DURGA DASS SETH SARAF vs. CBDT AND ORS.

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CWP/9204/2023HC Punjab & HaryanaPHHC01054095202307 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 Central Board of Direct Taxes cannot override statutory provisions or make them otiose. Legislative enactments with financial implications must be followed strictly and mandatorily. The Court found that by exercising powers under Sections 119 and 120 of the Act, 1961, as well as Section 144B (7 & 8), authorities cannot usurp legal provisions for their convenience, causing hardship to assessees and confusion. Instructions and circulars can only supplement statutory provisions and aid in their implementation. Consequently, notices issued by the JAO under Section 148 and proceedings initiated without conducting faceless assessments under Section 144B were found to be contrary to the Act. The Court set aside the notices dated 28.02.2023, 16.03.2023, 20.03.2024, and 30.03.2023, and the order dated 30.03.2023, for want of jurisdiction. The revenue was granted liberty to follow the prescribed procedure under the Act. The present writ petition was allowed in terms of the aforesaid observations and order, with the notice dated 10.04.2023 and consequential proceedings being set aside.

What were the facts?

The petitioner, Durga Dass Seth Saraf, filed a writ petition challenging notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148 of the Income Tax Act, 1961, and subsequent proceedings. The petitioner argued that these actions were taken without conducting a faceless assessment as mandated by Section 144B of the Act. The revenue contended that circulars or instructions issued by the Central Board of Direct Taxes could override statutory provisions. The High Court was considering the present petition alongside other similar petitions, including CWP No. 21509 of 2023 and CWP No. 15745 of 2024, which had already been decided by a Coordinate Bench.

What were the issues?

1. Whether circulars or instructions issued by the Central Board of Direct Taxes can override statutory provisions of the Income Tax Act, 1961, or render them otiose, particularly concerning faceless assessments under Section 144B. (Question of law) Assessee's Contention: The assessee argued that faceless assessments as envisaged under Section 144B of the Act, 1961, were not conducted, and notices under Section 148 and subsequent proceedings were contrary to the Act. The assessee relied on the decision in Jasjit Singh vs. Union of India and others. Revenue's Contention: The revenue contended that circulars or instructions by the Board could be issued to override statutory provisions or make them obsolete, and that the Coordinate Bench's view in Jasjit Singh (supra) was distinguishable.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

101-2 I

Durga Dass S

Central Board CORAM: H

Present: M

SANJEEV P CM-18007-C 1.

F allowed. The CWP-9204-2 2.

L issue involved by this Court India and oth CWP No.1574 and others, de under: IN THE HIGH COURT OF PUN AT CHANDIGA C C D Seth Saraf

Vs. d of Direct Taxes and others

HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN Mr. Divya Suri, Advocate for the Ms. Urvashi Dhugga, Sr. Standin

*** RAKASH SHARMA, J.(Oral) CWP-2024 For the reasons as are mentioned main case is preponed and is tak 2023 (O&M) Learned counsel for the parties d in the present petition stands f in CWP No.21509 of 2023 title hers, decided on 29.07.2024, an 745 of 2024 titled as Jatinder Sin ecided on 19.07.2024. This Cour NJAB AND HARYANA ARH CM-18007-CWP-2024 in/and CWP-9204-2023 (O&M) Date of Decision: 07.11.2024

…Petitioner

…Respondents NJEEV PRAKASH SHARMA NJAY VASHISTH e petitioner. ng Counsel for the revenue. ) d in the application, the same is ken on board today. are ad idem that the substantial finally examined and concluded ed as Jasjit Singh vs. Union of nd by the Coordinate Bench in ngh Bhangu vs. Union of India rt in Jasjit Singh (supra) held as s l d f n a s RAJESH KUMAR 2024.11.08 12:29 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

[2] CWP-9204-2023 (O&M)

“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. RAJESH KUMAR 2024.11.08 12:29 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

[3] CWP-9204-2023 (O&M)

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.”

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 Jurisdictional Assessing Officer under Section 148 of the Income Tax Act, dated 10.04.2023 and all consequential proceedings are set aside. 4.

All pending applications also stand disposed of accordingly.

(SANJEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH)

JUDGE 07.11.2024 rajesh

1.

Whether speaking/reasoned? : Yes/No 2. Whether reportable?

: Yes/No RAJESH KUMAR 2024.11.08 12:29 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh.

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