High Court of Calcutta considers appeal challenging Income Tax Act order, grants interim stay

The High Court of Calcutta heard an intra-court appeal challenging an order under Section 148A(d) of the Income Tax Act, 1961. The appellant contested the order, arguing it was a step preceding assessment. The Court emphasized the need to consider the correctness of the impugned order and admitted the appeal for further consideration. An interim stay was ordered on the order under Section 148A(d) and the consequential notice, with the appeal scheduled for a future hearing to address the jurisdictional issues raised under Section 149(1) of the Act.

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Issues involved:
Challenge to order under Section 148A(d) of the Income Tax Act, 1961 - Jurisdictional issue - Interpretation of Section 149(1) of the Act.

Analysis:
The High Court of Calcutta heard an intra-court appeal challenging an order under Section 148A(d) of the Income Tax Act, 1961, for the assessment year 2015-16. The appellant had contested the order, arguing that it was not an assessment or a demand but rather a step preceding the assessment process. The Court noted that the legal principles established by the Supreme Court prior to the amendment of the Act would apply in assessing the validity of an order under Section 148A(d). The Court highlighted that the appellant had no other immediate remedy against the order in question and emphasized that jurisdictional issues could be addressed in a writ petition, even if alternative remedies existed. The Court opined that it was essential to consider the correctness of the impugned order regarding the grounds raised by the appellant in response to the notice issued under Section 148A(b) of the Act.

The appellant raised concerns about the assumption of jurisdiction under Section 149(1) of the Act. Citing a Supreme Court decision, the appellant argued that reassessment must align with the provisions of Section 149(1)(b) and that defenses under the new law should be available. The assessing officer had ruled against the appellant's contentions, prompting the need for the Court to review the correctness of this ruling, which could not be challenged during the reassessment proceedings. Consequently, the Court found merit in the appellant's case for pursuing the appeal and admitted it for further consideration.

To prevent the appeal from becoming moot, the Court ordered an interim stay on the order under Section 148A(d) of the Act and the consequential notice until further directives. The respondent department was instructed to submit an affidavit addressing the grounds of the appeal and the assertions made in the writ petition within a specified timeline. The Court scheduled the appeal for a hearing on a future date to deliberate on the matter comprehensively.

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