Case Law Details
ITO Vs Vandana Malhotra (Supreme Court of India)
The Punjab and Haryana High Court allowed the writ petition challenging the validity of notice issued under Section 148 of the Income Tax Act, 1961 by the Jurisdictional Assessing Officer (JAO) and the consequential proceedings. The Court noted that the issue involved had already been examined and concluded in earlier decisions of the same Court, including CWP No. 21509 of 2023 (decided on 29.07.2024) and CWP No. 15745 of 2024 (decided on 19.07.2024).
Read HC Judgment in this case: Punjab & Haryana HC Quashes Section 148 Notice for Bypassing Faceless Assessment
Relying on its earlier rulings, the High Court held that circulars or instructions issued by the Board cannot override statutory provisions or render them otiose. Legislative enactments having financial implications must be followed strictly and mandatorily. The Court observed that powers under Sections 119 and 120 of the Act, as well as Section 144B(7) and (8), cannot be exercised in a manner that usurps legal provisions for administrative convenience or causes hardship to assessees. Instructions and circulars may supplement statutory provisions but cannot substitute or override them.
Applying this principle, the High Court held that notices issued by the JAO under Section 148 and proceedings initiated without conducting faceless assessment as envisaged under Section 144B were contrary to the Act and without jurisdiction. Consequently, the impugned notice dated 24.03.2024 and consequential proceedings were set aside. The Revenue was granted liberty to proceed afresh in accordance with law.
Against this background, the Revenue approached the Supreme Court by way of Special Leave Petitions. The Supreme Court disposed of the SLPs by permitting the petitioners (Revenue) to file applications before the concerned High Courts in the disposed matters to bring to their notice a latest clarification issued with effect from 01.04.2021, proposed to be inserted in the Finance Act.
The Supreme Court directed that if such applications are filed, they shall be considered by the High Courts after granting opportunity of hearing to both sides on merits. It further clarified that if any party remains aggrieved by the outcome, liberty is reserved to approach the Supreme Court again to challenge both the original impugned orders and subsequent orders passed on such applications. All contentions were kept open, and all pending applications, including those for condonation of delay, were disposed of.
Thus, while the High Court had quashed the reassessment notices for want of jurisdiction due to non-compliance with the faceless assessment mandate under Section 144B, the Supreme Court granted the Revenue an opportunity to seek reconsideration before the High Court in light of the subsequent clarification effective from 01.04.2021. The matter remains open for adjudication on merits before the High Court, subject to the outcome of the applications permitted by the Supreme Court.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We dispose of these Special Leave Petition(s) by permitting the petitioner(s) herein to file an application(s) before the High Court(s) in the disposed of matter(s) to bring to the notice of the High Court(s) the latest clarification which has been issued with effect from 01.04.2021 on such clarification to be inserted in the proposed Finance Act.
If such an application(s) is made by the petitioner herein before the High Court, the same shall be considered after giving an opportunity of hearing to both sides on its merits.
In the event, the petitioner or any other party is unsuccessful, then liberty is reserved to the aggrieved party(s) to approach this Court to assail the impugned order(s) as well as the subsequent order(s) to be passed.
Special Leave Petitions are disposed of in the aforesaid terms.
All contentions on both sides are kept open to be advanced on the application(s) to be filed by the petitioner herein before the High Court in the disposed of cases.
All pending application(s), including application(s) seeking condonation of delay, shall stand disposed of.
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