Writ Petition Against Assessment Order Dismissed Due to Availability of Statutory Appeal and Lack of Extraordinary Circumstances.
Issue:
Whether a writ petition challenging a notice and an assessment order, where additions were made based on incriminating material, should be entertained by the High Court when a statutory alternate remedy of appeal is available, and there are no extraordinary circumstances justifying the bypass of this remedy.
Facts:
A notice was issued to the assessee, who participated in the proceedings. Subsequently, an impugned assessment order was passed, making additions of a certain amount based on some incriminating material. The assessee filed an instant writ petition against both the notice and the assessment order.
It was noted by the court that there was no explanation for why the notice was not immediately challenged. Furthermore, the court observed that the additions were based on “incriminating material,” and the High Court, in its writ jurisdiction, could not examine such material to settle disputes regarding the extent of additions. These were considered “routine grounds addressed by appellate authorities,” and the court found no “extraordinary circumstances” existing to deviate from the standard practice of exhaustion of statutory alternate remedies (i.e., appeal to the Commissioner (Appeals) under Section 246).
Decision:
In favor of the revenue: The court held that in the absence of any reason, much less any cogent reason, as to why the standard rule of exhaustion of alternate remedy should be bypassed, there was no question of entertaining this petition. Therefore, the writ petition could not be entertained.
Key Takeaways:
- Exhaustion of Alternate Remedy: A fundamental principle of writ jurisdiction under Article 226 of the Constitution of India is that a High Court will generally not entertain a writ petition if an efficacious alternate statutory remedy is available to the petitioner. The Income-tax Act provides a detailed appellate mechanism (e.g., appeal to the Commissioner (Appeals) under Section 246, then to the Tribunal, etc.).
- No Bypass Without Cogent Reasons: To bypass the statutory appeal remedy and directly approach the High Court through a writ, the petitioner must demonstrate exceptional or extraordinary circumstances. These typically include:
- A complete lack of jurisdiction by the assessing authority.
- A patent violation of principles of natural justice where the alternate remedy is not equally efficacious.
- An order passed ex facie without jurisdiction or being time-barred beyond any doubt.
- Challenge to the vires (constitutionality) of a statutory provision.
- The case not falling into any of these exceptional categories, the writ petition is usually dismissed.
- Factual Disputes and Incriminating Material: High Courts, in their writ jurisdiction, typically do not delve into factual disputes or the appreciation of evidence (like “incriminating material”). These are matters best addressed by the specialized appellate authorities (Commissioner (Appeals) and ITAT), who are equipped to re-examine facts and evidence.
- Assessee’s Participation: The fact that the assessee participated in the assessment proceedings and did not immediately challenge the notice also weakens their claim for direct writ intervention.
- “Routine Grounds”: The court categorized the assessee’s grievances as “routine grounds” that are typically handled by appellate authorities, further justifying the dismissal of the writ petition.
HIGH COURT OF BOMBAY
Manoj Naraindas Motwani
v.
Assistant Commissioner of Income-tax
M.S. Sonak AND Jitendra Jain, JJ.
WRIT PETITION NO. 42 OF 2025
APRIL 9, 2025
Ms. Rutuja Pawar and Ms. Sneha More, Advs., for the Petitioner. Akhileshwar Sharma, Adv., for the Respondent.
ORDER
1. At the request on behalf of the learned Counsel for the Petitioner, we listed this matter at 2.30 p.m. In this matter, the assessment order has already been passed. Therefore, prima facie, we felt that the Petitioner should avail the alternate remedies available. However, at Ms Rutuja Pawar’s request, the matter was kept the day before yesterday, 07 April 2025.
2. When the matter was called out on 07 April 2025, Ms Pawar appeared virtually. She expressed some difficulties in connectivity, etc., so the matter was again adjourned and kept today.
3. Again, today, at Ms Pawar’s request, the matter was adjourned from the morning session to the afternoon at 2:30 p.m.
4. Heard learned Counsel for the parties.
5. The Petitioner challenges the assessment order dated 20 March 2024.
6. There is no averment in the Petition that the Petitioner has no alternate or efficacious remedy or explaining why, despite the alternate and efficacious remedy, the Petitioner has chosen not to avail such remedy. Instead, an omnibus statement was made in the Petition that there was no other Petition either in this Hon’ble Court or before the Hon’ble Supreme Court of India with respect to the same subject matter of the Petition.
7. The Petitioner must plead correctly on the issue of alternate remedy. In this case, the impugned demand notice pursuant to the impugned assessment order advises the Petitioner-assessee of the availability of the of alternate remedy. There is no whisper in the Petition about such an alternate remedy or the reasons why the Petitioner has chosen not to avail of such an alternate remedy.
8. Ms Pawar, the learned Counsel for the Petitioner, submitted that this Petition was instituted within 30 days of the service of the impugned assessment order. She suggests this is grounds for why we should entertain this Petition bypassing the practice of exhaustion of alternate statutory remedies.
9. With respect to Ms Pawar, this submission is quite misconceived. Because a Petition is filed within the limitation period prescribed for instituting an Appeal, that cannot be ground to entertain the Petition bypassing the statutorily provided alternate remedy.
10. In this case, the notice based upon which the impugned order was made was issued on 25 March 2023. The Petitioner participated in the proceedings, and the impugned assessment order dated 20 March 2024 passed. The Petition now questions the notice dated 25 March 2023 as well. Again, there is no explanation for why the notice was not immediately challenged, assuming there were certain jurisdictional objections to such notice.
11. Without any pleadings on the alternate remedy, Ms Pawar now submits that this is a violation of natural justice. We have heard the submissions on the alleged breach of natural justice and perused the written submissions handed across the bar. All that we can say at this stage is that even the issue of a violation of natural justice would involve the evaluation of factual aspects. This is not a case in which we can conclude without detailed investigation that principles of natural justice have been breached. This is not a “no notice” or “no opportunity” case. At the highest, the allegation suggests that this is a case of “no adequate notice” or “no adequate opportunity”. All such issues are best raised in the statutory remedies provided under the law. In the absence of any reason, much less any cogent reason, as to why the standard rule of exhaustion of alternate remedy should be bypassed, there is no question of entertaining this Petition.
12. Ms Pawar contended that the addition was more than Rs. 2,49,88,500 /—, and consequently, the larger limitation period would be relevant. She submitted that limitation was a jurisdictional issue and, therefore, we should entertain this petition. The Respondents argue that the addition made is more than Rs. 2,49,88,500/—.
13. The limitation issue presents a mixed question of law and fact, which this Court, exercising its extraordinary jurisdiction, would prefer not to adjudicate. Furthermore, the additions are based on incriminating material, and this Court cannot examine such material to settle the disputes regarding the extent of the additions. These are routine grounds addressed by the appellate authorities, and no extraordinary circumstances exist to deviate from the standard practice of exhaustion of statutory alternate remedies.
14. Almost all the grounds that were tried to be urged before us concern the merits or demerits of the assessment order. It is not as if these grounds cannot be urged before the appellate authority. This is an instance where the party has tried to take chances with the court procedures and consumed disproportionate Court time.
15. In the case of Oberoi Constructions Limited v. Union of India & Ors WP(L) No. 33260 of 2023 decided on 11 November 2024, this Court has considered several precedents on the issue of exhaustion of alternate remedies. By adopting the reasoning in the said decision, we decline to entertain this Petition. The Petitioner is free to Appeal the impugned assessment order if the Petitioner so desires.
16. The observations made in this order are not intended to prejudice the Petitioner’s Appeal when instituted. The observations are only prima facie for deciding whether any case is made out to bypass the salutary practice of exhaustion of alternate remedies. Therefore, if an Appeal is instituted, the appellate authority need not be influenced by any observations.
17. For all the above reasons, we dismiss this Petition but refrain from imposing any costs because it may have been filed based on legal advice.
18. This Petition is dismissed without any costs order.