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of <h1>Court Invalidates Tax Notices for Lack of Evidence</h1> The court held that it had territorial jurisdiction as the cause of action arose where the impugned notices were issued. It found the notices under the ... Reassessment, Jurisdiction, Service Of Notice, Condition Precedent, Limitation, Notice Issues Involved:1. Territorial Jurisdiction2. Validity of Notices under Section 148 of the Income-tax Act and Section 17 of the Wealth-tax Act3. Allegations of Mala Fides and Abuse of PowerSummary:1. Territorial Jurisdiction:The court addressed the preliminary objection regarding its territorial jurisdiction. The respondents argued that since the petitioners resided in Delhi and the investigation was initiated there, the Delhi High Court should have jurisdiction. However, the court held that the cause of action arose within its jurisdiction as the impugned notices were issued from Bhopal, where the property in question was located. The court rejected the argument of 'jurisdiction of convenience,' emphasizing that the jurisdiction of a constitutional court cannot be made subservient to the convenience of any party.2. Validity of Notices under Section 148 of the Income-tax Act and Section 17 of the Wealth-tax Act:The court examined whether the notices issued under section 148 of the Income-tax Act and section 17 of the Wealth-tax Act were valid. The court emphasized that the power under section 131(1A) of the Act is not an independent power but is exercisable in aid of proceedings under section 132 of the Act. The court found that the Assistant Director of Income-tax (Investigation), Delhi, had no tangible material to suspect that any income had been concealed by the petitioners. The court also noted that the reasons to believe must be based on objective and relevant materials, not on mere suspicion or conjecture. The court held that the impugned notices were without jurisdiction and authority of law, as there was no material to show that income chargeable to tax had escaped assessment due to the petitioners' failure to disclose material facts.3. Allegations of Mala Fides and Abuse of Power:The court addressed the allegations of mala fides and gross abuse of statutory powers, particularly by the Assistant Director of Income-tax (Investigation), Delhi. The court noted that the investigation against the petitioners was initiated based on the Jain hawala case, which had no relevance after the discharge of Shri Arjun Singh from the charges. The court found that the impugned actions were arbitrary and mala fide, aimed at reopening long-closed assessments without any new material. The court emphasized that the power conferred by the Legislature must be exercised fairly, bona fide, and without extraneous considerations.Conclusion:The court allowed the writ petitions, quashing the impugned notices and restraining the respondents from proceeding against the petitioners in connection with the land and house known as 'Kerwa House.' The court held that the actions taken by the respondents were without jurisdiction, arbitrary, and mala fide. The court awarded costs to the petitioners.
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