HC interference in section 148 The notification stage is not justified: P&H HC

Red Chilli International Sales versus Income Tax Official and another (Superior Court of Punjab and Haryana)

Superior Court of Punjab and Haryana, in the case of Red Chilli International Sales vs. Income tax officer and otherHe dismissed a writing request that challenged a notice issued under Section 148 of the Income Tax Law of 1961. The petitioner, an association firm, sought to cancel an order under Section 148a (D) and the subsequent notice of reevaluation for the 2018-2019 financial year, which its objections were not considered adequately. However, the court argued that the judicial intervention at this stage was premature, since the evaluation officer (AO) had not yet completed the reevaluation procedures.

The court referred to several precedents that support the opinion that reevaluation procedures should be able to progress before seeking judicial interference. He cited Lachhman Das Nayar vs. Hans Raj Puri (1953 Air P&H 55), where the Court emphasized that the Income Tax Law provides a structured mechanism for evaluations, and challenging AO actions through writing requests is not appropriate. In the same way, in Rasulji Buxji Kathawala vs. IT Commissioner (1956), Rajasthan’s Superior Court refused to intervene in the notification stage, stating that legal remedies should be exhausted first.

In addition, the court made reference Summit Passi vs. Income Tax Assistant Commissioner (2016) and Cit vs. Chhabil Dass agarwal (2014) 1 SCC 603, where the courts argued that reevaluation should not be stopped in the preliminary stage unless jurisdictional errors are evident. The Superior Court of Delhi, in Gulmuhar Silk Pvt. Ltd. vs. ItoSimilarly, he ruled that errors in the conclusions could be challenged during subsequent procedures, and the precedent of the Supreme Court in Raymond Woolen Mills Ltd. vs. Ito (1997) reaffirmed that the sufficiency of the material to reopen an evaluation is not for the courts to determine in the notification stage.

According to these judgments, the court concluded that, since the AO had not yet ended the reevaluation, the petitioner had legal remedies available under the Income Tax Law. The distinction between the jurisdictional error and the errors of fact or law within the jurisdiction was emphasized, and the Court ruled that the latter must be resolved through the procedural framework of the law. As a result, the request for deed was dismissed, clarifying that the legal evaluations should not be interrupted unless the clear jurisdictional overreach is evident.

Full text of the sentence/order of the Superior Court of Punjab and Haryana

Through this request for a letter, the petitioner seeks the issuance of the court order in the nature of Certioari to annul the order of 12.04.2022 (Annex P-3) approved under section 148a (d) of the Income Tax Law, 1961 (for the dare of the act of the act ‘) and issued under section 148 dated 12.04.2022 (Annex P-4) 2018.

Petitioner, an association firm, is an advisor under the law. The petitioner received notice under section 148a (b) dated 14.03.2022 (Annex P-1). The details of the information based on which the petitioner of section 148a (b) has also been issued. The petitioner responded to the one to communicate the communication of 21.03.2022 and raised objections. These objections were decided in a video order dated 12.04.2022 approved under section 148a (d) of the Law. Together with the Order, the petitioner also received a notice under section 148 of the Law. The challenge in this request for writing has been established to the order approved under section 148 A (d) dated 12.04.2022 together with the notice issued under section 148 Uniform date that states that the response presented by the petitioner to the notification under section 148a (b) has not been considered.

We have heard a lawyer learned for the parties and have carefully passed the records of the case.

The main problem that arises in this writing request is:-

“Either at this stage of the notification under Section 148, the Court of Writings must venture into the merits of the controversy when AO has not yet framed the evaluation/reensation in the fulfillment of the legal duty that he threw under Section 147 of the Law?”

The debate is not new. While it is the similar situation under the Law on the Income Taxes of India, 1922, Division Bank of this Court in ‘Lachhman Das Nayar and others vs. Hans Raj Puri, Tax Officer, Amritsar et al., 1953 Air (P&H) 55He held that –

“An examination of the scheme of the law and the words used in section 34 of the law and the various cases to which I have mentioned above show that the Legislature has entrusted the determination of facts and laws to tax officers. A particular machinery has been established under the law “for the use of which only”, the total evaluation income for the purposes of Income Tax must be determined and the jurisdiction to question the evaluation in another way that the use of this machinery is incompatible with the scheme of the Law. The challenge of the action of the Income Tax Official by a court order The ban or mandamus, therefore, are not available for the advisor. “

In ‘Rasulji Buxji Kathawala vs. Income Tax Commissioner, Delhi and Other ‘(Civil Write No.44 of 1955, D/D. 2.4.1956) While dealing with the similar situation under the law of 1922, the Banking of the Division of the Superior Court of Rajasthan said that –

“But where, as in this case, any part of the act is attacked, in our opinion, there is no justification for us to intervene at this stage when other remedies that are not necessarily onerous are still open to the applicant under the law. Therefore, we refuse to intervene in this stage in this case, and let the applicant pursue their remedies by virtue of the Law on Income Tax Income by virtue of the law, or other issues refers. “

Division Bank of this Court in the case of ‘Summit Passi vs. Commissioner Assistant for Income Tax ‘, (2016) 386 ITHe held that –

“29. … The reasons assigned by the evaluation official to tentatively believe that the taxable income has escaped the evaluation cannot be set aside in the threshold without a fact investigation procedure, more, the most when the petitioners are not remedy and have equally effective resources by virtue of the law.

30. A similar opinion is discernible from Cit v. Chhabil Dass Agarwal (2014) 1 SCC 603, as argued that the law provides full machinery for tax evaluation/reassessment, the imposition of the fine and to obtain relief with respect to any undue orders approved by the Organizing Upper, and the evaluation could not be allowed to leave that map and to invoke the youth of the highs. 226 of the Constitution when it had an adequate remedy opened by an appeal before the Income Tax Commissioner (Appeals).

31. Having argued that it is not convenient for this Court to express its opinion on rival presentations, since, without realizing it, it can cause damage to any of the parties. Suffice it to say that no case to cancel the notice issued under section 148 read with section 147 of the Law or the Order (s) that rejects the objections, is carried out at this premature stage ”.

Superior Court of Delhi in WP (c) 5787/2022 entitled as Gulmuhar Silk Pvt. Ltd. vs. Income Tax Official Ward 10 (3) Delhi, When considering the same question, he argued that:

“6. Although it is the case of the petitioner that the contested order is wrong in the facts, however, this court is of the opinion that the petitioner would have a wide opportunity during the course of the procedures before different legal forums to demonstrate that the discovery of facts was wrong. In addition, at this stage, no evaluation order has been approved and it has only been observed that it is an adequate case for the issuance of notification under section 148 Law. In fact, the Supreme Court in Income Tax Commissioner and Ors. Vs. chhabil das agarwal, (2014) 1 SCC 603 He has argued that, as the Income Tax Law, 1961 provides full machinery for tax evaluation/ reassessment, the evaluated cannot abandon that machinery and invoke the jurisdiction of the Superior Court of article 226. “

Supreme Court in the case of ‘Raymond Woolen Mills Limited vs. Income Tax Official, Centro XI, Range Bombay and others (Civil Appeals No.1972 of 1992 with No.1973 of 1992. D/D 17.12.1997)He held that –

“3. In this case, we do not have to give a final decision on whether the advisor there is a suppression of the material facts or not. We only have to see if there was a prima facie material on the basis of which the department could reopen the case. The sufficiency or correction of the material is not a thing to consider at this stage. We are of the opinion that the court cannot reduce the reopening of the case in the facts of this case. It will be open to the advisor to demonstrate that the assumption of facts made in the notice was wrong. The advisor can also demonstrate that new facts did not arrive at the knowledge of the income tax officer after completing the evaluation procedure. We are not expressing any opinion about the merits of the case. The issues of fact and law are left open to be investigated and determined by the evaluation authority. The appellant will have the right to take all points before the evaluation authority. “

Therefore, the consistent opinion is that when the procedures have not even been concluded by the legal authority, the writing court should not interfere in such a mature stage. In addition, it is not a case in which, from the bare reading of the notification, it can be sustained axiomatically that the authority has clung to the jurisdiction not acquired in it. The accuracy of the order under Section 148a (d) is being challenged to the objective premise that states that the jurisdiction, although the warned, has been wrongly exercised. At this time, it is well established that there is an annoying distinction between the jurisdictional error and the error of the law/made within the jurisdiction. For the rectification of errors, a legal remedy has been provided.

In the light of the proposal of law previously established, we find that there is no reason to guarantee the interference of this Court in the exercise of the jurisdiction under article 226/227 of the Constitution of India at this intermediate stage when the procedures initiated have not yet been concluded by a statutory authority. Therefore, the writing request is dismissed.

It is not necessary to say that anything in this observed document will be interpreted as an opinion on the merits of the case.