2024 (1) TMI 756 - HC - Income Tax

Taxpayer can challenge section 148 notice jurisdiction before assessing officer when income exceeds 50 lakhs threshold

Jothiramalingam Sangeetha Versus Income Tax Officer, Ward-1, Cuddalore

The HC held that a taxpayer can raise jurisdictional issues regarding notices issued under section 148 of the Income Tax Act before the assessing officer. ... Validity of reopening of assessment - Jurisdiction of Officer, who passed the impugned order u/s 148(A)(d) and notice issued u/s 148 - whether the petitioner can raise the jurisdictional issue before the officer, who issued notice u/s 148? - HELD THAT:- As per provisions of section 149(1) of Income Tax Act in the event if the income chargeable to tax is 50 lakhs or more, the Assessing Officer has jurisdiction to issue the notice under section 148 of the Act. Further, the section 149 start with the terms 'no notice under section 148 shall be issued for the relevant assessment years' which means in the event, if any notice is issued, without jurisdiction, still by referring section 149(1) of the Act, the petitioner can take a stand that the notice has been issued without any jurisdiction. Further, the petitioner can also raise the issue that her income did not cross 50 lakhs or more in the sale transaction. Therefore, it is not that the petitioner will not have any opportunity to raise the jurisdiction issue in the Section 148 proceedings. The said aspect is also fairly accepted by the learned counsel for the respondent stating that the petitioner will have the opportunity to raise the jurisdictional issue by way of filing reply to the above show cause notice. Even though the petitioner has not furnished any details with regard to the cost of the property plus improvement made therein etc., in the event, if she furnishes those particulars along with relevant documents supporting her claim, the Assessing Officer will take a stand whether the notice issued by him is within the jurisdiction or not. This court is inclined to pass the following order:- (a) The petitioner is directed to file reply to the show cause notice issued under section 148 of the Act, raising issue on jurisdiction along with the relevant documents in support of her claim within a period of 30 days from the date of receipt of a copy of this order. (b) Thereafter, the respondent is directed to consider the jurisdictional issue with regard to the notice under section 148 of the Act after taking into consideration the reply filed by the petitioner and after affording an opportunity of personal hearing. Issues involved:The issues involved in this case are challenging the order passed under section 148A(d) of the Income Tax Act for proposing re-assessment proceedings for the AY 2015-16, jurisdictional concerns regarding the income chargeable to tax, and the validity of the notice issued under section 148 of the Act.Re-assessment Proceedings:The petitioner sold her land for Rs. 40 lakhs, with the market value shown as Rs. 51 lakhs in the sale deed. The respondent issued a show cause notice under section 148A of the Income Tax Act, questioning the income chargeable to tax for the AY 2015-16. The petitioner contended that her income, after deductions, was below the taxable limit, thus no obligation to file a return. Despite the petitioner's explanation, the respondent passed an order under section 148(A)(d) and issued a notice proposing reassessment, citing lack of proof regarding land purchase costs and expenses.Jurisdictional Issue:The petitioner argued that her income derived from the property sale would be below 50 lakhs after deducting expenses, hence the officer lacked jurisdiction to issue the order and notice. The petitioner did not raise the jurisdictional issue in her initial reply to the show cause notice. The respondent contended that the petitioner had the opportunity to provide supporting documents but failed to do so, leading to the order being passed. The court highlighted the provisions of section 149(1) of the Income Tax Act, stating that if the income is 50 lakhs or more, the Assessing Officer has jurisdiction to issue the notice under section 148.Court Decision:The court directed the petitioner to file a reply to the show cause notice within 30 days, specifically raising the jurisdictional issue and providing relevant supporting documents. The respondent was instructed to consider the jurisdictional matter after reviewing the petitioner's response and offering a personal hearing. The writ petition was disposed of with these directives, and no costs were awarded.