M/S EPSON INDIA PRIVATE LIMITED V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP/15970/2019

AI Insights

The case involves M/s. Epson India Private Limited, which filed a writ petition against notices issued by the Assistant Commissioner of Income Tax under various sections of the Income Tax Act, 1961. The petitioner sought to quash these notices and an order overruling their objections. The court examined whether the Deputy Commissioner of Income Tax had the jurisdiction to issue these notices and whether the petitioner had been afforded adequate opportunity to present their case. The court found that the Deputy Commissioner had the authority to issue the notices and that the petitioner had not been prejudiced at the stage of communication, as they would have an opportunity to explain their case during the reassessment proceedings.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 755000 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-09-2019
• Assessment Year: misc
• Other Referred Cases: GKN Driveshafts (India) Ltd. Vs. DCIT (2003) 259 ITR (19) SC
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: CHYTHANYA
• Keywords: Income Tax; Jurisdiction; Reassessment; Show cause notice; Writ petition
• Section: 148; 143(2); 92CA

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF SEPTEMBER 2019 BEFORE THE HON’BLE MR.JUSTICE P. B. BAJANTHRI WRIT PETITION NO.15970 OF 2019 (T-IT) BETWEEN: M/S. EPSON INDIA PRIVATE LIMITED, 12TH FLOOR, ‘THE MILLENIA’ TOWER A, NO.1, MURPHY ROAD, ULSOOR, BENGALURU-560 008. (REPRESENTED BY ITS SENIOR VIDE PRESIDENT SRI. MR. T. SUKUMAR, S/O. SRI. THIRUNAVUKKARASU, AGED ABOUT 58 YEARS) …PETITIONER (BY SRI. CHYTHANYA K. K., ADVOCATE) AND: 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2(1)(2), ROOM NO.218, 2ND FLOOR, BMTC BUILDING, 80 FT. ROAD, KORAMANGALA, BENGALURU-560 095. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, TRANSFER PRICING -1(2)(1), ROOM NO.329, 3RD FLOOR, BMTC BUILDING, 80 FT. ROAD, KORAMANGALA, BENGALURU-560 095. ... RESPONDENTS (BY SRI. E. I. SANMATHI, ADVOCATE FOR SRI. JEEVAN J. NEERALGI, ADVOCATE) - 2 - THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AS FAR AS THE PETITIONER IS CONCERNED THE IMPUGNED NOTICE ISSUED BY THE R-1 UNDER SECTION 148 OF THE IT ACT, DATED 15.09.2017, ENCLOSED AS ANNEXURE-A. THIS WRIT PETITION IS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R In the instant petition, petitioner has sought for the following reliefs: a) Quash as far as the petitioner is concerned by an appropriate writ or order in the nature of certiorari or otherwise, the impugned notice bearing No.ITBA/AST/S/148/2017- 18/1006343705(1) issued by the first respondent under Section 148 of the IT act, dated 15.09.2017, enclosed as Annexure-A; b) Quash as far as the petitioner is concerned by an appropriate writ or order in the nature of certiorari or otherwise, the impugned notice bearing No.AACE7858F/ACIT-C2(1)(2) /143(2)/2018-19 issued by the first respondent under Section 143(2), dated 05.09.2018, enclosed as Annexure-B; c) Quash as far as the petitioner is concerned by an appropriate writ or order in the nature of certiorari or otherwise, the impugned order overruling objection bearing F.No.148/ AAACE7858F/DCIT-C-2(1)(2)/2018-19 passed by the first respondent enclosed as Annexure-C; - 3 - d) Quash as far as the petitioner is concerned by an appropriate writ or order in the nature of certiorari or otherwise, the impugned notice bearing F.No./TPO-1(1)(2)/2018-19 issued by the second respondent under Section 92CA, dated 23.10.2018, enclosed as Annexure-D. 2. Annexures ‘A’ to ‘D’ are notices issued under Section 148 and 143(2) of Income Tax Act, 1961. Annexure-C is stated to have been the overruling objections of the petitioner and Annexure-D relates to issuance of notice under Section 92CA. On a bare perusal of the impugned notices read with Annexure-C, it is crystal clear that it is not a final re-assessment order. Certain procedures have been adopted by the Deputy Commissioner, Income Tax. Paragraphs 3 and 4 of Annexure-C dated 28.02.2019, reads as under: “3. Accordingly, the undersigned is of the considered opinion that there is relevant material for forming a reasonable belief that income has escaped assessment and, therefore, the initiation of reassessment proceedings by issue of notice under Section 148 of the Act is in order. This communication should be considered as speaking order as per the directions of the Hon’ble Supreme Court in the - 4 - case of GKN Driveshafts (India) Ltd. Vs. DCIT (2003) 259 ITR (19) SC. 4. During the course of reassessment proceedings you will be afforded adequate opportunity to explain your case and the resultant order will be passed on an objective appraisal of the evidences available.” 3. The learned counsel for petitioner submitted that time and again courts have held that if reasons to believe with reference to materials are not available, the same amounts to without jurisdiction. The petitioner has not pointed out that the very statutory provision do not empower the Deputy Commissioner of Income Tax to proceed with, so as to contend that he has no jurisdiction to interfere with the issuance of show-cause notices. Supreme Court in number of cases has examined under what circumstances a show-cause notice could be interfered. Therefore, writ is maintainable. The definition of ‘jurisdiction’ as defined in the judicial dictionary is as under: - 5 - “Jurisdiction means the legal authority to administer justice according to the means, the law has provided subject to the limitation imposed by the law upon the judicial authority. A Government’s general power to exercise authority over all persons and things within its territory; esp. a State’s power to create interests that will be recognized under common-law principles as valid in other states. A court’s power to decide a case to issue a decree; the constitutional grant of federal-question jurisdiction.” 4. Judgment delivered by a Court “not competent” to deliver it is void – Distinction between total want of jurisdiction and erroneous exercise of jurisdiction . – It is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity, and that invalidity could be set up whenever and by whoever it is sought to be enforced or relied upon even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action, strikes at the very - 6 - authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. 5. The words “not competent’ in Section 44 of Evidence Act refer to a Court acting without jurisdiction. The section refers to the lack of inherent jurisdiction in the Court and not to its territorial jurisdiction. In Article 46 of Sir James Stephen’s Digest of the Law of Evidence, the corresponding rule of English law is stated to be that whenever a judgment is offered as evidence, the party against whom it is so offered may prove that the Court which gave it had no jurisdiction. The “competency” of a Court and its “jurisdiction” are thus synonymous terms. A judgment or decree passed without jurisdiction is a nullity; and when a decree is void and a nullity, it is the duty not only of the Court which passed it to ignore it but of every Court to which it is presented. There must, - 7 - however, be a manifest lack of jurisdiction in the Court to render its decree or judgment void. 6. Jurisdiction may be defined to be power of a Court to hear and determine a cause, to adjudicate or exercise any judicial power in relation to it. Such jurisdiction naturally divides itself under three broad heads, namely, with reference to: (i) the subject- matter (ii) the parties, and (iii) the particular question which calls for decision. 7. Question of jurisdiction may consequently arise in one of three ways, that is, either in relation to the subject-matter, or in relation to the parties, or in relation to the question submitted for the decision of the Court. This classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction of the subject- matter is obviously of a fundamental character. Given - 8 - such jurisdiction, we must be careful to distinguish exercise of jurisdiction from existence of jurisdiction, for fundamentally different are the consequences of failure to comply with statutory requirements in the assumption and in the exercise of jurisdiction. 8. The authority to decide a cause at all, and not the decision rendered therein, is what makes up jurisdiction, and when there is jurisdiction of the person and subject-matter, the decision of all other questions arising in the case is but an exercise of that jurisdiction. The distinction between cases where jurisdiction is assumed by a Court where there is a absolute want of it and those where the Court in the exercise of its jurisdiction acts wrongly is of fundamental importance. In the former case the decision is void and a nullity, whereas in the latter case it is merely voidable, and has due effect, unless set aside by appropriate proceedings. It cannot be said that wherever a decision is wrong in - 9 - law or violates a rule of procedure, the Court must be held incompetent to deliver it. It has never been and could not be held that a Court which erroneously decreed a suit which it should have dismissed as time barred or as barred by the rule of res judicata acts without jurisdiction and is not competent to deliver its decree. Even the concept of pending proceedings is taken into consideration under act, 1999 or Act, 2003 do not provide for transfer of pending proceedings like arbitration proceedings which was pending till 5.8.2004 like a provision in the Administration Tribunal Act, 1985, where Government employees litigations were pending before High Court were transferred to respective Administrative Tribunals as and when Tribunal was constituted. 9. In the present petition, it is not that Deputy Commission’s action is without authority of law to contend he has no jurisdiction to issue notices. - 10 - Therefore, petition is premature for the reason that the Deputy Commissioner of Income Tax has specifically stated that the petitioner would be afforded adequate opportunity to explain his case before passing order on objective appraisal of the evidence available. The learned counsel for petitioner contends that the petitioner’s objections stated in para-21.2 of his petition has not been considered before issuing the impugned communication dated 28.02.2019. The learned counsel for petitioner submitted that it is an order. Perusal of the last portion of the communication shows that the petitioner’s right has not been affected. What has been stated is that the petitioner would be afforded adequate opportunity to explain his case. Therefore, one has to draw an inference that it is not an order and it is only a communication wherein it is specifically stated that during the course of reassessment proceedings, the petitioner has an opportunity to explain his version. The contention of the petitioner that objections stated in - 11 - para-21.2 have not been appraised by the concerned authority. If it is not considered, it is an advantage to the petitioner in future to take the contention that his grievance/objections have not been addressed, which would be non-application of mind, and on that ground itself further proceedings will be treated as void. In other words, the present petition is premature. Accordingly, the writ petition stands dismissed as premature reserving liberty to the petitioner to pursue the Deputy Commissioner of Income Tax in terms of Annexure-C and appraise all his contentions. In the event of making a detail explanation along with the documents before the Deputy Commissioner of Income Tax pursuant to the communication dated 28.02.2019, the Deputy Commissioner of Income Tax, Bengaluru is hereby directed to consider each and every contention to be raised by the petitioner and pass speaking order after due consideration of each contention, in accordance with law. - 12 - 10. Petition is accordingly dismissed. Sd/- JUDGE RD "