the petitioner (Jasjit Singh and Jatinder Singh Bhangu) held that circulars or instructions by the Board cannot override statutory provisions, and that legislative enactments with financial implications must be strictly followed. They also held that authorities cannot usurp legal provisions for their convenience, causing hardship, and that instructions/circulars can only supplement statutory provisions. The judgments further found that notices issued under Section 148 without conducting faceless assessment under Section 144B were contrary to the Act and liable to be set aside for want of jurisdiction. Revenue's Contention: The revenue, through its counsel, agreed that the issue had been finally examined and concluded by this Court in previous judgments. This implies the revenue did not contest the findings of those judgments in the present case.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 144B,Section 119,Section 120

AI-generated summary — verify with the full judgment below

CWP-12720-2023 - 1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 242 CWP-12720-2023

Decided on : 10.12.2024 M/S Liberty Shoes Ltd. . . . Petitioner(s) Versus Deputy Commissioner Of Income Tax, Karnal . . . Respondent(s) CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJAY VASHISTH PRESENT: Mr. Amit Kumar Kaushik, Advocate for Mr. S.K. Mukhi, Advocate for the petitioner(s). Ms. Gauri Neo Rampal, Sr. Standing Counsel (through V.C.) for the respondent(s) - revenue. **** SANJEEV PRAKASH SHARMA

, J. (Oral) 1. Both the counsel are ad idem that the issue involved in the present petition stands finally examined and concluded by this Court in CWP No.21509 of 2023 titled as Jasjit Singh vs. Union of India and others, decided on 29.07.2024, and by the Coordinate Bench in CWP No.15745 of 2024 titled as Jatinder Singh Bhangu vs. Union of India and others, decided on 19.07.2024. This Court in Jasjit Singh (supra) held as under: “16. We are in agreement with the view taken by the Coordinate Bench and hold that such circular or instructions by the Board could not have been issued to override statutory provisions or to make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 & 8), the JAWALA RAM 2024.12.10 18:20 I attest to the accuracy and authenticity of this document

CWP-12720-2023 - 2 - authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees. It also leaves confusion in the minds of the taxpayers. In the opinion of this Court, instructions and circulars can be issued only for the purpose of supplementing the statutory provisions and for their implementation. 17. In view of the aforesaid discussion, there is no occasion to distinguish or take a different view as suggested by the learned counsel for the revenue from what has already been held by the Coordinate Bench. 18. Keeping in view the law laid down by the Coordinate Bench (supra), notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices dated 28.02.2023, 16.03.2023, 20.03.2024 and 30.03.2023 and order dated 30.03.2023, are set aside for want of jurisdiction. 19. The respondents-revenue would be, however, at liberty to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised. 20. All the writ petitions are allowed. The interim order passed by the Court shall stand merged with the present order.” 2. Keeping in view above, we allow this Writ Petition in the aforesaid terms. The observations and order passed above shall apply mutatis mutandis to the present case. Accordingly, order passed by the JAWALA RAM 2024.12.10 18:20 I attest to the accuracy and authenticity of this document

CWP-12720-2023 - 3 - Jurisdictional Assessing Officer u/s 148A(d) of the Income Tax Act, 1961, dated 24.04.2023 and notice issued u/s 148 of the Act, dated 24.04.2023, as well as consequential proceedings are set aside. 3. All pending applications also stand disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE December 10, 2024 J.Ram Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No JAWALA RAM 2024.12.10 18:20 I attest to the accuracy and authenticity of this document

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