2025 (1) TMI 1351 - HC - Income Tax

Tax authorities must decide within three weeks on application challenging validity of demand notices under section 206C

The HC directed tax authorities to decide within three weeks an application filed by the petitioner regarding validity of notices of demand and orders ... Validity of Notices of Demand and Orders u/s 206C - as submitted that the authorities have been tried to be impressed upon by filing application showing applicability of the judgment passed in the case of Ghanshyam Mishra and Sons Private Ltd. [2021 (4) TMI 613 - SUPREME COURT] but the authorities have not passed any order As submitted that suffice will be at this stage if the direction will be issued upon the competent authority to take a decision on that, if not already taken. Revenue, has submitted that if the application has not been decided, then the same will be decided in accordance with law within a reasonable period. HELD THAT:- As without entering into the merit of the issues, the concerned respondent is hereby directed to decide the application dated 17.08.2024, if not already decided, within a period of three weeks from the date of receipt of copy of the order. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include: Whether the notices of demand and subsequent orders issued under Section 206C of the Income Tax Act, 1961, for various financial years against the petitioner are valid in light of the Supreme Court's judgment in Ghanshyam Mishra and Sons Private Ltd. v. Edelweiss Asset Reconstruction Company Ltd. Whether the ex-parte appellate orders confirming the tax liabilities against the petitioner should be quashed. Whether the respondent authorities failed to consider the applicability of the Supreme Court's judgment in the petitioner's case.ISSUE-WISE DETAILED ANALYSIS1. Validity of Notices of Demand and Orders under Section 206C- Relevant Legal Framework and Precedents: The notices and orders were issued under Section 206C of the Income Tax Act, 1961, which deals with the collection of tax at source. The petitioner argued that these were invalid based on the Supreme Court's decision in Ghanshyam Mishra and Sons Private Ltd. v. Edelweiss Asset Reconstruction Company Ltd., which they claim applies to their situation.- Court's Interpretation and Reasoning: The Court did not delve into the merits of the applicability of the Supreme Court judgment. Instead, it focused on procedural fairness, noting that the petitioner's application regarding the applicability of the Supreme Court's decision had not been considered by the authorities.- Key Evidence and Findings: The petitioner had filed an application on 17.08.2024, seeking the application of the Supreme Court's judgment to their case, which had not been addressed by the authorities.- Application of Law to Facts: The Court directed the respondent authorities to consider and decide on the application filed by the petitioner, without expressing any opinion on the merits of the case.- Treatment of Competing Arguments: The petitioner argued for the quashing of the notices and orders based on the Supreme Court judgment. The Revenue's counsel agreed that if the application had not been decided, it should be addressed in accordance with the law.- Conclusions: The Court directed the respondent authorities to decide on the petitioner's application within three weeks, thereby disposing of the writ petitions.2. Quashing of Ex-Parte Appellate Orders- Relevant Legal Framework and Precedents: The appellate orders were passed under Section 250 of the Income Tax Act, 1961, confirming the tax liabilities. The petitioner sought to quash these orders on procedural grounds.- Court's Interpretation and Reasoning: The Court did not address the merits of the appellate orders directly. Instead, it focused on ensuring that the petitioner's application regarding the Supreme Court judgment was considered.- Key Evidence and Findings: The appellate orders were passed ex-parte, and the petitioner's subsequent application to consider the Supreme Court judgment had not been addressed.- Application of Law to Facts: The Court's directive to the authorities to decide on the petitioner's application indirectly affects the validity of the appellate orders, pending the outcome of this consideration.- Treatment of Competing Arguments: The Court did not engage with the substantive arguments regarding the appellate orders but ensured procedural fairness by directing the authorities to consider the application.- Conclusions: The Court's directive to decide the application could lead to a reassessment of the appellate orders, depending on the authorities' decision.SIGNIFICANT HOLDINGS- Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court stated, 'Considering the same, without entering into the merit of the issues, the concerned respondent is hereby directed to decide the application dated 17.08.2024, if not already decided, within a period of three weeks from the date of receipt of copy of the order.'- Core Principles Established: The judgment emphasizes the importance of procedural fairness and the need for authorities to consider relevant applications that may affect the outcome of tax liabilities.- Final Determinations on Each Issue: The Court disposed of the writ petitions by directing the respondent authorities to decide on the petitioner's application regarding the applicability of the Supreme Court judgment within a specified timeframe, ensuring that procedural steps are followed before any substantive determinations are made.