The Gujarat High Court grants relief to Mastek Limited, and observed that challenge to notice under Section 154 of the Income Tax Act, 1961 is maintainable under Article 226 of the Constitution of India.
The petitioner, Mastek Limited is a public limited company and a Global Information Technology Service Provider offering a wide range of software development and related services. A return of income was filed for A.Y. 2008-2009 declaring a total income of Rs.1,76,66,295/- after claiming a deduction under Section 10A of the Income Tax Act, 1961.
The case was selected for scrutiny and notices under Sections 142(1) and 143(2) were issued. During the assessment proceedings, the respondent specifically inquired into the computation of deduction under Section 10A of the Income Tax Act and called for evidence and justification in respect of the same which was duly submitted by the petitioner.
The respondent issued the impugned notice under Section 154 of the Income Tax Act to rectify the OGE dated 30.01.2015. According to the respondent, a mistake of law and facts was committed while passing OGE allowing the loss (negative profit) of eligible 10A unit namely SDF VI and SDF VII amounting to Rs.4,46,67,531/- against income from House Property.
The counsel for the petitioner submitted that while passing the OGE, the Respondent has committed a mistake in allowing set-off of losses against the income from House Property and Other income. The issuance of notice under Section 154 is illegal and without jurisdiction. The Assessing Officer cannot go beyond the issue and aspect which he was directed to reconsider. The Assessing Officer cannot travel beyond the jurisdiction and limits of the directions of the Appellate Authority.
A Division Bench comprising Justice Biren Vaishnav and Justice Bhargav D Karia observed that “Having held that the notice under Section 154 of the Act is barred by limitation, that it was a debatable issue not therefore within the parameters of Section 154 of the Act, the notices under Section 154 of the Income Tax Act are bad. Even on the parameters of interpretation, notice under Section 263 in one of the petitions must also fail. Challenge to such a notice is maintainable under Article 226 of the Constitution of India.”
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