Writ Petition Challenging Intimation under Section 143(1) Dismissed: Appeal Remedy Available : Section 246A does not mandate a pre-deposit for admitting and entertaining an appeal,

Summary in Key Points:

Issue: Could the High Court exercise its writ jurisdiction to interfere with an intimation under Section 143(1) raising a substantial tax demand, or was the assessee limited to the appeal remedy?
Facts: The assessee challenged an intimation under Section 143(1) that raised a demand of approximately Rs. 6600 crores. They argued that the appeal remedy was not efficacious due to the huge demand and sought the High Court’s intervention through a writ petition.
Decision: The court held that the intimation under challenge was an appealable order under Section 246A(1)(a). Since Section 246A does not mandate a pre-deposit for admitting and entertaining an appeal, the High Court declined to interfere with the impugned intimation in writ proceedings.

Important Note: This decision emphasizes the principle that when an appeal remedy is available, the High Court will generally not interfere through writ jurisdiction. The absence of a mandatory pre-deposit requirement in Section 246A further strengthened the case for pursuing the appeal remedy. This ruling underscores the importance of following the statutory appeal process and exhausting available remedies before invoking the High Court’s writ jurisdiction.

HIGH COURT OF BOMBAY

Fiat India Automobiles Ltd.

Deputy Director of Income-tax

M.S. Sonak and Jitendra Jain, JJ.

WRIT PETITION NO. 10495 OF 2023

JANUARY 15, 2025

Niraj Sheth and Atul K Jasani, Advs. for the Petitioner. Suresh Kumar, Adv. for the Respondent.

ORDER

Jitendra Jain, J. – Heard learned counsel for the parties.

2. Rule. The rule is made returnable immediately at the request of and with the consent of learned counsel for the parties.

3. By this Petition under Article 226 of the Constitution of India, the Petitioner challenges an intimation passed under Section 143(1) of the Income Tax Act, 1961 (“IT Act”) dated 26 July 2023 for Assessment Year 2022-23 whereby demand of approximately Rs.6600 Crores has been raised.

4. Vide our order dated 23 August 2023 we had granted ad-interim relief in terms of prayer clause (d) restraining the Respondents from proceeding further pursuant to the impugned intimation. The ad-interim relief granted was continued from time to time.

5. Today the matter was listed for extension of ad-interim relief. However, on perusal of the papers and with the consent of both the learned counsel for the parties, the Petition is taken up for final disposal.

6. Mr. Sheth, the learned counsel for the Petitioner, submits that a huge demand of Rs.6600 has been raised, and therefore, the remedy of appeal would not be an efficacious remedy, and therefore, this Court should exercise its writ jurisdiction. He further submits that prior to passing the impugned intimation order, no opportunity was given to the Petitioner, and therefore, this also raises the jurisdictional point. He further submits that on 28 March 2024 an order under Section 143(3) read with Section 144B of the IT Act came to be passed by the Assessing Officer accepting the return income with a rider which reads as follows :-

“3.1.4…….

It is clarified that the issue of ICDS adjustment and valuation of inventory is under adjudication pending with Hon’ble High Court, therefore, no decision with regard to these issues is being taken in this order.”

7. It is Mr. Sheth’s contention that in view of the subsequent 143(3) order and on a reading of Section 143(4) of the IT Act, the subject matter of 143(1) gets subsumed in 143(3) proceedings. He further points out that the Petitioner has made an application under Section 154 on 31 July 2023 for rectifying the mistake which has crept in the intimation under Section 143(1) of the IT Act and same, till today, has not been disposed of on the ground that the subject matter of 143(1) is pending before this Court in the present Petition.

8. Mr. Suresh Kumar, the learned counsel for the Respondents, justifies the action of the Respondents in passing 143(1) order and submits that since the matter was pending before this Court the officer in 143(3) order stated that the issue of ICDS adjustment and valuation of inventory would be subject to the outcome of this Petition.

9. We have heard learned counsel for the Petitioner and the Respondents and with their assistance have perused the documents which have been brought to our notice.

10. At the outset, we wish to clarify that at no point of time, we had restrained the Respondents from adjudicating any issue in the regular assessment proceedings, and therefore, the observations made in the assessment order under Section 143(3) that since the issue of ICDS adjustment and valuation of inventory is pending before this Court, no decision with regard to this issue has been taken, is incorrect. If the officer was of the view that our ad-interim order amounts to restraining himself from adjudicating this issue in regular assessment proceedings, then, he should have approached this Court for clarification. However, we are clear that at no stage we had restrained the Respondents from adjudicating this issue in regular assessment proceedings.

11. Secondly, the Petitioner had made an application on 31 July 2023 for rectification of the intimation. The said application of the Petitioner was never decided by the Assessing Officer on the ground that issue of Section 143(1) adjustment is pending before this Court. We once again clarify that we had not restrained the Respondents from passing any order to decide the rectification application filed by the Petitioner on 31 July 2023. We fail to understand that in the absence of any restraint order by this Court the stand of the Respondents not to adjudicate the rectification application is misconceived. The officer ought to have adjudicated this rectification application in accordance with law.

12. The intimation under challenge is an appealable under Section 246A(1)(a) of the IT Act. It is the contention of the Petitioner that no notice was given before passing the intimation; whereas in our order dated 23 August 2023 we have recorded the statement made on behalf of the Respondents that an intimation was communicated on 27 May 2023 and response was sought by 11 July 2023, and since Petitioner did not respond, the adjustment has been made.

13. In our view, this would require adjudication of facts whether any prior intimation was served on the Petitioner before passing the impugned intimation. This factual determination cannot be examined by this Court in the writ proceedings. However, same can be adjudicated efficaciously before the Appellate Authority.

14. In Section 246A there is no provision of mandatory predeposit for admitting and entertaining the appeal, and therefore, the contention of Mr. Sheth that the intimation raises a huge demand of Rs.6600 crores, and therefore, the remedy of appeal is not efficacious remedy, is rejected. Certainly the Petitioner has the remedy of making an application for stay of the demand and any order passed thereon, if the Petitioner is aggrieved, can be challenged in accordance with law. Therefore, although huge demand is raised, but in the absence of any pre-deposit for admitting and entertaining the appeal, this Court cannot interfere with the impugned intimation in writ proceedings.

15. In view of above, we propose to pass the following order:-

(i)

The Petitioner is at liberty to challenge the impugned intimation dated 26 July 2023 by filing an appeal within a period of four weeks from the date of uploading of the present order. If the appeal is so filed, then the Appellate Authority will consider the appeal on merits without recourse to limitation, since the Petitioner was bonafidely pursuing the present Petition before this Court.

(ii)

Respondent No.2 is directed to decide the rectification application dated 31 July 2023 within a period of two weeks from the date of uploading the present order. Before passing any order deciding the rectification application, Respondent No.2 shall give an opportunity of personal hearing to the Petitioner. The Petitioner is at liberty to file all the submissions in support of their case. Respondent No.2 shall pass a speaking order after considering the submissions of the Petitioner and after hearing the Petitioner.

(iii)

The Petitioner is at liberty to take out any proceedings which will be available in law for the stay of the demand.

16. The Petition is disposed of in above terms with no orders as to costs.