1975 (7) TMI 5 - HC - Income Tax

Validity of notice under section 148: absence of valid notice deprives jurisdiction, renders reopening void and allows writ challenge

Validity of notice under section 148 is determinative of the assessing officer's jurisdiction: an invalid or improperly issued notice deprives the ... Validity of the notice u/s 148 - income chargeable to tax - sanction of the Commissioner was mechanical and without application of mind. - HELD THAT:- The failure to issue a valid notice deprives the ITO of the jurisdiction conferred on him under the Act and the proceedings taken by the ITO in pursuance of an invalid notice must necessarily be illegal and void. In this view of the matter, I do not consider it necessary to decide the further question whether the sanction given by the Commissioner in the instant case was mechanical or not. It is undoubtedly true that this point of invalidity of the notice has not been specifically taken in the petition. This question, however, is a pure question of law and the question turns on the interpretation of the notice itself and does not require any investigation into any question of fact. The question of law clearly goes to the very root as the point relates to the question of jurisdiction of the authority concerned. As the question is on, of pure law and raises the vital question of jurisdiction of the authority concerned to reopen the assessment, clearly of the opinion that the petitioner is entitled to urge this question at the hearing of the petition. If the authority concerned does not acquire jurisdiction in the absence of a valid notice being served, the entire proceeding will be without jurisdiction and void, and even consent on the part of the petitioner would confer no jurisdiction on the ITO. There cannot, therefore, be any question of any waiver. The act of reopening sought to be done without jurisdiction can be properly challenged in a writ petition. Issues Involved:1. Validity of the notice u/s 148 of the Income-tax Act, 1961.2. Whether the sanction of the Commissioner was mechanical and without application of mind.Summary:Issue 1: Validity of the Notice u/s 148The notice issued on 22nd February 1973 by the ITO, 'E' Ward, Dist. 1(2), Calcutta, was challenged on the grounds that it did not specify whether B. D. Saraogi and others were a firm, HUF, or association of persons. The notice also failed to indicate in what capacity Smt. B. D. Saraogi and others were being served, whether as principal officers or members of an association. The learned Advocate-General argued that a valid notice is a statutory requirement and essential for the ITO to acquire jurisdiction to start reassessment proceedings. The absence of such specifics in the notice rendered it invalid and illegal, as supported by precedents like Y. Narayana Chetty v. ITO [1959] 35 ITR 388 (SC) and Sewlal Daga v. CIT [1965] 55 ITR 406 (Cal).The court held that the notice was indeed invalid as it did not meet the statutory requirements, thereby depriving the ITO of the jurisdiction to reopen the assessment. The court referenced several cases, including Shyam Sundar Bajaj v. ITO [1973] 89 ITR 317 (Cal) and the Division Bench decision in Smt. Rama Devi Agarwalla v. CIT [1979] 117 ITR 256 (Cal), which concluded that such defects in the notice render it invalid and void.Issue 2: Sanction of the CommissionerThe learned Advocate-General contended that the sanction by the Commissioner was mechanical and lacked application of mind. The Commissioner acted as a rubber-stamping authority without detecting the defects in the notice. This argument was supported by the Supreme Court decisions in Chhugamal Rajpal v. S. P. Chaliha [1971] 79 ITR 603 and Union of India v. Rai Singh Deb Singh Bist [1973] 88 ITR 200.However, the court found it unnecessary to decide on this issue since the notice was already deemed invalid on the first ground.Conclusion:The court quashed the impugned notice and restrained the respondents from taking any action based on it. Any assessment made on the basis of the invalid notice was declared illegal, void, and without jurisdiction. The rule was made absolute with no order as to costs, and the operation of the order was stayed for six weeks.