Punjab Coal Traders V. Assistant Commissioner of Income Tax, Central Circle, Patiala

CWP/3939/1992

AI Insights

In this case, M/s Punjab Coal Traders filed a writ petition challenging a show cause notice issued under Section 148 of the Income Tax Act, 1961, by the Assistant Commissioner of Income Tax, Central Circle, Patiala. The notice alleged that M/s Jayanto Coal Supplier, Gauhati, with whom the petitioner had transactions, was a fictitious entity. The petitioner argued that the transactions were disclosed in their balance sheet and supported by bank drafts, thus contesting the validity of the show cause notice. The respondent countered that the challenge to the show cause notice involved disputed facts, which are not suitable for adjudication under Article 226 of the Constitution. The court agreed with the respondent, emphasizing that such factual disputes should be resolved by the Assessing Officer.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 815856 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 14-08-2013
• Assessment Year: misc
• Other Referred Cases: Gemini Leather Stores Versus Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SAVITA SAXENA
• Assessee Lawyers: AKSHAY BHAN; PALLAVI SINGH
• Keywords: Fictitious entity; Genuine transaction; Income Tax; Show cause notice; Writ of Certiorari
• Section: 148; 143(2)

Judgement Text

"CWP No.3939 of 1992 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.3939 of 1992 Decided on: 14.08.2013 M/s Punjab Coal Traders, Panchkula ..... Petitioner VERSUS Assistant Commissioner of Income Tax, Central Circle, Patiala ..... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr.Akshay Bhan, Advocate, with Ms.Pallavi Singh, Advocate, for the petitioner. Ms.Savita Saxena, Advocate, for the respondent. ******* RAJIVE BHALLA, J.(ORAL) The petitioner prays for issuance of a writ of certiorari quashing show cause notice dated 19.11.1991, issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the '1961 Act'). Counsel for the petitioner submits that as the offending transaction with M/s Jayanto Coal Supplier, Gauhati, has already been disclosed in the balance sheet, the list of creditors filed by the petitioner and the bank drafts dated 09.02.1991 and 11.02.1991, clearly evidence payment to M/s Jayanto Coal Supplier, Gauhati, the show cause notices issued under Sections 148 and 143(2) of the 1961 Act, on the ground that M/s Jayanto Coal Supplier, Gauhati, is a fictitious entity, are not warranted. The reasons assigned by the Income Tax Officer while issuing notices to the petitioner are CWP No.3939 of 1992 -2- contrary to the record. Counsel for the petitioner relies upon “Gemini Leather Stores Versus Income Tax Officer”, 100 ITR page 1, to support of his argument. Counsel for the respondent submits that as challenge is to a mere show cause notice and the petitioner has already filed a reply, the writ petition should be dismissed. It is further submitted that whether M/s Jayanto Coal Supplier, Gauhati, is a genuine entity, and whether the balance sheet, the list of creditors and demand drafts are genuine, is a question of fact that cannot be adjudicated in proceedings under Article 226 of the Constitution. We have heard counsel for the parties. There is no disputing the fact that power under Article 226 of the Constitution is wide enough to entertain challenge to a show cause notice but where challenge to a show cause notice, entails adjudication of disputed questions of fact: like the identity of an entity, the veracity of a transaction or such like related facts, a Court exercising power under Article 226 of the Constitution of India would desist from traversing the field of facts so as to arrive at a conclusion for or against the assessee or the revenue. The question whether the transaction recorded in favour of M/s Jayanto Coal Supplier, Gauhati, was genuine, would necessarily require adjudication of disputed facts which can be more suitably decided by the Assessing Officer. In view of what has been recorded hereinabove, the writ petition is dismissed with a direction to the Income Tax Officer, Patiala, to proceed further in the matter and decide the show cause notice within three months of parties putting in appearance before CWP No.3939 of 1992 -3- him on 23.09.2013. [ RAJIVE BHALLA ] JUDGE 14.08.2013 [ DR. BHARAT BHUSHAN PARSOON ] shamsher JUDGE Singh Shemsher 2013.09.02 15:43 I attest to the accuracy and integrity of this document Chandigarh "