2014 (5) TMI 593 - HC - Income Tax

Availability of alternate remedy - Validity of notice u/s 147 of the Act Income escapement Held that - The issues are urged by way of a reply to the notice - If there is a response to the notice, the authority shall consider the same and pass orders on merits - the assessees are entitled to make all legal pleas in response to the notice - the assessment order can be assailed in appeal - the assessees have not made out a case for invoking the extraordinary jurisdiction of the court under Article 226 of Constitution of India bypassing the effective alternative remedy Decided against Assessee.

Summary

Issues involved:
1. Challenge to notice dated 25.3.13 regarding escaped assessment for the year 2007-2008 under Section 147 of the Income Tax Act.
2. Challenge to assessment order of the year 2008-2009 based on short term capital gains from a transaction in 2007-2008.

Analysis:

Issue 1: Challenge to notice dated 25.3.13 for the year 2007-2008 assessment:
The petitioners in W.P. No.13164/14 contested the notice dated 25.3.13, alleging that it was received beyond the limitation period. The respondent, represented by the standing counsel for income tax, refuted this claim stating that the notice was issued on time but was belatedly received by the petitioner. The court held that the petitioners can raise their contentions in response to the notice and that the authority will consider these responses before passing any orders, emphasizing that all legal pleas can be made at that stage. However, the court clarified that no further relief can be granted through the writ petition.

Issue 2: Challenge to assessment order of the year 2008-2009 based on 2007-2008 transaction:
In W.P. No.13163/14, the petitioners challenged the assessment order of the year 2008-2009, arguing that the short term capital gains assessed were not related to the transaction in that year but rather to a transaction in 2007-2008. The respondent contended that the assessment was protective to determine the taxable nature of the transaction, whether in 2007-2008 or 2008-2009, and highlighted that the assessment order for 2008-2009 is subject to appeal. The court held that since the assessment order is appealable, the petitioners did not establish a case for invoking the court's extraordinary jurisdiction under Article 226 of the Constitution, emphasizing the availability of an effective alternative remedy through appeal.

In conclusion, both writ petitions were dismissed, and the connected miscellaneous petitions were closed without any costs. The petitioners were granted thirty days to file an appeal before the relevant authority, with the office directed to return the original order upon receiving a duly authenticated copy.