The Supreme Court in the case Red Chilli International Sales Versus ITO observed and has set aside an order of the Punjab and Haryana High Court which dismissed a writ petition filed by an assessee against a notice issued for reopening assessment under Section 148A of the Income Tax Act 1961.
The Writ petition was dismissed by the High Court on the ground of the availability of an alternative remedy. Taking exception to the High Court’s approach, In the case, the Supreme Court observed that writ petitions have been entertained to examine whether the conditions for the issuance of notice under Section 148 of the Income Tax Act, 1961 have been satisfied.
The bench comprising of Justice Sanjiv Khanna and Justice MM Sundresh in the case observed while directing the High Court to examine the issue in depth, the court stated that the provisions of reopening under the Income Tax Act, 1961 have undergone an amendment by the Finance Act, 2021, and subsequently, the matter would be require a deeper and in depth consideration, the court while keeping in view the earlier case law
A notice was received by the petitioner under Section 148A(b). The said details of the information that led to the issuance of a notice under Section 148A(b) were also provided to the petitioner. Thus, the petitioner responded and raised of the objections. The court decided the objections by an order passed under Section 148A(d). However, the petitioner also served with notice under Section 148. The petitioner objected to both the order issued under Section 148 A(d) and the notice issued under Section 148 of the even date, wherein claiming that the response of the petitioner to the notice under Section 148A(b) was ignored.
The present issue raised was whether, at the stage of notice, the writ Court should venture into the merits of the controversy when AO is yet to frame of the assessment or reassessment in the discharge of statutory duty which being cast upon him under Section 147 of the Income Tax Act, 1961.
It has been held by the Punjab & Haryana High Court that where the proceedings have not even been concluded by the statutory authority, thus, the writ court should not interfere at such a premature stage. Furthermore, the said case being not a case in which the authority can be held axiomatically to have grasped jurisdiction not vested in it based on a cursory reading of the notice and the correctness of the order under Section 148A(d) is being challenged on the factual premise that vested jurisdiction has been wrongly exercised and the distinction between the jurisdictional error and error of law or fact within the jurisdiction is well established. A statutory remedy has been provided for rectification of errors.
It has been noted by the High Court that there being no reason to warrant interference in the exercise of the jurisdiction under Article 226 or Article 227 of the Constitution of India at the intermediate stage when the proceedings which are initiated are yet to be concluded by a statutory authority.
Further, the Apex Court held that the said provisions of reopening under the Income Tax Act, 1961, have undergone an amendment by the Finance Act, 2021, and subsequently, the said matter would require a deeper and more in-depth consideration.
The court stated that the court disposed of the special leave petition. The court clarified and has dismissed of the special leave petition would not be construed as a finding or observations on the merits of the case.
