Alternative Remedy Is Not Absolute Bar To Examine Conditions To Issue Reassessment Notice: Madhya Pradesh High Court

The Madhya Pradesh High Court stayed the reassessment proceedings and admitted them for the final hearing.

The division bench of Justice S.A. Dharmadhikari and Justice Prakash Chandra Gupta has relied on the decision of the Supreme Court in the case of Red Chilli International Sales Vs. Income Tax Officer & Anr., in which it was held that writ petitions have been entertained to examine whether the conditions for the issuance of a notice under Section 148 of the Income Tax Act have been satisfied. The provisions of reopening under the Income Tax Act, 1961, have undergone an amendment by the Finance Act, 2021, and consequently, the matter would require a deeper and more in-depth consideration keeping in mind the earlier case law.

The petitioners/assessees assailed the order passed under Section 148A(d) of the Income Tax Act as well as the notice issued under Section 148 of the Act for initiating reassessment proceedings for the 2013–14 assessment year.

The department raised a preliminary objection with regard to the maintainability of the writ petition in view of the alternative remedy available under Section 246 of filing an appeal.

The issue raised was in respect of under what circumstances a challenge can be entertained to an order passed under Section 148A(d), as it stood amended.

The court held that the alternative remedy will not operate as an absolute bar for entertaining the writ petition as the jurisdictional issue goes to the root of the matter. Therefore, the petitioners have made a case for entertaining the appeal.

The court had also stayed further reassessment proceedings.

Case Title: M/S Space Enclave Private Limited Versus Income Tax Department

Citation: 2023 LiveLaw (MP) 38

Date: 01.03.2023

Counsel For Petitioner: Yatish Kumar Laad, P. M. Choudhary, Anand Prabhawalkar, Madhav Khandelwal, V.N. Dubey, Ibrahim Kannodwala, Nisha Lahoti, Sujeet Deshmukh

Counsel For Respondent: Veena Mandlik

Click Here To Read The Order