The Division Bench of the Delhi High Court in the case of M/S Ester Industries Ltd. vs Assistant CIT, New Delhi & Anr. consisting of Justices Manmohan and Manmeet Pritam Singh Arora reiterated that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226.
Facts
This writ petition was filed challenging the Notice u/s 148 of the Income Tax Act, 1961 (‘the Act’) dated 31st March, 2021, Order under Section 147 read with Section 144B and the demand notice issued under Section 156 of the Act dated 30th March, 2022.
Contentions Made
Petitioner: The impugned order and notice have been issued and passed illegally, mechanically and without application of mind. The impugned Order has been passed without considering the detailed reply submitted by the petitioner during the assessment proceedings. The short-term capital loss of Rs.35,11,525/- can only be carried forward for set off against short term capital gain in subsequent years and, therefore, the question of disallowing the loss so computed and reducing the same from the business loss of the assessee entitled to be carried forward u/s 72 for set off in future does not arise and the impugned order was liable to be quashed. The respondents committed grave error in issuing the notice under old Section 148 without complying with the mandatory requirements of the statute and thereafter converting the case as falling under the new section 147/148 read with Section 148A when no enquiry was conducted and no notice u/s 148A was issued and no effective opportunity of hearing provided to the assessee. As against a returned loss of Rs.5,71,43,593/-, the respondents raised a tax demand of Rs.43,43,36,124/-.
Respondent: The petitioner has already filed an appeal challenging the impugned order, and also filed a rectification application which is pending consideration.
Observations of the Court
The Bench noted that the petitioner had not submitted brought on record anything to prove that the impugned notice issued was to be governed by the amended procedure u/s 148A of the Act.
It was also observed that the petitioner was primarily challenging the impugned order on merits. It reiterated the decision of the Supreme Court in Commissioner of Income Tax and Ors. vs. Chhabil Das Agarwal, wherein it was held that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226.
Judgment
The Bench noted that the present case does not fall under the exceptional grounds on which a writ petition is maintainable at the interim stage in tax matters. So, the present writ petition and applications were dismissed.
Case: M/S Ester Industries Ltd. vs Assistant CIT, New Delhi & Anr.
Citation: W.P.(C) 7889/2022 & CM APPLs.24093-24094/2022
Bench: Justice Manmohan, Justice Manmeet Pritam Singh Arora
Decided on: 24th May 2022
Read Judgment @Latestlaws.com
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