PUNJAB STEEL FORGING AND AGRO INDUSTRIES vs. DEPUTY COMMISSIONER OF INCOME TAX AND OTHERS

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CWP/12659/2025HC Punjab & HaryanaPHHC01066488202505 May 2025Bench: MRS. JUSTICE LISA GILL,MRS. JUSTICE SUDEEPTI SHARMA2 pages
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What did the High Court hold?

The High Court allowed the writ petition, disposing of it in terms of previous judgments by a Co-ordinate Bench in Jatinder Singh Bhangu vs. Union of India (CWP No. 15745-2024) and Jasjit Singh vs. Union of India (CWP No. 21509-2023). In those cases, the writ petitions were allowed on similar issues, granting liberty to the revenue to follow the prescribed procedure under the Act, 1961, and proceed accordingly if advised. The reasoning is based on the precedent set by the Co-ordinate Bench, which found merit in the challenge to the jurisdiction of the issuing authority in light of the relevant CBDT circular. The ratio decidendi is that notices issued under Section 148 by authorities other than the NFAC, contrary to the CBDT's circular, are liable to be quashed. The operative direction is to quash the impugned notices and orders, with liberty to the revenue to re-initiate proceedings if they choose, following the correct procedure.

What were the facts?

The petitioner, Punjab Steel Forging and Agro Industries, challenged notices and orders issued by the Dy. Commissioner of Income Tax, Circle Patiala, for Assessment Year 2017-2018. These included a notice dated 08.03.2024 under Section 148, an assessment order dated 31.03.2025 under Section 147, a demand notice dated 31.03.2025 under Section 156, and a penalty show cause notice dated 31.03.2025 under Section 271 AAC (1). The core of the challenge was that the issuing authority lacked jurisdiction due to a CBDT circular dated 29.03.2022, which purportedly vested exclusive power to issue Section 148 notices with the National Faceless Assessment Centre (NFAC). The revenue did not dispute the petitioner's contention.

What were the issues?

1. Whether the notice dated 08.03.2024 issued under Section 148 of the Income Tax Act, 1961, the assessment order dated 31.03.2025 under Section 147, the demand notice dated 31.03.2025 under Section 156, and the penalty show cause notice dated 31.03.2025 under Section 271 AAC (1) for AY 2017-2018 are invalid due to lack of jurisdiction by the issuing authority, in light of the CBDT circular dated 29.03.2022? (Question of law and fact, concerning Sections 148, 147, 156, and 271 AAC (1) of the Income Tax Act, 1961). Assessee's Contention: The issuing authority lacked jurisdiction to issue the impugned notices and orders, as the CBDT circular dated 29.03.2022 specifically grants exclusive power to the NFAC to issue notices under Section 148 of the Act, 1961. Revenue's Contention: The revenue did not dispute the petitioner's contention.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 156,Section 271 AAC (1)

AI-generated summary — verify with the full judgment below

CWP-12659-2025 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 182 CWP-12659-2025(O&M) Date of Decision:-05.05.2025 Punjab Steel Forging and Agro Industries ....Petitioner Vs. Dy. commissioner of Income Tax, Circle Patiala & ors. ...Respondents CORAM: HON'BLE MRS. JUSTICE LISA GILL HON'BLE MRS. JUSTICE SUDEEPTI SHARMA Present: Mr. B.M. Monga, Advocate for the petitioner. Mr. Saurabh Kapoor, Sr. Standing counsel with Ms. Muskan Gupta, Advocate for the respondents. *** SUDEEPTI SHARMA, J. 1. Challenge in the present petition is to notice dated 08.03.2024 issued under Section 148 of the Income Tax Act, 1961 (for short ‘Act 1961”); assessment order dated 31.03.2025 issued under Section 147 of the Act, 1961; demand notice dated 31.03.2025 issued under Section 156 of the Act, 1961; penalty show cause notice dated 31.03.2025 issued under Section 271 AAC (1) of the Act, 1961 and all consequential actions, for AY 2017- 2018. 2. Learned counsel for the petitioner contends that the issue involved in the present writ petition is covered by the judgment passed by a Co-ordinate Bench of this Court in the cases of Jatinder Singh Bhangu vs. Union of India and others, passed in CWP No. 15745-2024 and connected matter, decided on 19.07.2024 and Jasjit Singh vs. Union of India and others (CWP No. 21509- 2023 and other connected matters), decided on 29.07.2024. 3. Learned counsel appearing for Union of India has also not Gaurav Arora 2025.05.07 14:39 I attest to the accuracy and integrity of this document

CWP-12659-2025 2 disputed the same. 4. We have heard learned counsel for the parties and perused the whole records of the case. 5. The petitioner has challenged the notice dated 08.03.2024 issued under Section 148 of the Act, 1961; assessment order dated 31.03.2025 issued under Section 147 of the Act, 1961; demand notice dated 31.03.2025 issued under Section 156 of the Act, 1961; penalty show cause notice dated 31.03.2025 issued under Section 271 AAC (1) of the Act, 1961 and all consequential actions, for AY 2017-2018, on the ground that the Issuing Authority had no jurisdiction to issue the same, in view of the circular/notification dated 29.03.2022 of the CBDT, wherein, it has been specifically enumerated that the NFAC has exclusive power to issue the notice under Section 148 of the Act, 1961. 6. A Co-ordinate Bench of this Court in Jatinder Singh Bhangu’s case (supra) and Jasjit Singh’s case (supra), allowed the writ petitions on the same issue, as raised in the present writ petition, by granting liberty to the revenue to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised. 7. In view of the above, the present writ petition is disposed of, in terms of Jatinder Singh Bhangu’s case (supra), decided on 19.07.2024 and Jasjit Singh’s case (supra), decided on 29.07.2024. 8. All the pending applications, if any, also stand disposed of. (LISA GILL)

(SUDEEPTI SHARMA) JUDGE JUDGE 05.05.2025

Gaurav Arora Whether speaking/reasoned : Yes/No Whether reportable : Yes/No Gaurav Arora 2025.05.07 14:39 I attest to the accuracy and integrity of this document

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