M/S CHEER SAGAR V. COMMISSIONER OF INCOME TAX ANR

CW/7488/2012

AI Insights

In this case, M/s. Cheer Sagar challenged a notice issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961, claiming it was beyond the jurisdiction of the Assistant Commissioner of Income Tax. The notice pertained to the Assessment Year 2005-2006, and the petitioner argued that the conditions for extending the four-year limitation period for issuing such a notice were not met, as there was no allegation of failure to disclose material facts or other conditions that would justify extending the limitation period. The respondents contended that the notice was a preliminary show cause and that the petitioner could contest it, including on the grounds of jurisdiction and limitation, without approaching the writ courts under Article 226 of the Constitution of India. The court decided to address the jurisdictional issue as a preliminary matter and directed the petitioner to submit his objections within a week.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 751033 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 25-05-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: J K SINGHI; ANUROOP SINGH
• Assessee Lawyers: ANANT KASLIWAL
• Keywords: Assessment Year; Income Tax Department; Jurisdiction; Limitation; Show cause notice
• Section: 147; 148; 139; 142

Judgement Text

"1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR ORDER S.B. Civil Writ Petition No. 7488/2012 S.B. Civil Misc. Stay Application No. 6408/2012 (M/s. Cheer Sagar Versus The Commissioner of Income Tax & Another) Date of Order :: 25th May, 2012 HON'BLE MR. JUSTICE ALOK SHARMA Mr. Anant Kasliwal, counsel for the petitioner Mr. J.K. Singhi, Sr. Counsel with Mr. Anuroop Singh, Counsel for the respondents BY THE COURT: The petitioner has challenged the notice dated 30th March, 2012 issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961 (here-in-after Act of 1961) primarily on the ground that the notice issued on 30th March, 2012 in respect of Assessment Year 2005-2006 ending on 31st March, 2005 was wholly beyond jurisdiction and power of the Assistant Commissioner of Income Tax for the reason that the pre-conditions for issue of notice under section 148 readwith Section 147 of the Act of 1961 were not satisfied. It is submitted that proviso to Section 147 of the Act provides that “where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section 2 after the expiry of four years from the end of relevant assessment year.” It is further submitted by the petitioner's counsel that the exception to the limitation of the jurisdiction of the Income Tax Department can only be invoked and the four year limitation provided in law extended only where the escaped assessment is alleged to have been occasioned by the reason of failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub- section (1) of Section 142 or Section 148 of the Act of 1961 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Counsel for the petitioner submits that the extension of the four year limitation cannot arise in the present case as the show cause notice does not contain even a whisper about any of the conditions warranting extension of the period of limitation obtaining. Counsel further submits that even apart from the notice u/s. 148 of the Act of 61, even reasons for the issue of notice sought by petitioner assessee and supplied by the department do not allege any wrong doing or suppression of material facts or failure to fully and truly disclose 3 all facts by the assessee. It is hence submitted that under the proviso to Section 147 of the Act of 1961 the limitation being four years from the end of the relevant assessment year, the show cause notice dated 30.3.2012 u/s. 148 of the Act of 61 for A.Y. 2005-06 (F.Y. 2004-05) is without jurisdiction. It is submitted that the bar of limitation in the present case is basically an issue of jurisdiction and consequently all proceedings following the notice dated 30th March, 2012, would be null and void and the petitioner- assessee cannot be subjected to aforesaid proceedings. 2. Counsel appearing for the respondent Mr. J.K. Singhi, Sr. Counsel with Mr. Anuroop Singhi would however submit that the notice under Section 148 issued on 30th March, 2012 is only in the nature of show cause and the petitioner-assessee has the opportunity of contesting the said notice raising all the grounds in defence thereto, as may be available to him in the matter. It is submitted that the Hon'ble Supreme court as also this Court have held that the noticee under Section 148 of Act of 1961 should submit to the jurisdiction of the department with his defences including that 4 of lack of jurisdiction on ground of limitation and not approach the writ courts under Article 226 of the Constitution of India. 3. Having heard the learned counsel for the parties and perused the writ petition, I am of the view that this writ petition ought to be disposed of with a direction that the Assistant commissioner of Income Tax, Circle – III (respondent no.2 herein) address the question pertaining to his lack of jurisdiction in the context inter-alia of Section 147/148 of Act of 1961 as a preliminary issue. The petitioner is directed to submit his preliminary objections to the notice dated 30.3.2012 u/s. 148 of the Act of 1961 to Assistant Commissioner of Income Tax, Circle (III) setting out all his grounds contesting the jurisdiction of the Assistant commissioner of Income Tax. The preliminary objections be filed within a period of one week. On the preliminary objections being filed by the petitioner-assessee relating to the jurisdiction of the Assessing Authority in the context of the period of limitation under the proviso of Section 147, as also on any other ground, they shall be decided as a preliminary issue by a reasoned and speaking order dealing with the judgments of the Apex Court and this 5 Court on the subject cited by the counsel of the petitioner-assessee. It is further directed that for a period of 30 days from the date of decision on the petitioner's preliminary objections as to the jurisdiction of the Assessing authority and the notice in issue being bad for having been issued beyond statutorily prescribed limitation and also for failing to satisfy the pre-conditions for resort thereto, no coercive action shall be taken against the petitioner-assessee. The petitioner assessee shall be free to approach this Court afresh following the decision on his preliminary objections. 4. The writ petition is disposed of accordingly. 5. Consequent upon the disposal of writ petition, the stay application, filed herewith, does not survive and the same also stands disposed off accordingly. (ALOK SHARMA),J. DK All Corrections made in the judgment/order have been incorporated in the judgment/order being emailed. Dilip Khandelwal Personal Assistant "