High Court rules against Income Tax Officer's jurisdiction to issue requisition notices in 1997

The Calcutta High Court ruled in favor of the petitioner in WP No.1092 of 1997, holding that the Income Tax Officer (TDS) lacked jurisdiction to issue requisition notices in 1997. The Court quashed the notices dated 10th April 1997 and 26th May 1997, stating they were void of legal authority. Despite annulling the notices, the Income Tax Authorities were permitted to pursue legal actions within the confines of the law, with limitations starting from the Court's order date. The judgment clarified the application of Section 14 of the Limitation Act, 1963 in this context.

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Issues: Challenge against jurisdiction of Income Tax Officer (TDS) to issue requisition notices in 1997.

The judgment delivered by Ravi Krishan Kapur J. of the Calcutta High Court addressed the challenge raised by the petitioner against the jurisdiction of the Income Tax Officer (TDS) to initiate requisition notices in 1997. The petitioner contended that the respondent no.1, the Income Tax Officer (TDS), lacked the authority to issue the impugned notices dated 10th April, 1997, and 26th May, 1997. The petitioner had obtained an interim stay order on the notices in June 1997. The petitioner's senior advocate, Mr. Khaitan, relied on a precedent involving CESC Limited & Anr. vs. Income Tax Officer (TDS) to support the argument that the concerned TDS Officer lacked jurisdiction. Subsequently, the Department clarified that the jurisdiction was vested with the respondent no.1 for the first time following a Circular.

Upon hearing the arguments from both parties, the Court concluded that the impugned notices issued in 1997 were devoid of jurisdiction and authority of law. The respondent no.1 did not possess the necessary jurisdiction at the time of issuing the notices. Consequently, the Court quashed and set aside the notices dated 10th April 1997 and 26th May 1997. However, the judgment clarified that the annulment of the notices did not prevent the Income Tax Authorities from taking appropriate legal actions in accordance with the law regarding the disputes raised in the impugned notices. The petitioner was barred from raising the plea of limitation if such proceedings were initiated, with the relevant date being the date of the Court's order. Additionally, the Revenue Authorities were permitted to utilize the provisions of Section 14 of the Limitation Act, 1963 for this purpose.

In conclusion, the Court allowed WP No.1092 of 1997, providing clear directions regarding the quashing of the impugned notices, the initiation of further proceedings by the Income Tax Authorities, and the application of limitation principles in such cases.

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