2021 (7) TMI 1284 - HC - Income Tax

Validity of reopening of assessment u/s 147 - adjudication be done by the High Court in a writ proceedings under Article 226 of the Constitution of India - petitioner made a submission that the regular assessment was made based on the materials books of accounts and informations provided by the assessee and was concluded and the reopening of assessment proceedings were initiated on change of opinion and therefore the petitioner has chosen to approach this Court - HELD THAT - Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise. Thus dispensing with an appellate remedy is to be granted cautiously in view of the fact that the very purpose and object of legislation providing an appellate remedy cannot be diluted nor the benefit be denied to the aggrieved person to exhaust the same. The statutory appellate authorities are the final fact finding authorities Routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so possessing expertise in a particular field. Thus the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants the disputed facts cannot be concluded. Thus the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. This being the factum established the petitioner is at liberty to prefer an appeal before the appellate authority having jurisdiction within a period of four weeks from the date of receipt of a copy of this order. In the event of filing any such appeal the appellate authority is bound to adjudicate the same on merits and in accordance with law and by affording opportunity to the writ petitioner and dispose of the appeal as expeditiously as possible.

Summary

Issues Involved:
Challenge to assessment order under Section 143 (3) read with Section 147 of the Income Tax Act, 1961 for Assessment Year 2006-07 based on reopening of assessment proceedings, change of opinion, and appealability of the order.

Analysis:

Issue 1: Challenge to Assessment Order
The petitioner challenged the assessment order dated 13.11.2014 under Section 143 (3) read with Section 147 of the Income Tax Act, 1961. The reopening of assessment proceedings was contested on the grounds of change of opinion. The petitioner argued that the assessment order was antedated and not in line with the conditions stipulated under Sections 147 and 148 of the Act.

Issue 2: Efficacy of Appellate Remedy
The High Court opined that the merits of the assessment order need not be delved into at this stage as the appeal remedy provided under the Act is effective. The appellate authority serves as the final fact-finding body, and the High Court cannot adjudicate disputed facts regarding transactions. The initiation of proceedings under Sections 147 and 148 on change of opinion allows the assessee to raise grounds, emphasizing the importance of exhausting the appellate remedy.

Issue 3: Role of Appellate Authority
The assessment order considered materials and information from the reopening of assessment, necessitating an adjudication based on original records. The High Court cannot delve into intricate accounting matters, and the final fact-finding by the appellate authority is crucial for judicial review under Article 226 of the Constitution of India.

Issue 4: Importance of Appellate Remedy
Preferring an appeal is the norm, and entertaining a Writ Petition before exhausting the appellate remedy is an exception. The High Court highlighted the significance of appellate authorities as final fact-finding bodies possessing expertise in specific fields, emphasizing the need to provide aggrieved parties with the opportunity to exhaust statutory remedies for effective adjudication.

Issue 5: Power of Judicial Review
The power of judicial review under Article 226 allows scrutiny of decision-making processes, not the decisions themselves. The routine entertainment of Writ Petitions without exhausting appellate remedies is discouraged to maintain institutional hierarchy and respect for appellate institutions, which are crucial for providing complete justice based on factual findings.

Issue 6: Grounds for Entertaining Writ Petition
The High Court noted the increasing trend of filing Writ Petitions without exhausting statutory remedies, often to avoid pre-deposits in appeals or due to perceived delays in appellate processes. However, delay alone may not suffice as a ground for entertaining a Writ Petition.

Conclusion
The petitioner was directed to prefer an appeal before the appellate authority within four weeks. The appellate authority was instructed to adjudicate the appeal on merits and in accordance with the law, ensuring expeditious disposal. The High Court emphasized the importance of exhausting appellate remedies for effective adjudication and closed the Writ Petition without costs, highlighting the significance of appellate forums in providing complete justice.