The Bombay High Court ruled that a writ petition is maintainable to question initiation of proceedings under Section 148 of the Income Tax Act, 1961.
The challenge raised in the writ petition filed under Article 226 of the Constitution of India is to the notices issued under Section 148 of the Income Tax Act, 1961 by which the respondent has sought to re-open the assessment of the petitioner, Modern Living Solutions Private Ltd, for the year 2017-2018.
A. Parchure, counsel for the respondent raised a preliminary objection to the maintainability of the writ petition on the ground that an alternate statutory remedy is available to the petitioner by way of an appeal under the Income Tax Act of 1961 for challenging the order of assessment when passed. The Counsel submitted that all the grounds that are sought to be raised in the present writ petition can be permitted to be raised in such statutory proceedings. There is no exceptional case made out to invoke writ jurisdiction.
A. N. Agrawal, counsel for the petitioner on the other hand submitted that since the petitioner had challenged the jurisdiction of the respondent in seeking to re-open the assessment proceedings under Section 148 of the Income Tax Act of 1961, such challenge could be entertained in exercise of jurisdiction under Article 226 of the Constitution of India.
The Counsel further submitted that since the petitioner was challenging the initiation of the proceedings itself by urging that the statutory requirements provided under Section 148 of the Income Tax Act of 1961 were absent and hence there was no jurisdiction to initiate such proceedings, it was permissible to raise such jurisdictional issue in the present proceedings.
A Division Bench of the Bombay High Court comprising Justices M. W. Chandwani and A. S. Chandurkar observed that “In the present writ petition the petitioner has raised a challenge to the initiation of proceedings and exercise of power under Section 148 of the Income Tax Act of 1961 by urging that the statutory requirements prescribed by Section 148 of the Income Tax Act have not been satisfied. “
“In other words, it is submitted that since there is no existence of any reason to believe, reopening of the proceedings by the respondent is without jurisdiction. Since the jurisdiction of the respondent of initiating the proceedings, itself is under challenge, the writ petition would be maintainable. In the light of the challenge as raised it cannot be said that the writ petition is not maintainable” the Court concluded.
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