Facts of the Case

Alka Agarwal filed writ petitions before the Delhi High Court challenging income-tax proceedings initiated following search and investigation actions conducted by the Department. Consequent to 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 and proceedings, alleging lack of jurisdiction and non-compliance with statutory requirements. The matter formed part of a large batch of connected petitions involving multiple entities and individuals arising from the same investigative exercise.

 

Issues Involved

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

 Petitioner’s Arguments

  • The petitioner contended that the impugned notices were issued without lawful jurisdiction.
  • It was argued that mandatory statutory conditions for initiating assessment proceedings had not been fulfilled.
  • The transfer to the Central Circle and subsequent actions were alleged to be arbitrary and violative of principles of natural justice.
  • The petitioner sought quashing of the notices and restraint on 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 effective alternative remedies under the Act and that writ jurisdiction should not be exercised at a preliminary stage.

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 of the Constitution was established.
  • Issues raised by the petitioner could be appropriately adjudicated 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 where there is clear lack of jurisdiction, procedural illegality, or violation of natural justice.
  • Taxpayers are expected to raise objections during assessment proceedings and pursue remedies through the statutory appellate mechanism.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772271146_ALKAAGARWALVsDEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

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