2021 (10) TMI 1303 - HC - Income Tax

Court grants interim relief in petition to quash IT Act notice citing lack of jurisdiction

Yogeshwar Developers Versus Union of India

The Court granted interim relief in a petition seeking to quash a show cause notice under Section 142(1) of the IT Act, citing lack of jurisdiction due to ... Validity of Proceedings under Section 142(1) - Scope of Income Tax Settlement Commission as discontinued - HELD THAT:- Income Tax Settlement Commission, which was discontinued in view of the amendment under Section 245 B as stipulated under the Finance Act, 2021 leading to setting up of the Interim Board of Settlement by way of Notification No.91 of 2021 on 10.08.2021 for the purpose of settlement of the cases which were pending before the Income Tax Settlement Commission as on 01.02.2021, when the Income Tax Settlement Commission ceased to operate. The grievance on the part of the petitioner is with regard to the action of the respondent authority of initiating the proceedings under Section 142(1) of the IT Act. A show cause notice dated 15.09.2021 issued under Section 142(1) of the IT Act by respondent No.4, who according to the petitioner would have no authority or jurisdiction to initiate the proceedings for recovery in wake of the pendency of the matter before the Income Tax Settlement Commission and now before the newly constituted Interim Board of Settlement. Issue urgent Notice, returnable on 25.10.2021. In the meantime, interim relief in terms of prayer 9(D) is granted. Issues:Petition for writ of mandamus to quash show cause notice under Section 142(1) of the IT Act; Jurisdiction of respondent authority post discontinuation of Income Tax Settlement Commission; Interim relief pending final disposal of petition.Analysis:The petitioner sought various reliefs through the petition, including quashing the show cause notice dated 15.09.2021 issued under Section 142(1) of the IT Act. The petitioner contended that the respondent authority lacked jurisdiction to initiate proceedings for recovery due to the existence of unresolved matters before the Income Tax Settlement Commission and the newly formed Interim Board of Settlement.The petitioner highlighted the discontinuation of the Income Tax Settlement Commission following an amendment under Section 245 B of the IT Act, leading to the establishment of the Interim Board of Settlement. The petitioner's grievance primarily revolved around the actions of respondent No.4 in initiating proceedings under Section 142(1) of the IT Act despite the ongoing unresolved matters before the settlement bodies.The Court, considering the urgency of the matter, issued an urgent notice returnable on 25.10.2021. Additionally, interim relief in line with the petitioner's prayer 9(D) was granted to stay the implementation and operation of the impugned notice dated 15.09.2021. Moreover, the Court allowed direct service through speed post and e-mode in addition to the regular mode of service to ensure effective communication and adherence to legal procedures.