MARK GULATI vs. DY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE KARNAL

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CWP/31393/2024HC Punjab & HaryanaPHHC01146840202421 November 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition, following its own prior decisions in Jasjit Singh vs. Union of India and Jatinder Singh Bhangu vs. Union of India. The Court held that circulars or instructions issued by the Board cannot override statutory provisions or render them otiose. Legislative enactments with financial implications must be strictly followed. The Court found that by exercising powers under Sections 119 and 120, and Section 144B(7 & 8), authorities cannot usurp legal provisions for their convenience, causing hardship and confusion. Instructions and circulars can only supplement statutory provisions. Consequently, notices issued by the JAO under Section 148 and subsequent proceedings initiated without conducting faceless assessments as envisaged under Section 144B were found to be contrary to the Act and set aside for want of jurisdiction. The Revenue was granted liberty to follow the procedure laid down under the Act if advised. The specific notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, and order dated 30.03.2023, from the Jasjit Singh case, and the notice dated 31.08.2024 in the present case, were set aside.

What were the facts?

The petitioner, Mark Gulati, filed a writ petition before the High Court of Punjab and Haryana at Chandigarh challenging a notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961, by the Jurisdictional Assessing Officer, and the consequential proceedings. The Revenue, represented by the Deputy Commissioner of Income Tax, accepted notice. Both parties agreed that the issue was concluded by prior judgments of the same Court in CWP No.21509 of 2023 (Jasjit Singh vs. Union of India and others) decided on 29.07.2024, and CWP No.15745 of 2024 (Jatinder Singh Bhangu vs. Union of India and others) decided on 19.07.2024. The core of the dispute revolved around the validity of notices issued without conducting faceless assessments as envisaged under Section 144B of the Act.

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 envisaged under Section 144B of the Act, are contrary to the provisions of the Act and liable to be set aside? (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, by implication through reliance on prior judgments, argued that notices issued and proceedings initiated without adhering to the faceless assessment procedure under Section 144B were without jurisdiction and contrary to law. The Court's prior decisions in Jasjit Singh and Jatinder Singh Bhangu were cited as precedent. Revenue's Contention: The Revenue, by agreeing that the issue was concluded by prior judgments, implicitly accepted the arguments presented in those cases. The Court noted that the Revenue suggested a distinction or different view in prior proceedings, but ultimately agreed with the Coordinate Bench's findings.

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

(O&M) 1 126 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-31393-2024 (O&M)

Date of Decision: 21.11.2024 MARK GULATI ....Petitioner Vs. DEPUTY COMMISSIONER OF INCOME TAX ....Respondent **** CORAM:HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MR. JUSTICE SANJAY VASHISTH **** Present: Mr. Chetan Jain, Advocate Mr. Mahesh Kumar, Advocate Mr. Anand Chaudhuri, Advocate for the petitioner. Mr. Yogesh Putney, Sr. Standing Counsel with Mr. Vaibhav Gupta, Standing Counsel for the respondents/Revenue. **** SANJEEV PRAKASH SHARMA, J.(Oral) 1 Notice of motion. 2 Mr. Yogesh Putney, Sr. Standing Counsel with Mr. Vaibhav Gupta, Standing Counsel accept notice on behalf of respondents/Revenue. 3. 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 KUMUD VERMA 2024.11.22 15:35 I attest to the accuracy and integrity of this document Chandigarh

(O&M) 2 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 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. KUMUD VERMA 2024.11.22 15:35 I attest to the accuracy and integrity of this document Chandigarh

(O&M) 3 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.” 4. 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 dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961 by Jurisdictional Assessing Officer as well as the consequential proceedings are set aside. 5. All pending applications also stand disposed of accordingly. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE 21.11.2024 kv 1. Whether speaking/reasoned? Yes/No 2. Whether reportable? Yes/No KUMUD VERMA 2024.11.22 15:35 I attest to the accuracy and integrity of this document Chandigarh

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