2014 (12) TMI 103 - HC - Income Tax

High Court upholds Income Tax notice under Section 158BC, emphasizing structured remedies

The High Court dismissed the writ petition challenging a notice issued under Section 158BC of the Income Tax Act, 1961. The Court emphasized the ... Validity of notice u/s 158BC - Valuation of cost of construction of house – Reference made to DVO for estimated cost of construction – Held that:- The occasion to interfere with the proceedings under the Act in a writ petition under Article 226 of the Constitution of India would arise, if only the notice is issued or the order is passed by an authority, who is not conferred with the jurisdiction under the Act - what is challenged is a notice requiring the petitioner to file a block return - as a matter of fact, the assessee filed such a return with his own effort to contradict the facts alleged against him on the basis of the search - The mere fact that it is filed under protest does not make much of difference - these are the matters, which can be dealt with before the concerned Forum under the Act. Satisfaction recorded or not – Held that:- In Manish Maheshwari vs. Asst. Commissioner of Income-Tax [2007 (2) TMI 148 - SUPREME COURT OF INDIA] it has been discloses that they arose out of the regular appeals preferred u/s 260-A of the Act before the High Court and other proceedings under the Act before the concerned authority earlier thereto –Decided against assessee. Issues:1. Validity of the notice issued under Section 158BC of the Income Tax Act, 1961.2. Jurisdiction of the High Court to interfere with proceedings under the Act through a writ petition.Analysis:1. The petitioner challenged a notice issued under Section 158BC of the Income Tax Act, 1961, regarding the assessment year 1999-2000. The notice was based on a search conducted at the house of the petitioner's father, leading to the estimation of the construction cost of the petitioner's house at a higher value than disclosed. The petitioner contended that no search was conducted at his house, and the notice was unjustified. He submitted a block assessment under protest, disputing the valuation by the respondent. The respondent argued that the notice was issued under Section 158BD and that the petitioner could present his case during subsequent proceedings. The petitioner's plea was based on the lack of a search at his house and the absence of recorded satisfaction by the respondent before issuing the notice.2. The High Court emphasized that the Income Tax Act provides a structured hierarchy of remedies, including appeals to the Tribunal and the High Court under Section 260-A. The Court noted that interference through a writ petition under Article 226 of the Constitution is warranted only if the issuing authority lacks jurisdiction. In this case, the notice challenged was for filing a block return, which the petitioner had already submitted, albeit under protest. The Court clarified that filing under protest did not alter the situation significantly. The petitioner's arguments centered on the absence of a search at his premises and the necessity of recorded satisfaction by the respondent before issuing the notice.3. The Court referred to precedents and highlighted that challenges to notices or orders should be addressed through the established procedures under the Income Tax Act. The respondent's invocation of Section 158BD was deemed appropriate for situations where a search at one assessee's premises raises doubts about another assessee's information accuracy. The petitioner's contention regarding the lack of recorded satisfaction could be raised during regular proceedings under the Act. The Court dismissed the writ petition, allowing the petitioner to present all contentions before the respondent and relevant authorities as per the law.4. The Court cited judgments from the Supreme Court and the Bombay High Court to support its decision, emphasizing the need for utilizing the appeal mechanisms provided under the Act. The petitioner was granted the opportunity to pursue all available contentions within the statutory framework during subsequent proceedings. The writ petition was dismissed, with the petitioner retaining the right to address his concerns through the appropriate channels as per the provisions of the Income Tax Act.