SUPERB MINERALS PRIVATE LTD. vs. INCOME TAX OFFICER RANGE-2(1), NASHIK AND ORS.

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WP/1218/2006HC BombayHCBM01007021200620 March 2006Author: HON'BLE SHRI JUSTICE J.P. DEVADHAR,HON'BLE SHRI JUSTICE R.M. LODHA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the impugned notice under Section 148 of the Income Tax Act, 1961, cannot be said to suffer from a patent lack of jurisdiction. The Court emphasized that merely because the Assessing Officer disposed of the petitioner's objections to the notice with a speaking order, the correctness of such an order cannot be challenged in a writ petition as if the Court were exercising appellate powers. The Court noted that the petitioner had reduced its income by 90% from business profits for the assessment year 1998-99, and the Assessing Officer was of the prima facie view that deductions under Section 80HHC resulted in escapement of income. The Court stated that the issue of whether expenditure claimed by the petitioner has a nexus with the interest receipt while computing business profit, and whether there is any escapement of income, will be open for the petitioner to raise at the time of re-assessment. If an adverse order is passed by the Assessing Officer, the matter can be carried in appeal. The Court was satisfied that no case was made out for invoking the extraordinary jurisdiction under Article 226 of the Constitution of India.

What were the facts?

The petitioner, Superb Minerals Pvt. Ltd., filed a writ petition challenging a notice dated March 29, 2005, issued under Section 148 of the Income Tax Act, 1961, by the Income Tax Officer, Range 2(1), Nashik. The notice alleged escapement of income amounting to Rs. 2,68,338/- for the assessment year 1998-99. The petitioner argued that the notice was issued beyond four years and the escaped income was below the threshold specified in Section 149(1)(b). The petitioner also contended that the Assessing Officer wrongly treated interest income of Rs. 2,68,338/- as gross interest without allowing deductions for expenditure related to such receipts. The petitioner further stated that the Assessing Officer failed to address this objection in an order dated February 8, 2006, despite a show cause notice.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 1998-99, suffers from a patent lack of jurisdiction, considering it was issued beyond four years and the alleged escaped income falls below the threshold under Section 149(1)(b)? Assessee's arguments: The notice under Section 148 is beyond four years, and the escaped income is below the threshold under Section 149(1)(b). The Assessing Officer erred by treating interest income as gross without allowing deductions for related expenditure, and failed to address this objection in the order dated February 8, 2006. The notice suffers from an error of jurisdiction. Relied on the judgment of the Special Bench of the ITAT in Lalsons Enterprises V/s. Deputy Commissioner of Income Tax [(2004) 89 ITD 25]. Revenue's arguments: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 149(1)(b),Section 80HHC

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.1218 OF 2006 Superb Minerals Pvt.Ltd. .. Petitioner. V/s. Income Tax Officer, Range 2(1), Nashik & Others .. Respondents. Mr.Atul K. Jasani for the petitioner. Mr.B.M. Chatterjee with Mrs.P.P. Bhosale for the respondents. CORAM : R.M. LODHA & CORAM : R.M. LODHA & CORAM : R.M. LODHA & DATED : 20TH MARCH, 2006. DATED : 20TH MARCH, 2006. DATED : 20TH MARCH, 2006. P.C. : Mr.A.K. Jasani, the learned counsel for the petitioner submits that by the impugned notice dated 29th March, 2005 issued under Section 148 of the Income Tax Act, 1961, in the prima facie opinion of the Assessing Officer, there is escapement of income in the sum of Rs.2,68,338/- for the assessment year 1998-99. He submits that the issuance of notice under Section 148 is beyond four years and the escaped income falls much below the threshold limit under Section 149(1)(b). The learned counsel would submit that the Assessing Officer has wrongly treated the interest income of Rs.2,68,338/- as gross interest income without giving benefit of deduction of expenditure having a nexus with such receipt. He relied upon the judgment of Special Bench of the Income Tax Appellate Tribunal in the case of Lalsons

2 Enterprises V/s. Deputy Commissioner of Income Tax [(2004) 89 ITD 25]. The learned counsel submitted that despite categorical objection raised in response to the show cause notice, the Assessing Officer did not deal with this objection in the order dated 8th February, 2006. The learned counsel would submit that the notice dated 29th March, 2005 under Section 148 suffers from error of jurisdiction.

2.

Having considered the submissions of the learned counsel for the petitioner, we are of the view that the impugned notice cannot be said to suffer from patent lack of jurisdiction. It needs to be emphasized that merely because the Assessing Officer has disposed of the petitioners objections to the notice under Section 148 of the Income Tax Act, 1961 by speaking order, in the garb of filing writ petition, correctness of such order cannot be challenged as if this Court were exercising appellate powers.

3.

It would be seen that in its return filed for the assessment year 1998-99, the petitioner reduced its income of Rs.5,95,616/- by 90% from the profit of business resulting in loss from exports. The Assessing Officer was of the prima facie view that the deductions under Section 80HHC so computed by the 3 petitioner resulted in escapement of income of Rs.2,68,338/-. As to whether the expenditure claimed by the petitioner has a nexus with the interest receipt while computing the business profit and that there is no escapement of income shall obviously be open to be raised by the petitioner at the time of re-assessment and if the Assessing Officer passes an order adverse, the matter can be carried in appeal. We are satisfied that no case for invocation of extra ordinary jurisdiction under Article 226 of the Constitution of India is made out.

4.

The writ petition is dismissed in limine. (R.M. LODHA, J.) (J.P. DEVADHAR, J.)

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