HIGH COURT OF JAMMU AND KASHMIR AT JAMMU: OWP No. 83/2007 CMP no. 112/2007 Date of Decision: 04.12.2008 Municipal Committee and anr v. Union of India and ors CORAM; MR. JUSTICE J. P. SINGH, JUDGE. Appearing counsel: For the Petitioner(s) : Mr. A. V. Gupta, Sr. Advocate with Mr. Y. E. Tak, Advocate. For respondent(s) : Mr. D. S. Thakur, Advocate. i) Whether approved for reporting in Press/Journal/Media : Yes ii) Whether to be reported in Digest/Journal : Yes __________________________________________________________________________________ Municipal Committee Katra has filed this writ petition seeking issuance of a writ of certiorari quashing notices bearing Nos. ITO/UDH/2006-07/1092 and ITO/UDH/2006-07/1093 of October 04, 2006 issued by the Income Tax Officer, Dhar Road, Udhampur to the petitioner no.1, to explain and show cause as to why an amount of Rs. 1,02,12,226/- and Rs. 1,85,28,258/-, mentioned as such in the notices aforementioned respectively, be not subjected to Tax, besides seeking declaration that Municipal Committee Katra is exempt from payment of Tax under the provisions of the Income Tax Act, 1961. The case set up by the petitioners in their writ petition is that, being a Local Authority in terms of Section 10(20) of the 2 Income Tax Act, petitioner no.1’s income is exempt from payment of Tax, and it, as such, is not obliged to file Return under the Income Tax Act. Supporting their plea, the petitioners say that to meet the contingencies, inter alia, of ensuring hygiene in Katra Town and to muster resources for managing its affairs, the population of Katra and one crore pilgrims reaching Katra Town every year, petitioner no.1 had decided to charge Entry Fee on all vehicles entering Katra Municipal Committee limits for dual purpose, viz., (1) to discourage the vehicles from entering Katra Town, encouraging them to stop outside the Municipal Limits of Katra Town and (2) to muster resources for undertaking development works within the limits of Municipal Committee, Katra. Mules and Porters had been creating unique unhygienic atmosphere in Katra Town for management whereof, Fee/Duty had been imposed on their movement and since petitioner no.1 itself did not have requisite infrastructure with it, it had sanctioned contract in favour of Private Contractor, which was within its statutory power in terms of the provisions of the Municipal Act. These activities of petitioner no.1 would not, therefore, make it liable to Tax under the Income Tax Act, is, in nut shell, the case which the petitioners have projected in the writ petition to seek the reliefs mentioned at the threshold, on the ground that in view of the provisions of Section 10(20) of the Income Tax Act, 1961, (hereinafter referred to as “the Act”), petitioner no.1’s income may not be liable to Tax. 3 Opposing the admission of the writ petition to hearing, Income Tax Officer, Udhampur has indicated in its reply that the survey carried out under Section 133A of the Act, in the office premises of Municipal Committee Katra on 02.05.2006 had revealed that major heads of receipts of Municipal Committee Katra were on account of Lorry Adda Contract and allotment of Mule Mazdoor Contracts. The income on account of Lorry Adda is actually the Entry Fee/Commission charged by the Municipal Committee from the vehicles at the entry point of Katra Town. These contracts had been allotted through open auction and the highest bidder given the annual contract. These contracts had been executed by the contractors and not by the Municipal Committee itself. Whereas the Lorry Adda contract was being executed within the limits of Municipal Committee Katra, the contract in respect of Mule Mazdoor had been executed beyond the limits of Municipal Committee Katra, in an area which, in terms of SRO 12 of January 30, 1995, notified as such by the Government, had vested in a separate Notified Area Committee for Purana Daroor. Since the income from Mule-Mazdoor Contract was income earned beyond the jurisdiction of Municipal Committee Katra, so petitioner no.1, was not exempt from payment of Income Tax in view of the provisions of Section 10(20) of the Act. Relying on various facts and figures, the Income Tax Officer, Udhampur says that despite issuance of several notices, including the notices impugned in the writ petition, petitioner no.1, had not complied with the provisions of the Act, as a 4 result whereof, it had assessed it to Tax on the basis of Best Judgment Assessment. Petitioners’ learned counsel Shri A. V. Gupta, submitted that, as the contracts sanctioned by petitioner no.1 arose out of its statutory power to impose Fee/Tax, it would not be liable to Tax under the Act and the notices issued by respondent no.2, being without jurisdiction, were liable to be quashed and writ petition for that purpose would be maintainable as the Income Tax Act does not contemplate any appeal against the show cause notices. Per contra, Shri D. S. Thakur, appearing for the Revenue, urged that the impugned notices had been issued on the basis of information which respondent no.2 had gathered pursuant to the survey conducted under Section 133A of the Act, which had disclosed that petitioner no.1 had been carrying on contractual activities outside its jurisdiction by giving contracts to those who were highest bidders, in the open auction, and the income earned by petitioner no.1 was thus not exempt from payment of Tax under the Act. Learned counsel submitted that dispute raised by the petitioners, on facts which had been found by respondent no.2 during the process of survey under Section 133A of the Act, may not be capable of adjudication in exercise of this Court’s extra ordinary writ jurisdiction. He submitted that the Income Tax Act contemplates statutory appeal against the final orders that may be passed on the basis of the Show Cause Notices and in view of the settled legal position, they may not be entitled to invoke the writ jurisdiction of the Court, particularly when 5 contents of the show cause notices demonstrated petitioners’ liability to Tax under the Act. I have considered the submissions of learned counsel for the parties, gone through the case set up by them in their pleadings and the facts which appear from the impugned show cause notices. Judicial Review by this Court may be permissible, only if the petitioners are able to demonstrate either lack of jurisdiction or violation of rules by the Authority whose action is questioned, on the facts, on the basis whereof, it had proceeded to exercise its jurisdiction. Appreciation of facts to consider as to whether or not respondent-authority’s action was jurisdictionally competent and in accordance with the rules, on the basis of the material supplied by the petitioners in the writ petition, may not, in my opinion, be permissible, in view of the settled legal position. That apart, petitioners have placed no material on records, on the basis whereof, it may be said that the contents of the impugned notices, on the basis of information gathered after survey action under Section 133A of the Act, are factually incorrect. Perusal of the information appearing in the impugned notices indicates that petitioner no.1 had been found to be carrying on Contractual activities beyond the limits of its jurisdiction, and in that view of the matter, it cannot be said, by any stretch of reasoning, that petitioner no.1 may be exempt from payment of Tax under the Act. 6 I am, therefore, of the view that in the absence of any material on records to justify that petitioner no.1 was exempt from payment of Tax under the Act, respondent no.2 cannot be said to have lacked jurisdiction in issuing it the impugned show cause notices. Petitioners having been provided opportunity by respondent no. 2 to show cause as to why its Income Tax be not assessed under the Income Tax Act, were required to place such material before him, on the basis whereof, petitioner no.1 may be entitled to seek exemption from payment of Tax under the Act. Rather than satisfying the Income Tax Officer, petitioners have hastened to approach this Court without availing of the opportunity which had been made available to them by respondent no.2 to demonstrate as to why petitioner no.1’s income be not subjected to Tax. The issues raised by the petitioners in this petition are required to be addressed to by the authorities under the Income Tax Act rather than by this Court, particularly when even if the finding of the Income Tax Officer had gone against the petitioners, they would still have the Statutory Forums of appeals available to them where they may question the decision of the Income Tax Officer. In this view of the matter, equally efficacious remedy of statutory appeals being available, the petitioners are not entitled to invoke the extra ordinary civil writ jurisdiction of this Court. For all what has been said above, I am of the view that the petitioners have not succeeded in making out a case for admission of the writ petition to hearing. 7 Lacking substance, this writ petition is, accordingly, dismissed. (J. P. Singh) Judge JAMMU: 04.12.2008 Anil Raina, Secretary