TITLE: Assessee is bound to furnish a return in
response to a s. 148 notice. The reasons for reopening can be given only
thereafter. A writ involving disputed factual issues cannot be entertained
CASE: Adobe Systems Software Ireland Ltd vs. ADIT
(Delhi High Court)
(i) The
petitioner did not file any returns of income in response to the notices issued
u/s 148. Even under the judgment of the Supreme Court in G.K.N. Driveshafts 259
ITR 19, the petitioner would get the reasons recorded for reopening the
assessment only upon filing the return of income pursuant to the notice issued
u/s 148. The conduct of the petitioner has been one of defiance; it did not
file returns in response to the notices issued u/s 148. The mere filing of the
return can never amount to submitting to the jurisdiction. The filing of the
return in response to the notice u/s 148 defines the stand taken by the
assessee. S. 148 says that the return called for by the notice issued under
that section shall be treated as if such a return were a return required to be
furnished u/s 139 of the Act. Under the scheme of the Act, a return of income
conveys the position taken by the assessee to the assessing authority – whether
he has taxable income or not. It is not a mere scrap of paper. There is a
sanctity attached to the return. If the assessing authority calls upon the
assessee to file a return of income, the same shall be complied with by the
assessee and it is no answer to the notice to say that since in his
(assessee’s) opinion there is no taxable income, he is under no obligation to
file the return. The petitioner, not having made the Noida officer aware that
no income chargeable to tax had escaped assessment and having merely told him
that he has no jurisdiction to issue reassessment notices, was not acting
strictly in accordance with law. The writ remedy being a discretionary remedy,
the discretion can be exercised in favour of the writ petitioner only if his
conduct has been in conformity with law. If it is not, the Court may refuse to
exercise the discretion in favour of the writ petitioner;
(ii) The
question whether the initiation of reassessment proceedings by the Noida officer
was valid or not would depend upon whether the petitioner had a PE within the
jurisdiction of the Noida officer. In the absence of any evidence unmistakably
and indisputably establishing the existence or otherwise of the PE, we would
hesitate to enter this prohibited arena in writ proceedings. It needs no
citation of authority to support the proposition that the Court exercising its
jurisdiction under Article 226 of cannot enter into disputed questions of fact
which is best left to be resolved in the alternative remedies available to the
petitioner. In fact the assessment and appellate authorities, including the
Income Tax Appellate Tribunal, constituted under the Act as fact-finding bodies
are best suited to examine whether the petitioner had a PE in Noida or not and
the question of jurisdiction would depend upon the findings of those
authorities. Moreover, when we are exercising discretionary jurisdiction, it is
not impermissible to consider whether any real prejudice has been caused to the
petitioner to justify the exercise of the extraordinary jurisdiction which is
to be sparingly wielded. We do not see any such prejudice to the petitioner.
There can be no vested right that escaped income cannot be taxed, provided all
the jurisdictional conditions and the procedural requirements of the Act are
satisfied. This fundamental question is purely one of fact which ideally should
be determined in proceedings relating to assessment and appeal prescribed under
the Act. This Court cannot, on the facts of the present case, enter that
domain.