2014 (5) TMI 1223 - HC - Income Tax

Default u/s 201(1) and 201(1A) - Alternate remedy - as argued 15% trade discount allowed by the petitioner to the advertising agencies was not payment of commission within the meaning of section 194H therefore, the authorities had no jurisdiction to initiate proceedings under sections 201(1)/201(1A) - HELD THAT - We are not inclined to entertain this petition as the petitioner has a statutory alternative remedy of filing an appeal before the CIT and a further appeal to the Income Tax Appellate Tribunal, if required. In the judgment rendered in Jagran Prakashan 2012 (5) TMI 488 - ALLAHABAD HIGH COURT the notice issued to the petitioner was in respect of section 194H alone. In the present case, as noticed above, apart from section 194H, the notice was issued under various other provisions of the Act. The impugned order elaborately deals with each of the provisions and has found that the assessee has failed to deduct TDS under each of these heads. As various factual aspects relating to the imposition of duty under these sections have been raised in this petition, we do not consider it appropriate to entertain this petition as the petitioner has available the statutory alternative remedies. Though it has been contended by petitioners that the principles of natural justice have been violated as adequate opportunity has not been given to the petitioner, but we find from the records that a notice had been issued to the petitioner to which he had submitted a reply. It cannot be urged that there has been a breach of the principles of natural justice. The Supreme Court in Commissioner of Income Tax Ors. Vs. Chhabil Dass Agarwal 2013 (8) TMI 458 - SUPREME COURT has held that as the Income Tax Act provides for a complete machinery against orders passed by the Revenue authorities, an assessee should not ordinarily be permitted to abandon that machinery and invoke jurisdiction of the High Court under Article 226. In the instant case, the Act provides complete machinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. vs. State of Haryana, 1985 (5) TMI 213 - SUPREME COURT this Court has noticed that if an appeal is from Caesar to Caesar's wife the existence of alternative remedy would be a mirage and an exercise in futility.

Summary

Issues:
1. Quashing of order dated 31 March 2014 passed by the Deputy Commissioner of Income Tax (TDS)
2. Treatment of assessee as an assessee in default for a demand of Rs.38,78,72,323/- for the Financial Year 2011-12
3. Availability of statutory alternative remedies under section 246A and section 253
4. Interpretation of judgment in Jagran Prakashan Ltd. Vs. Deputy Commissioner of Income Tax (TDS) (2012) 345 ITR 288 (All)
5. Challenge to duties levied under sections 194A, 194C, 194I, 194J, 195, and 206
6. Allegation of violation of principles of natural justice
7. Application of the ruling in Commissioner of Income Tax & Ors. Vs. Chhabil Dass Agarwal (2014) 1 SCC 603

Analysis:
1. The petition sought the quashing of an order by the Deputy Commissioner of Income Tax (TDS) and a consequential notice of demand for being treated as an assessee in default for a substantial amount for the Financial Year 2011-12.
2. The Revenue argued that the petitioner had statutory alternative remedies available through appeals under section 246A and section 253, which the petitioner contested by relying on a previous Division Bench judgment.
3. The Division Bench judgment cited by the petitioner was specific to section 194H, whereas the present case involved various other provisions, leading the court to conclude that the petitioner should pursue the available statutory remedies.
4. The detailed computation of the demand under various heads was presented, showing the failure to deduct TDS under different sections, which were not covered by the previous judgment relied upon by the petitioner.
5. The court rejected the petition's challenge to duties levied under sections 194A, 194C, 194I, 194J, 195, and 206, emphasizing that the petitioner had statutory alternative remedies and that the factual aspects differed from the previous judgment.
6. Despite the petitioner's claim of a violation of natural justice principles, the court found that the petitioner had been given an opportunity to respond to the notice, thus not constituting a breach of natural justice.
7. Citing the Supreme Court ruling in Commissioner of Income Tax & Ors. Vs. Chhabil Dass Agarwal, the court held that the Income Tax Act provided a complete machinery for redressal, and the petitioner should not bypass the statutory remedies available by directly approaching the High Court under Article 226. The court declined to entertain the writ petition based on this principle.