Facts of the Case

Alankit Insurance TPA Limited filed a writ petition before the Delhi High Court challenging income-tax proceedings initiated pursuant to search and investigation actions conducted by the Department. Following the search, jurisdiction over the petitioner’s case was transferred to the Central Circle, and notices initiating assessment and related proceedings were issued by the Deputy Commissioner of Income Tax, Central Circle-28, Delhi.

The petitioner sought quashing of the impugned notices on the ground that the proceedings lacked jurisdiction and were contrary to statutory provisions. The petition formed part of a large batch of connected matters involving several entities and individuals arising from the same investigative action.

 

Issues Involved

  1. Whether transfer of jurisdiction to Central Circle authorities pursuant to search/investigation was valid in law.
  2. Whether the notices initiating assessment proceedings were legally sustainable.
  3. Whether writ jurisdiction could be invoked to challenge proceedings at the notice stage.
  4. Whether statutory requirements and procedural safeguards were complied with by the Department.

  Petitioner’s Arguments

  • The petitioner contended that the impugned notices were issued without lawful jurisdiction.
  • It was argued that mandatory statutory preconditions for initiating assessment proceedings had not been satisfied.
  • The transfer of the case to the Central Circle and subsequent actions were alleged to be arbitrary and violative of principles of natural justice.
  • The petitioner sought judicial intervention to quash the notices and restrain further proceedings.

 Respondent’s Arguments (Revenue)

  • The Revenue submitted that the proceedings were initiated pursuant to lawful search and investigation operations.
  • Jurisdiction of the Central Circle authorities was validly assumed under the provisions of the Income Tax Act, 1961.
  • It was contended that all procedural requirements had been duly complied with prior to issuance of notices.
  • The Department further argued that the petitioner had adequate alternative remedies under the Act and that writ jurisdiction should not be exercised prematurely.

Court Order / Findings

  • Transfer of jurisdiction to Central Circle authorities following search actions was legally permissible.
  • The notices initiating assessment proceedings were issued within the statutory framework.
  • No patent illegality or jurisdictional defect warranting interference under Article 226 was demonstrated.
  • Disputed issues could be effectively addressed during assessment proceedings and through statutory appellate remedies.

Important Clarification

  • Courts ordinarily refrain from quashing income-tax notices at the threshold where alternate statutory remedies exist.
  • Post-search proceedings conducted by Central Circle authorities are generally valid if supported by statutory provisions.
  • Writ jurisdiction is exercised only in cases of clear lack of jurisdiction, procedural illegality, or violation of natural justice.
  • Taxpayers are expected to raise objections during assessment and appellate proceedings under the Income Tax Act.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772270672_ALANKITINSURANCETPALIMITEDVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

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