2021 (7) TMI 69 - HC - Income Tax

Maintainability of appeal before High Court - Reopening of assessment u/s 147 - reasons furnished is that the assessee has not furnished any TRC Certificate during the scrutiny proceedings of the Assessment Year 2006-07 - petitioner has emphasized that when production of certain certificate is not mandatory and applying the subsequent amendment with retrospective effect by reopening the assessment is not only bad in law, shows the non-application of mind on the part of the respondent - HELD THAT - This Court is of the considered opinion that an attempt is made by the petitioner to set aside the original Assessment Order on the ground that there was violation of principles of natural justice and the TRC Certificate is not necessary with reference to the Assessment Year 2006-07. This Court is of the considered opinion that the reasons furnished for reopening of assessment in proceedings dated 10.02.2014 reveals that beyond the production of TRC Certificate there are other aspects, which requires an adjudication, which was done by the Assessing Officer and the final order of Assessment was passed in the impugned proceedings dated 21.03.2014. Even in case of violation of principles of natural justice, in all circumstances such cases need not be entertained by the High Court under Article 226 of the Constitution of India by dispensing with the appellate provisions contemplated under the statute. Undoubtedly, every writ petition is filed on one or the other ground, more specifically, violation of the principles of natural justice, discrimination, equality of law or otherwise in violation of statutory provisions. On all these grounds, if the appeal provision is dispensed with, then the High Court is diluting the importance of the appellate provisions contemplated under the Act. Filing an appeal is the Rule. Entertaining a writ petition is an exception. Dispensing with an appeal is an exceptional one, wherein, the High Court could be able to form an opinion that there is an imminent threat or damage, which cannot be compensated or gross injustice, warranting an urgent relief but not otherwise. Therefore, filing of an appeal may be dispensed with by the High Court, only if the urgency and imminency is established and in all other circumstances, the aggrieved persons shall prefer an appeal for the purpose of redressing their grievances by following the procedures contemplated. This being the principles to be followed, this Court is of the considered opinion that the legal grounds as well as the factual discrepancies, which all are disputed, shall be adjudicated by the Appellate Authority and the petitioner is at liberty to approach the Appellate Authority by following the procedures contemplated and in the event of preferring any such appeal, the Appellate Authority shall entertain the appeal .

Summary

Issues:
Challenge to assessment order under Section 144 read with Section 147 of Income Tax Act, 1961 for assessment year 2006-07.

Analysis:
1. The petitioner, a company providing oil field services, challenged the assessment order dated 21.03.2014 under Section 144 read with Section 147 of the Income Tax Act, 1961 for the assessment year 2006-07.
2. The petitioner filed the return of income for the said assessment year, which was selected for scrutiny, and the assessment was completed under Section 143(3) of the Act. Subsequently, re-opening proceedings were initiated under Section 147, leading to the impugned assessment order dated 21.03.2014.
3. The petitioner contended that the reason for reopening the assessment, related to TRC Certificate, was baseless as the certificate was not required during the original assessment. The petitioner argued that applying amended provisions retrospectively was impermissible.
4. The petitioner highlighted that the reasons for reopening the assessment were untenable and the Assessing Officer proceeded hastily without providing a fair opportunity, leading to the present writ petition.
5. The petitioner cited various judgments emphasizing the importance of following due process in reopening assessments and providing adequate time for objections and appeals, which the Assessing Officer allegedly did not adhere to in this case.
6. The respondent, represented by the Senior Standing Counsel, argued that the petitioner was given due opportunities and the reasons for reopening the assessment were valid, beyond just the TRC Certificate issue.
7. The Court observed that the reasons furnished for reopening the assessment went beyond the TRC Certificate, requiring adjudication by the Assessing Officer, who passed the final assessment order on 21.03.2014.
8. The Court reiterated the importance of appellate remedies, stating that exceptions for entertaining writ petitions exist only in cases of imminent threat or gross injustice, which were not established in this case.
9. Emphasizing the role of Appellate Authorities as final fact-finding bodies, the Court highlighted the limited scope of review under Article 226 of the Constitution, urging parties to exhaust appellate remedies before approaching the High Court.
10. The Court directed the petitioner to seek redressal through the Appellate Authority, ensuring that legal and factual disputes are adjudicated following due procedures, without delay, and on merits.

In conclusion, the Court disposed of the writ petition, emphasizing the importance of exhausting appellate remedies and allowing the Appellate Authority to address legal and factual disputes effectively.