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Power of Court under Article 226 is Applied where Heading Authority Breached the Principles of Natural Justice: High Court of New Delhi

The Court is duty-bound to exercise its powers under Article 226 where ever it finds that a statutory authority has exercised its jurisdiction either irregularly or acted in a matter in which it had no jurisdiction or committed a breach of the principles of natural justice. This honorable judgement was passed by High Court of New Delhi in the case of Synfonia Tradelinks Pvt Ltd v. Income Tax Officer Ward-22(4) by The Hon’ble Mr. Justice Rajiv Shakdher and The Hon’ble Mr. Justice Talwant Singh.

This writ petition was filed against notice, issued under Section 148 of the Income Tax Act, 1961. The income tax return was filed by the assessed along with the balance sheet as on 31.03.2011. On 31.03.2018, which was the last date on which the limitation was to expire, a notice under Section 148 of the Act was issued by respondent no.1, wherein respondent no.1 inter alia stated that he had reason to believe that income chargeable to tax qua had escaped assessment within the meaning of Section 147 of the Act. Accordingly, the assessed was directed to file a return in the prescribed form for the said AY as respondent no.1 proposed to assess/re-assess the income/loss for the concerned AY. As indicated above, the limitation for issuance of notice expired, concededly, on 31.03.2018. Besides this, the said communication went on to state, that without prejudice to its contention that the notice under Section 148 of the Act was time-barred, it had enclosed a copy of the income tax return qua AY 2011- 2012. Since respondent no.1 did not furnish a copy of the proceedings in which he had documented his reasons for initiating proceedings under Section 147 of the Act, the assessed escalated the matter, by writing to the Assistant Commissioner of Income Tax [in short ‘ACIT’] vide communication dated 09.06.2018. Respondent no.1 in no uncertain terms, had indicated in the order recording reasons that the information which triggered the initiation of proceedings qua the assessee under Section 147 of the Act was received upon a search being carried out at the residence.

The court quash the impugned notice dated 31.03.2018 stating that, “that the order recording reasons neither discusses the contents of the report received from the investigation wing or the statements made by Mr. Pradeep Kumar Jindal and his associates. The order recording reasons, merely, indicates that the formation of belief is based on these sources. Furthermore, although, there is a reference to Shri Laxman Singh Satyapal and Ms. Meera Mishra in paragraph 3.14 of the counter-affidavit, as persons, whose statements were also recorded during the search, which formed the basis of initiation of proceedings under Section 147 of the Act, there is no reference to them in the order recording reasons.”

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