2023 (3) TMI 1464 - HC - Income Tax

Violation of principles of natural justice - order of assessment had travelled beyond the scope of show-cause notice - as argued while the order rejects the petitioner's entitlement to carry-forward long term capital loss, such a proposal does not form part of pre-assessment show-cause notices - HELD THAT - The Division Bench of this Court in the case K.S.Shivji 1965 (4) TMI 96 - MADRAS HIGH COURT has, reiterated the position that when a statutory remedy is available to an assessee, he must first resort to it and in a case where appeal remedy was availed, Courts are normally reluctant to interfere with an order of assessment. The Court has, also observed that there might be cases where the aforesaid rule may not outweigh other considerations which may compel interference. In that case they were of the view that such interference was warranted. In the present case, the revenue impact of the disallowance in the order of assessment is nil, though the assessee is aggrieved by the fact that the entitlement to carry forward losses has been rejected. That apart, the power of an appellate authority under the Act is co-terminus with that of an Assessing Officer and hence any lacunae in procedure can well be corrected even at that stage. There are thus, in our considered view, no extraordinary circumstances in the present case to persuade to intervene in the impugned order and thus leave it to the petitioner to pursue the statutory appeal that it has filed. WP dismissed.

Summary

Issues Involved:
The petitioner challenged an order of assessment passed under the Income-Tax Act, 1961, primarily alleging a violation of principles of natural justice.

Violation of Principles of Natural Justice:
The petitioner contended that the order of assessment exceeded the scope of the show-cause notice by rejecting the entitlement to carry-forward long term capital loss, which was not part of the pre-assessment show-cause notices. The petitioner argued that such violation of natural justice should be taken seriously, citing past instances where the court intervened in similar cases to ensure assessments were conducted in line with principles of natural justice.

Statutory Appeal vs. Writ Petition:
The court noted that the petitioner had already challenged the impugned order through a statutory appeal in January 2023, raising the same grounds as in the writ petition. The court highlighted that resorting to Article 226 of the Constitution of India for a writ petition should be an extraordinary remedy and should not be used as an afterthought after pursuing statutory remedies. Given the circumstances, the court declined to consider the prayer raised in the writ petition, leaving it to the petitioner to continue pursuing the statutory appeal.

Precedents and Legal References:
The petitioner relied on various legal precedents, including judgments from the Supreme Court and High Courts, to support their argument regarding the violation of principles of natural justice. The court acknowledged the importance of appellate remedies and the general reluctance of courts to interfere with assessment orders when statutory remedies are available to the assessee.

Decision and Conclusion:
The court dismissed the writ petitions, noting that the revenue impact of the disallowance in the assessment order was nil, and any procedural lacunae could be corrected during the appellate stage. The court emphasized that there were no extraordinary circumstances warranting intervention in the impugned order and encouraged the petitioner to continue pursuing the statutory appeal. No costs were awarded, and connected miscellaneous petitions were closed.