In a recent decision, the Madhya Pradesh High Court bench of Justice Anil Verma and Justice Vivek Rusia ordered an interim stay of the order passed under section 148A(d) of the Income Tax Act, 1961, as well as a consequential notice under section 148 of the same Act, until further orders.
The petitioner filed a writ petition under Article 226 of the Indian Constitution before the Madhya Pradesh High Court, challenging the impugned order passed under Section 148A(d) of the Income Tax Act, as well as the notice issued under Section 148 of the said Act to initiate reassessment proceedings under Section 147 of the Act for the Assessment Year 2013-14.
In this writ petition, a jurisdictional issue has been raised by the petitioner. The issue raised was “Whether under what circumstances, a challenge can be entertained to an order passed u/S 148A(d) of the Act, as it stood amended ?”
The bench observed that since the jurisdictional issue has been raised before this Court, even assuming an alternative remedy under section 246 of the Income Tax Act of filing an appeal is available, it will not operate as an absolute bar for entertaining the writ petition as jurisdictional issues goes to the root of matter and it is one of the exceptional factors carved out by the Supreme Court for exercise of jurisdiction under Article 226 of the Constitution of India.
Relying on the judgment of Apex Court in the case of Union of India Vs. Ashish Agrawal, the counsel of the revenue/respondent contended that new law relating to assessment shall operate and that all defence under section 149 of the new Income Tax Act shall be available to the assessee. Therefore, the writ petition is not maintainable and liable to be dismissed.
The bench highlighted the decision of the supreme court in the case Red Chilli International Sales Vs. Income Tax Officer & Anr in which the apex court stated that the provisions of reopening under the act of 1961 has undergone an amendment by the Finance Act, 2021 and consequently, the matter would require deeper and in depth consideration keeping in view the earlier case law. Further, the Supreme court had also set aside the observations of the High Court observing that the writ petitions would not be maintainable in view of the alternative remedy.
Conclusively, the bench directed to file a detailed reply if not filed.
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