Issues Involved: 1. Whether a writ petition challenging the validity of an order of a statutory authority should be entertained when a statutory appeal is provided but not availed of by the petitioner. 2. Whether the conditions for the Additional Commissioner to assume jurisdiction under section 263 of the Income-tax Act were fulfilled. 3. Whether the orders of the Income-tax Officer were correct on merits and should not have been interfered with by the Additional Commissioner.
Detailed Analysis:
Issue 1: Entertaining Writ Petition Despite Availability of Statutory Appeal The court first addressed the preliminary question of whether to admit the writ petitions considering the petitioners did not avail themselves of the statutory appeals provided under section 253 of the Income-tax Act. The court emphasized that the jurisdiction under Article 226 is wide but should be exercised circumspectly to avoid overburdening the court and defeating the statutory scheme of appeals and revisions. The court cited several Supreme Court decisions, including *Lalji Haridas v. R. H. Bhatt* and *Champalal Binani v. Commissioner of Income-tax*, affirming that ordinarily, a party must exhaust the statutory remedies before seeking judicial review under Article 226.
The court noted that the rule of exhausting administrative remedies is not rigid and exceptions exist, such as lack of jurisdiction, violation of natural justice, error of law apparent on the face of the record, and others. However, the petitioners did not provide any explanation for not filing appeals, and their case did not fall under any exceptions. Therefore, the writ petitions were dismissed in limine for not availing the alternative remedy of appeal.
Issue 2: Jurisdiction Under Section 263 of the Income-tax Act The petitioners challenged the jurisdiction of the Additional Commissioner under section 263, arguing that the conditions for assuming jurisdiction were not fulfilled. The court explained that the word "erroneous" in section 263 includes the failure of the Income-tax Officer to make necessary inquiries. The court referred to Supreme Court decisions in *Rampyari Devi Saraogi v. Commissioner of Income-tax* and *Tara Devi Aggarwal v. Commissioner of Income-tax*, which held that the Commissioner could regard an order as erroneous if the Income-tax Officer failed to make inquiries that the circumstances warranted.
In this case, the court found that the Income-tax Officer did not make adequate inquiries into the genuineness of the firm and the transactions, which justified the Additional Commissioner's action under section 263. Therefore, the challenge to the jurisdiction of the Additional Commissioner failed.
Issue 3: Merits of the Income-tax Officer's Orders The petitioners contended that the orders of the Income-tax Officer were correct on merits and should not have been interfered with by the Additional Commissioner. However, the court did not delve into the merits of the case, as it had already decided not to entertain the writ petitions due to the petitioners' failure to exhaust the statutory remedies. The court reiterated that the statutory appeal process provided an adequate mechanism for addressing the merits of the case.
Conclusion The court dismissed the writ petitions in limine due to the petitioners' failure to provide an adequate explanation for not availing the statutory appeal under section 253 of the Income-tax Act. The court emphasized the importance of exhausting statutory remedies before seeking judicial review under Article 226, except in exceptional circumstances, which were not present in this case. The petitioners' challenges to the jurisdiction of the Additional Commissioner and the merits of the Income-tax Officer's orders were not entertained due to the preliminary dismissal of the writ petitions.
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