1995 (2) TMI 46 - HC - Income Tax

Summary

Issues:
- Interpretation of the term "local authority" under section 10(20) of the Income-tax Act, 1961
- Jurisdiction of the High Court under article 226 of the Constitution of India in tax matters
- Availability of alternative remedies before approaching the High Court

Analysis:
The High Court was faced with a petition challenging the Assessing Officer's order and the Commissioner of Income-tax (Appeals) decision, which held the petitioner not to be a "local authority" exempt from income tax under section 10(20) of the Income-tax Act, 1961. The petitioner's bank account was attached for tax recovery, prompting the court to restrain any further recovery actions. The petitioner had filed an appeal against the Assessing Officer's order, which was dismissed by the Commissioner of Income-tax (Appeals). The issue arose whether the petitioner could approach the High Court under article 226 or should pursue the alternative remedy of appealing to the Income tax Appellate Tribunal. The petitioner argued that inherent jurisdiction allowed for the writ petition, citing various judgments supporting this stance.

On the other hand, the Revenue contended that the petitioner should opt for the Tribunal, given the availability of an efficacious alternative remedy. The court considered the definitions of "local authority" under sections 10(20) and 10(29) of the Act, noting that the term was not explicitly defined but could be interpreted by the Appellate Tribunal. Referring to precedents like the Titaghur Paper Mills case, the court declined to interfere and directed the petitioner to appeal to the Tribunal if dissatisfied with the Commissioner of Income-tax (Appeals) decision. The Revenue agreed to keep the demand in abeyance for four months and return any pay orders received from the bank due to attachment. Additionally, the court addressed pending proceedings for the assessment year 1985-86, instructing that demands should not be enforced until the present appeal was decided by the Appellate Tribunal.

In conclusion, the High Court disposed of the petition, emphasizing the importance of the legal question involved and urging the Appellate Tribunal to expedite the appeal process. The judgment highlighted the significance of exhausting alternative remedies before seeking extraordinary relief under article 226 of the Constitution of India in tax matters, reaffirming the principle of judicial prudence and hierarchy in addressing legal disputes.