Writ Petition Challenging Reassessment Notice Dismissed Due to Availability of Alternate Remedy

Summary in Key Points:

Issue: Whether a writ petition challenging a reassessment notice and assessment order under Sections 148 and 148A of the Income-tax Act, 1961 is maintainable when the assessee has already filed an appeal against the assessment order.
Facts: The assessee filed a writ petition seeking to quash a reassessment notice and assessment order, arguing that the sanction for reassessment was not granted by the appropriate authority as required under Section 151. However, the assessee had already filed an appeal against the assessment order before the Commissioner (Appeals).
Decision: The High Court dismissed the writ petition, holding that the assessee should pursue the pending appeal instead of invoking the extraordinary writ jurisdiction, as the appellate authority can address the issue of proper sanction.

Analysis:

The High Court ruled in favor of the revenue department, dismissing the writ petition. The court emphasized the following:

Availability of Alternate Remedy: The assessee had an effective alternate remedy available in the form of an appeal, where they could raise the issue of improper sanction under Section 151.
Appellate Authority’s Jurisdiction: The appellate authority and revisionary authority have the jurisdiction to examine the validity of the reassessment notice and assessment order, including the issue of proper sanction.
Avoidance of Parallel Proceedings: Allowing the writ petition would lead to parallel proceedings and could create conflicting decisions.

Important Note: This case reinforces the principle that writ jurisdiction should not be invoked when an effective alternate remedy is available to the aggrieved party. The High Court emphasized that the assessee should exhaust the available appellate remedies under the Income-tax Act before approaching the court. This ensures that the specialized appellate authorities have the first opportunity to address the issues in dispute and promotes an efficient and orderly resolution of tax disputes.

HIGH COURT OF BOMBAY

Sunrath Trading (P.) Ltd.

Union of India

G.S. Kulkarni and Advait M. Sethna, JJ.

WRIT PETITION (L.) NO. 19319 OF 2024

DECEMBER 19, 2024

Ms. Neha Anchlia, for the Petitioner. Vikas Khanchandani, for the Respondent.

ORDER

1. We have heard Ms. Anchlia, learned counsel for the petitioner and Mr. Khanchandani, learned counsel for the respondents.

2. This petition under Article 226 of the Constitution of India is filed praying for the following reliefs:-

“(a) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned instruction dated 11.05.2022 (being EXHIBIT ‘B’ hereto) and after going into the validity and legality thereof to quash and set aside the same to the extent it is contrary to section 149 of the Act and not in line with the decision of the Hon’ble Apex Court in UOI & Ors. v. Ashish Agarwal (supra);

(b) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned notice dated 20.04.2021 issued u/s 148 of the un-amended Act for AY 2014-15, which is deemed as a notice issued u/s 148A(b) (being EXHIBIT “A” Hereto) and after going into the validity and legality thereof to quash and set aside the same.

(c) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned notice u/s 148A(b) dated 23.05.2022 for AY 2014-15, (being EXHIBIT “C” Hereto) and after going into the validity and legality thereof to quash and set aside the same.

(d) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned order dated 21.07.2022 passed by Respondent No. 3 u/s 148A(d) of the Act for the AY 2014-15 (being EXHIBIT ‘G’ hereto) and after going into the validity and legality thereof to quash and set aside the same.

(e) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the Impugned Notice issued u/s 148 of the Act on 22.07.2022 for AY 2014-15 by the Respondent No. 3 (being EXHIBIT ‘H’ hereto) and after going into the validity and legality thereof to quash and set aside the same.

(f) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned order dated 19.05.2023 passed by Respondent No. 4 u/s 147 t/w 144B of the Act for the AY 2014-15 (being EXHIBIT ‘P’ hereto) and after going into the validity and legality thereof to quash and set aside the same.

(g) that this Hon’ble Court be pleased to issue a writ of Centiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned demand notice dated 19.05.2023 issued by Respondent No. 4 (being EXHIBIT ‘Q” hereto) and after going into the validity and legality thereof to quash and set aside the same.

(h) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned penalty notice dated 19.05.2023 issued by Respondent No. 4 (being EXHIBIT ‘R’ hereto) and after going into the validity and legality thereof to quash and set aside the same.

(i) that pending the hearing and final disposal of this petition the Respondents, their successors in office, subordinates, servants and agents be restrained by an order and injunction of this Hon’ble Court be pleased to stay the execution, operation and implementation and from taking any steps pursuant to the impugned order u/s 147 r/w 144B of the act dated 19.05.2023 (being EXHIBIT ‘P’ hereto) for the AY 2014-15 and impugned demand & penalty notice dated 19.05.2023 (being EXHIBIT ‘Q’ and EXHIBIT ‘R’ hereto);

(j) for ad-interim and interim reliefs in terms of prayer clause (i) above;

(k) for costs of this Petition; and

(l) for such further and other reliefs as the nature and circumstances of the case may require.”

3. At the outset, Ms. Anchlia would submit that the impugned order dated 21 July 2022 as also the impugned notice under Section 148 dated 20 April 2021 would stand covered by the decision of this Court in Hexaware Technologies Limited. v. Assistant Commissioner of Income Tax & Ors. (Bombay) as also the decision of the division Bench in Rajan Pradeepkumar Dubey v. Income Tax Officer Ward 3-2, Kalyan & Ors. Writ Petition No.11166 of 2024 decided on 12 August,2024 (“Rajan Dubey”) in regard to the applicability of Section 151 of the provisions of the Act as the sanction has not been granted by the appropriate authority as specified under the said provisions.

4. However, Ms. Anchlia has fairly submitted that the petitioner has come before the Court after the petitioner had already filed an appeal against the impugned order, as also the petitioner has filed a Review Application before the Principal Chief Commissioner under Section 264 of the Income Tax Act. Ms. Anchlia has stated that both the proceedings are pending namely the appeal before the CIT(A), as also the Review proceedings before the Principal Chief Commissioner of Income Tax. He, however, submits that considering the decision of this Court being of the jurisdictional High Court in Hexaware (supra) and Rajan Dubey (supra), the present petition has been filed despite the petitioner’s appeal and revision remaining pending.

5. Mr. Khanchandani, learned counsel for revenue would submit that much prior to the decisions of this Court in Hexaware as also in Rajan Dubey (supra), the petitioner in the present case has availed of an alternate remedy. It is hence submitted that in the facts of the case it would be appropriate that the statutory remedy which is already availed by the petitioner, be pursued by the petitioner and should not have invoked the extraordinary jurisdiction of this Court under Article 226 by filing this petition, merely because the aforesaid decisions are rendered by this Court. In other words, Mr. Khanchandani’s submission is that the decision of this Court in Hexaware and Rajan Dubey (supra) are bound to be taken into consideration by the Appellate Authority as also by the Revisional authority in the adjudication of the pending proceedings.

6. We find much substance in the contention as urged by Mr. Khanchandani on behalf of the revenue. Once the petitioner has availed of an alternate remedy as provided under the Income Tax Act, namely of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto under Section 148A and under Section 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware and Rajan Dubey (supra), the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position. Thus,the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority.

7. Accordingly, we are of the opinion that the proceedings which are pending before the CIT(A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner namely as to whether the impugned assessment order as also the notice under Section 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions.

8. We may observe that an approach ought not to be followed that when the appellate authority is already seized with the proceedings, we entertain writ petitions to adjudicate, what can certainly be adjudicated by the appellate authority, considering the said decisions of this Court. As rightly pointed by Mr. Khanchandani to entertain writ petitions in such circumstances, would create a situation that all matters which are pending before the Appellate Authority and which are supposed to be decided in accordance with law involving issues on applicability of the decisions of this Court, in disposing of the proceedings would be required to be entertained by this Court. Certainly, such approach cannot be adopted by the Court. We are hence of the opinion that it would be appropriate that the assessee pursues the pending proceedings as filed before the appropriate Appellate Authority.

9. Accordingly, we are not persuaded to entertain the present proceedings which assail the assessment order when appeal is already filed by the petitioner, which is pending.

10. However, we find substance in Ms. Anchlia’s contention that if prima facie the petitioner is correct that the impugned assessment order as also the notice issued under Section 148 is illegal and contrary to the law laid down by this Court in Hexaware and Rajan Dubey (supra), the same ought not to be given effect, till the appellate proceedings and revisionary proceedings are decided. In the aforesaid circumstances, we dispose of this petition by the following order:

ORDER

(i)

The petitioner shall pursue the proceedings before the CIT(A) against the impugned assessment order as also the proceedings before the Revisionary Authority. It is open to the petitioner to raise contentions in regard to the illegality of the notice issued to the petitioner under Section 148, in the light of the decisions of this Court in Hexaware and Rajan Dubey (supra).

(ii)

Till the proceeding before the Appellate Authority or Revisionary Authority are decided, the impugned assessment order shall remain stayed.

(iii)

All contentions of the petitioner on the pending proceedings are expressly kept open.

11. Disposed of in the above terms. No costs.