HARPAL SINGH vs. CENTRAL BOARD OF DIRECT TAXES, NORTH BLOCK NEW DELHI AND OTHERS

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 02.06.2022 Harpal Singh ….Petitioner Versus Central Board of Direct Taxes and ors. …..Respondents CORAM : HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSA HON’BLE MR. JUSTICE PANKAJ JAIN Present : Mr. Pankaj Jain, Senior Advocate with Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the petitioner.

PANKAJ JAIN, J

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By way of present writ petition the petitioner has challenged notice issued under Section 148A(b) of the Income Tax Act, 1961 (for short 'the Act') dated 21.03.2022 (Annexure P-5) and order passed under Section 148A(d) dated 06.04.2022 (Annexure P-7). The petitioner is an assessee under the Act. He claims to have filed income tax return for the relevant Assessment Year i.e. 2015-2016. He was served with notice under Section 148A(b) of the Act claiming that income chargeable to tax for the assessment year 2015-2016 has escapement assessment. Along with the notice he was also supplied with the information which forms basis for issuance of such notice. Petitioner is stated to have responded to the same vide communication dated 26.03.2022 raising objections to the notice Annexure P-5. The objections raised by the petitioner have been decided vide impugned order dated 06.04.2022 passed POOJA SHARMA 2022.06.03 01:21 integrity of this document under Section 148A(d) (Annexure P-7). The petitioner by way of present petition has challenged the impugned order claiming that the same is erroneous on facts having been passed without considering the objections raised by the petitioner.

We have heard learned senior counsel for the petitioner and have carefully gone through the records of the case. The primary issue that would arises in the present writ petition is :- “Whether at this stage of notice under Section 148, writ Court should venture into the merits of the controversy when AO is yet to frame assessment/reassemment in discharge of statutory duty casted upon him under Section 147 of the Act ?” The debate is not new. While dealing with the similar situation under the old Act i.e. Indian Income Tax Act, 1922, Division Bench of this Court in 'Lachhman Das Nayar and others vs. Hans Raj Puri, Income- Tax Officer, Amritsar and others, 1953 AIR (P&H) 55, held that - “An examination of the scheme of the Act and the words used in section 34 of the Act and the various cases that I have referred to above show that the legislature has entrusted the determination of facts and of law to the Income-tax Officers. A particular machinery has been set up under the Act “by the use of which alone” total assessable income for the purposes of the Income-tax is to be ascertained and jurisdiction to question the assessment otherwise than by the use of this machinery is incompatible with the scheme of the Act. The challenge of the action of the Income-Tax Officer by a writ prohibition or mandamus is , therefore, not available to the assessee.” POOJA SHARMA 2022.06.03 01:21 integrity of this document In 'Rasulji Buxji Kathawala vs. Income Tax Commissioner, Delhi and another' (Civil Writ No.44 of 1955, D/d. 2.4.1956) while dealing with the similar situation under the 1922 Act, Division Bench of Rajasthan High Court held that - “But where as in this case no part of the Act is being attacked, there is, in our opinion, no justification for us to intervene at this stage when other remedies which arc not necessarily onerous are still open to the applicant under the Act. We, therefore, refuse to intervene at this stage in this case, and leave it to the applicant to pursue his remedies under the Income-tax Act so far as the question of his charge- ability to income-tax under the Act, or other matters are concerned.” Division Bench of this Court in the case of 'Sumit Passi vs. Assistant Commissioner of Income-Tax', (2016) 386 ITR, held that - POOJA SHARMA 2022.06.03 01:21 integrity of this document Delhi High Court in W.P.(C) 5787/2022 titled as Gulmuhar considering the same question held that:

“6. Though it is the petitioner's case that the impugned for assessment/ reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226.” Supreme Court in the case of 'Raymond Woollen Mills Limited vs. Income Tax Officer, Centre XI, Range Bombay and others' (Civil Appeals No.1972 of 1992 with No.1973 of 1992. D/d 17.12.1997), held that - “3. In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are POOJA SHARMA 2022.06.03 01:21 integrity of this document of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority.” Thus, the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed. POOJA SHARMA 2022.06.03 01:21 integrity of this document Needless to say that nothing herein observed shall be construed as an opinion on the merits of the case. (TEJINDER SINGH DHINDSA) (PANKAJ JAIN) JUDGE JUDGE June 02, 2022

Pooja sharma-I

Whether speaking/reasoned : Yes/No Whether reportable : Yes/No POOJA SHARMA 2022.06.03 01:21 integrity of this document