Court says issues over assessment in name of dissolved BSEB are already before ITAT; directs tax authorities to decide interim relief plea within six weeks and stay coercive recovery meanwhile.
The Patna High Court has refused to examine on merits a writ petition filed by Bihar State Power (Holding) Company Limited challenging income tax proceedings linked to the erstwhile Bihar State Electricity Board (BSEB), observing that the same issues are already pending before the Income Tax Appellate Tribunal (ITAT).
A Division Bench of Justice Rajeev Ranjan Prasad and Justice Sunil Dutta Mishra held that since the legality and validity of the assessment order dated 10 February 2022 and the related question of proceedings continuing in the name of a non-existent entity were already under consideration before the ITAT, the High Court should not interfere at this stage. The Court said any observation on the merits could prejudice the Tribunal’s independent adjudication.
The petitioner had sought a mandamus directing the Income Tax Officer to dispose of its rectification application filed under Section 154 of the Income Tax Act, 1961, and also requested protection from coercive recovery of outstanding tax demand of over Rs. 29.23 crore for Assessment Year 2012-13. It argued that several assessment and rectification orders, as well as notices under Sections 143(3), 147, 148, 154 and 271(1)(c), had been issued in the name of BSEB even after its dissolution and transfer of assets and liabilities to successor entities under the scheme notified by the Bihar Government in 2012.
The petitioner relied on the Supreme Court’s ruling in Principal Commissioner of Income Tax v. Maruti Suzuki (India) Ltd., contending that assessment against a non-existent entity is void ab initio. However, the High Court declined to rule on that argument, noting that the same jurisdictional issue was already pending before the ITAT along with other grounds raised by the petitioner.
At the same time, the Court took note of the petitioner’s grievance that recovery notices were being issued during the pendency of the appeal and rectification proceedings. To protect the petitioner from immediate coercive action, the Bench directed the Assessing Officer or the ITAT, as the case may be, to consider the petitioner’s application for interim relief within six weeks from the date of receipt of the judgment. Until then, the Court ordered that no coercive action in any form shall be taken against the petitioner.
The writ petition was accordingly disposed of.
Bottom Line :
Income Tax - Where challenge to assessment/rectification order and issue of proceedings against alleged non-existent entity are already pending before Income Tax Appellate Tribunal, High Court in writ jurisdiction should refrain from examining merits so as not to interfere with Tribunal's independent adjudication - However, to protect petitioner from recovery, Assessing Officer/Tribunal directed to consider interim relief application within six weeks and no coercive action to be taken in the meantime.
Statutory provision(s): Article 226 of the Constitution of India, 1950, Sections 154, 143(3), 147, 148, 271(1)(c) of the Income Tax Act, 1961
