2004 (4) TMI 24 - HC - Income Tax

Appeasable order - deduction under section 80-IB - petitioner contend that impugned assessment order passed ITO is per se illegal and without jurisdiction and deserves to be set aside. held that the impugned assessment order which is an appealable order cannot be interfered with by this court under article 226 of the Constitution of India - it is made clear that if the statutory authority has jurisdiction to decide a particular question and if the same is decided by the statutory authority in such a situation even if the order is a wrong order it cannot be said that the statutory authority had no jurisdiction and the propriety and legality of that wrong decision can be adjudged by the appropriate forum. The question of jurisdiction gets importance only when the statutory authority passes an order for which he had no jurisdiction but if he passes a wrong order it does not mean that he lacks jurisdiction. petition is treated as not maintainable and hence dismissed

Summary

Issues Involved:
1. Disallowance of deduction under Section 80-IB of the Income-tax Act, 1961.
2. Applicability of the judgment in Dhunseri Tea Industries [2001] 1 Tax Update 235 (Raj).
3. Jurisdiction and maintainability of the writ petition under Article 226 of the Constitution of India.
4. Availability and adequacy of alternative remedy.

Detailed Analysis:

1. Disallowance of Deduction under Section 80-IB of the Income-tax Act, 1961:
The petitioner-firm, engaged in blending tea leaves, claimed a deduction under Section 80-IB of the Income-tax Act, 1961, amounting to Rs. 2,46,943. The Income-tax Officer, Banswara, disallowed this deduction, arguing that blending tea does not constitute manufacturing or producing an article or thing under the Income-tax Act. The officer referenced the Calcutta High Court's judgment in Appeejay Pvt. Ltd. v. CIT [1994] 206 ITR 367, which held that blending tea does not involve manufacturing, thereby disallowing similar deductions under Section 80-I.

2. Applicability of the Judgment in Dhunseri Tea Industries [2001] 1 Tax Update 235 (Raj):
The petitioner argued that the process of blending tea amounts to manufacturing, as held in Dhunseri Tea Industries [2001] 1 Tax Update 235 (Raj), which granted exemption under the Sales Tax Act. However, the Income-tax Officer distinguished this case, noting that the Sales Tax Act's definition of manufacturing includes processing, unlike the Income-tax Act. The officer concluded that the Dhunseri case was not applicable to the petitioner's claim under Section 80-IB.

3. Jurisdiction and Maintainability of the Writ Petition under Article 226 of the Constitution of India:
The court emphasized that the impugned assessment order is appealable under Section 246 of the Income-tax Act, and the petitioner had already filed an appeal before the Commissioner of Income-tax (Appeals), Udaipur. The court cited several precedents, including Thansingh Nathmal v. Superintendent of Taxes [1964] 15 STC 468 and K.S. Rashid and Son v. Income-tax Investigation Commission [1954] 25 ITR 167 (SC), to highlight that the existence of an alternative remedy generally precludes the maintainability of a writ petition under Article 226. The court held that the petitioner could not pursue two parallel remedies simultaneously.

4. Availability and Adequacy of Alternative Remedy:
The court reiterated that the availability of an alternative and equally efficacious remedy, such as an appeal, generally bars the issuance of a writ. The petitioner had already availed of this remedy by filing an appeal, which was still pending. The court noted that the questions raised involved mixed questions of fact and law that should be decided by the statutory forum first. The court cited multiple judgments, including Union of India v. S.J. Thanawalla [1996] 8 SCC 469 and State Bank of Bikaner and Jaipur v. Union of India [2004] 270 ITR 271, to support this view.

The court concluded that the writ petition was not maintainable since the petitioner had an adequate alternative remedy, which had already been pursued. The court dismissed the writ petition, emphasizing that the petitioner must exhaust all avenues of appeal under the Income-tax Act before approaching the High Court under Article 226.

Conclusion:
The writ petition was dismissed as not maintainable, with the court directing the petitioner to pursue the pending appeal before the Commissioner of Income-tax (Appeals). The court held that the Income-tax Officer's assessment order was within jurisdiction and did not warrant interference under Article 226.