SC dismisses SLP against notice u/s 148A(b) & P&H HC order in Gian Castings

Gian Castings Private Limited Vs Central Board Of Direct Taxes & Ors. (Supreme Court of India)

SLP filed against the decision of Hon’ble Punjab & Haryana High Court in case of Gian Castings Private Limited vs. Central Board of Direct Taxes and Ors., CWP No.9142/2022 dated 02­-06­-2022 dismissed by Hon’ble Supreme Court vide its order dated 17.06.2022.

The Hon’ble Supreme Court in Special Leave Petition filed against the decision of Hon’ble Punjab & Haryana High Court in case of Gian Castings (P) Ltd. has been dismissed wherein Hon’ble Punjab & Haryana High Court has refused to interfere by way of writ jurisdiction under Article 226 of the Constitution of India where reassessment proceedings are initiated by issue of notice under section 148 of the Income Tax Act, 1961 (“the Act”) was at its intermediate stage and was yet to be concluded as per provisions laid down under the Act.

In the said case, the AO has passed order u/s 148A(d) and issued notice u/s 148 of the Act. The AO was issued notice u/s 148A(b) of the Act along with details of information and the inquiry forming basis of reopening. The assessee has also raised objections against such notice.

• The assessee has challenged notice u/s 148A(b) of the Act as well as notice u/s 148 of the Act and contended in writ filed before High Court that:

– There is no escapement of income for reopening under section 147 of the Act.

– While deciding on objections, stand of the assessee is not taken into consideration and order u/s 148A(d) of the Act is passed in mechanical manner, resulting in miscarriage of justice.

• The Hon’ble High Court has observed that section 147 and 148 of the Act has undergone change due to amendments in Finance Act, 2021. The High Court observed that

– Section 148 of the Act has been made subject to newly incorporated provisions of section 148A of the Act.

– Section 148A of the Act provides for conducting inquiry, providing opportunity before issuance of notice under section 148.

– After receiving notice under section 148, assessee is required to furnish return on his income within time period as specified in the notice.

– On his filing return, the Assessing Officer is required by the Statute to assess or reassess such income.

– It is only on such assessment or reassessment of the income by the Assessing Officer that the proceedings initiated can be said to have been concluded.

– Further, any such order passed under section 147 of the Act is further subject to appeal under section 246-A of the Act.

• Based on following observations on new law of reopening, while referring to old High Court and Supreme Court judgements in old law as well as recent decision of Hon’ble Delhi High Court in case of Gulmuhar Silk (P.) Ltd. v. ITO [W.P.(C) 5787 of 2022, dated 7-4-2022] under new law, the Hon’ble High Court held that there is no reason to interfere at pre mature stage when the proceedings have not yet been concluded by the statutory authority. The Hon’ble High Court further mentioned that from the bare reading of notice, it cannot be axiomatically held that the action of the authority is void of jurisdiction. There is clear distinction between jurisdictional error and error of law/facts within jurisdiction.

• This order was challenged in Special Leave Petition by the assessee before Hon’ble Supreme Court which has upheld the order of Hon’ble High Court and the SLP filed has been dismissed.

Our Comments:

This decision will reduce the chances of the assessee to file writ petition to challenge jurisdiction of the reopening of assessment at the stage of passing of order u/s 148A(d) of the Act and issue of notice u/s 148 of the Act since the assessee will be required to substantiate the limitation of the authority to exercise jurisdiction and not just on basis of error in facts/law while exercising his jurisdiction of reopening the assessment. The assessee still can approach the Hon’ble High Court for reconsideration of procedure followed under section 148A of the Act where orders are passed mechanically without application of mind or without following due procedure laid down in new law.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

1. Having heard learned Senior counsel appearing for the petitioner and on carefully perusing the material available on record, we see no reason to interfere at this stage.

2. However, all contentions of the petitioner are left upon to be urged at the appropriate stage

3. The Special Leave Petition is, accordingly, disposed of on the afore­stated terms.