2015 (5) TMI 1143 - HC - Indian Laws

Availability of effective alternative remedy - case of petitioner is that as the order of assessment has been passed during the pendency of the writ petition and the notice (Annex. 4) issued by the respondents is absolutely without jurisdiction, which has led to passing of the assessment order, the petitioner is entitled to question the assessment order in the present writ petition - Held that - Once a order of assessment has been passed by the respondents in the above circumstances, the plea raised by learned counsel for the respondents that as now the petitioner has effective alternative remedy by way of appeal before the Commissioner (Appeals), wherein besides the assessment order it is open for the petitioner to question the legality and validity of notice under Section 147/148 of the Act, the petitioner needs to approach the appellate authority under the provisions of the Act, assumes significance. Hon ble Supreme Court in the case of Chhabil Dass Agarwal 2013 (8) TMI 458 - SUPREME COURT , has laid down that the application/petition filed by the petitioner cannot be entertained on account of availability of effective alternative remedy - In view of the fact that post amendment the petitioner would be seeking to question the notice under Section 148 as well as assessment order, it cannot be said that the judgment in the case of Chhabil Dass Agarwal is not applicable to the facts of the present case - the application seeking amendment in the writ petition, the second stay application and the writ petition filed by the petitioner are dismissed.

Summary

Issues:
Challenge to notice under Sections 147/148 of the Income Tax Act, 1961; Maintainability of writ petition post issuance of assessment order; Alternative remedy of appeal available to petitioner; Applicability of judgment in CIT vs. Chhabil Dass Agarwal 357 ITR 357 (SC).

Analysis:
The petitioner challenged a notice dated 3.3.2014 under Sections 147/148 of the Income Tax Act, 1961. Subsequently, an assessment order dated 30.3.2015 was passed by the respondents during the pendency of the writ petition. The petitioner sought amendment in the writ petition to challenge the assessment order and requested a stay on the demand. The respondents contended that the writ petition was not maintainable as the petitioner had an alternative remedy through an appeal. The court considered the submissions and noted that the assessment order was passed to prevent the proceedings from becoming time-barred due to the absence of an interim order. The court referred to the judgment in CIT vs. Chhabil Dass Agarwal, emphasizing the importance of exhausting alternative remedies before approaching the High Court.

The court highlighted that the statutory framework provided an effective mechanism for assessment/re-assessment, penalty imposition, and relief from improper orders by Revenue Authorities. It reiterated that the availability of an alternative remedy through an appeal to the Commissioner of Income Tax (Appeals) should be utilized before seeking relief through a writ petition. The court emphasized that the remedy under the statute must be effective and not merely a formality. It further stated that the High Court should not entertain a writ petition when an adequate statutory remedy is available, unless the statutory remedy is ineffective or the High Court has valid reasons to exercise jurisdiction.

In light of the principles established in CIT vs. Chhabil Dass Agarwal, the court held that the petitioner's application/petition could not be entertained due to the existence of an effective alternative remedy through an appeal. The court directed the petitioner to approach the appellate authority within 15 days, allowing for the consideration of a condonation of delay application. The court rejected the petitioner's argument that the Chhabil Dass Agarwal judgment was not applicable to the present case, stating that the judgment's relevance persisted even after the amendment seeking to challenge both the notice under Section 148 and the assessment order. Consequently, the court dismissed the application for amendment, the second stay application, and the writ petition, without imposing any costs.