Relief to Himalaya Drug: Karnataka High Court quashes Notice as Search conducted by Deputy Commissioner of Income Tax was without Jurisdiction [Read Judgment]

In a major relief to Himalaya Drug, the Karnataka High Court quashed the notice as a search conducted by the Deputy Commissioner of Income Tax was without Jurisdiction.

The Assessee is a partnership firm engaged in the business of manufacture and sale of herbal pharmaceutical products (ayurvedic, medicaments, and preparations), consumer/personal care products, and animal health care products. The assessee filed its return of income which was selected for scrutiny and the order under Section 143(3) of the Act was passed disallowing certain expenses and making certain additions. The assessee preferred appeals before the Commissioner of Income Tax [Appeals] which came to be allowed in part. Being aggrieved by the same, the revenue filed appeals before the Tribunal and assessee filed cross-objections. The Tribunal allowed the cross-objections of the assessee in part dismissing the revenue’s appeals for the assessment years 2003-04 and 2004-05. Relating to the assessment year 2005-06, the appeal filed by the assessee was pending before the CIT(A). Relating to the assessment years 2006-07 and 2007-08, the assessee filed its return of income declaring a total income of Rs. Nil. No assessment has been made prior to requisition proceedings. Relating to the assessment year 2008-09, a return was filed by the assessee declaring the income of Rs. Nil. Notice under Section 143(2) was issued.

The assessee submitted that conferring of the jurisdiction on the officer has come to the notice of the assessee only on noticing the date mentioned in the assessment order of Mr. Hisham Syed Tamiz and further got confirmed on the information secured by the assessee to the application made under the provisions of the Right to Information Act, 2005 as per the letter issued by the Assistant Commissioner of Income Tax, Central Circle-I, Bengaluru.

The division bench of Justice S. Sujatha and Justice Ravi V.Hosmani held that the notice issued without jurisdiction is substantive illegality and not a procedural violation of the nature advertised in Sections 292B and 292BB which deals with mistake/defect or service of notice.

“It is trite that the language employed in the Amendment Act is self–explanatory that the said amendment has come into effect prospectively from the 1st Day of June 2016. The intention of the legislature was made explicit to give effect to the amendment from the 1st Day of June 2016. This proviso cannot be treated as declaratory/statutory or curative in nature, the same being a conscious decision of the legislature,” the court said.

To Read the full text of the Judgment CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.