High Court admits Writ Petition challenging Income Tax notice, issues ad-interim order

The High Court, comprising S.C. Dharmadhikari and B.P. Colabawalla, JJ., found arguable questions in the Writ Petition challenging the show cause notice under Section 148 of the Income Tax Act, 1961. The Court admitted the petition, preventing the Assessing Officer from implementing the notice and rejecting the assessee's objections. An ad-interim order was issued, temporarily restraining the Assessing Officer from further action until the issues raised in the petition are resolved. The Court's detailed analysis of the transaction of shares and lack of substantial reasons in the response affidavit led to this outcome.

---

---

Issues:
1. Admissibility of Writ Petition challenging the show cause notice issued under Section 148 of the Income Tax Act, 1961.

Analysis:
The High Court, comprising S.C. Dharmadhikari and B.P. Colabawalla, JJ., after hearing both parties, found arguable questions raised in the Writ Petition and admitted it. The Court carefully examined the grounds in the petition, specifically focusing on the "Change of Opinion" under the factual position, related to the show cause notice sent by the Assessing Officer on 26th December, 2013. The notice pertained to the transaction of purchase and sale of shares of 'M/S Nivyah Infrastructure and Telecom Services Ltd.' The assessee responded to this notice on 6th January, 2014, providing detailed information on the transaction. The Court, without any reasons presented in the affidavit in reply, decided not to allow the Assessing Officer to proceed with the implementation of the impugned notice under Section 148 of the Income Tax Act, 1961, and the order rejecting the objections of the assessee dated 20th August, 2018. Consequently, an ad-interim order was issued in line with the prayer clause (d) of the Writ Petition.

The respondents waived service in this case, indicating their acknowledgment of the proceedings without requiring formal service. This decision signifies the Court's intervention in preventing the Assessing Officer from taking further action based on the disputed notice, considering the lack of substantial reasons provided in the response affidavit. The Court's detailed analysis of the grounds raised in the Writ Petition, particularly concerning the transaction of shares, showcases a thorough examination of the factual and legal aspects involved. By granting an ad-interim order, the Court temporarily restrains the Assessing Officer from proceeding with the notice until further deliberation and resolution of the raised issues in the petition.

---