M/S PRIYA FINANCE COMPANY PVT LTD vs. INCOME TAX OFFICER WARD-1

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CWP/12733/2023HC Punjab & HaryanaPHHC01075085202313 November 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
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What did the High Court hold?

The High Court held that circulars or instructions issued by the Board cannot override statutory provisions or render them obsolete. Legislative enactments with financial implications must be followed strictly and mandatorily. The Court found that authorities cannot usurp legal provisions for their convenience, causing hardship to assessees and confusion. Instructions and circulars can only supplement statutory provisions for their implementation. Consequently, notices issued under Section 148 of the Act and subsequent proceedings initiated without conducting the faceless assessment as envisaged under Section 144B were found to be contrary to the Act. The Court set aside the notices and proceedings for want of jurisdiction. The revenue was granted liberty to follow the procedure laid down under the Act if advised. The writ petition was allowed.

What were the facts?

The petitioner, M/s Priya Finance Company Pvt. Ltd., filed a writ petition before the High Court of Punjab and Haryana at Chandigarh. The petition challenged certain notices and consequential proceedings initiated by the Income Tax Officer, Ward-1, Mandi Gobindgarh. The petitioner argued that these actions were taken without conducting a faceless assessment as envisaged under Section 144B of the Income Tax Act, 1961. The revenue contended that the circulars/instructions issued by the Board could override statutory provisions. The case was heard alongside other similar petitions.

What were the issues?

1. Whether notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings initiated without conducting a faceless assessment as per Section 144B of the Act, are valid and in accordance with the law? (Question of law and mixed fact and law, turning on Sections 148 and 144B of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that the proceedings were contrary to the provisions of the Act, specifically Section 144B, as a faceless assessment was not conducted. They relied on the principle that statutory provisions must be followed strictly. Revenue's Contention: The revenue contended that circulars or instructions issued by the Board could override statutory provisions, implying that the absence of a faceless assessment might be permissible under certain departmental instructions.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

CWP-12733-2023 - 1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 242-3 CWP-12733-2023

Decided on : 13.11.2024 M/S PRIYA FINANCE COMPANY PVT. LTD. . . . Petitioner(s) Versus INCOME TAX OFFICER, WARD-1, C/O INCOME TAX OFFICE, MANDI GOBINDGARH, PUNJAB . . . Respondent(s) CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJAY VASHISTH PRESENT: Mr. S.K. Mukhi, Advocate for the petitioner(s). Mr. Ranvijay Singh, Sr. Standing Counsel 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 2024.11.19 12:55 I attest to the accuracy and authenticity of this document

CWP-12733-2023 - 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, notice issued by the JAWALA RAM 2024.11.19 12:55 I attest to the accuracy and authenticity of this document

CWP-12733-2023 - 3 - Jurisdictional Assessing Officer u/s 148 of the Act, dated 25.06.2021, and consequential proceedings are set aside. 3. All pending applications also stand disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE November 13, 2024 J.Ram Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No JAWALA RAM 2024.11.19 12:55 I attest to the accuracy and authenticity of this document

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