Facts of the Case

Ashwani Kumar Gupta 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 Assistant Commissioner of Income Tax, Central Circle-17.

The petitioner sought quashing of the impugned notices on the ground that the proceedings were without jurisdiction and contrary to statutory provisions. The matter formed part of a large batch of connected petitions involving numerous assessees arising from the same search and investigative exercise.

Issues Involved

  1. Whether 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 such proceedings at the notice stage.
  4. Whether statutory preconditions and procedural safeguards had been 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 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/1772271381_ASHWANIKUMARGUPTAVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE17ANR..pdf  

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