The Madhya Pradesh High Court has provided respite to M/s Space Enclave Private Limited by halting the ongoing income tax reassessment proceedings against them. In addition, the division bench comprising Justice S A Dharmadhikari and Justice Prakash Chandra Gupta has admitted the case for final hearing.
The judges relied on the Supreme Court’s ruling in the case of Red Chilli International Sales Vs. Income Tax Officer & Anr. and noted that writ petitions can be entertained to scrutinize whether the conditions for issuing a notice under Section 148 of the Income Tax Act have been met, despite the presence of an alternate remedy by way of appeals.
The Income Tax Act, 1961, underwent an amendment in 2021 under the Finance Act, which altered the provisions for reopening. Considering the earlier case law, the court believed that the matter would necessitate more comprehensive consideration.
M/s Space Enclave Private Limited, the assesses, challenged the order passed under Section 148A(d) of the Income Tax Act and the notice issued under Section 148 of the Act, which initiated reassessment proceedings for the assessment year 2013-2014.
The department raised a preliminary objection about the writ petition’s maintainability in view of the alternative remedy available under Section 246 of filing an appeal. The issue raised was in regards to the circumstances under which a challenge could be entertained to an order passed under Section 148A(d), as it stood amended.
The court held that the petitioners have made a case for entertaining the appeal, observing that the alternative remedy will not act as an absolute bar for entertaining the writ petition as the jurisdictional issue runs deep in the matter.
The Madhya Pradesh High Court Bench of Justice S A Dharmadhikari and Justice Prakash Chandra Gupta also issued an interim stay of the order passed under Section 148A(d) of the Act as well as consequential notice under Section 148 of the Income Tax Act, until further orders.
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