2021 (8) TMI 616 - HC - Income Tax

Maintainability of appeal in High Court - alternate remedy - Reopening of assessment u/s 147 - issuance of show cause notice by an improper authority - violations of the principles of natural justice - HELD THAT - As observed earlier, Institutional respect is of paramount importance. Even the point of jurisdiction, limitation, error apparent on the face of the record, are on merits and all are to be adjudicated before the appellate authority and the appellate authority, more specifically, the Appellate Tribunal or the Commissioner (Appeals), as the case may be, is empowered to adjudicate all such legal grounds raised by the respective parties and make a finding on merits. Thus, usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be over-burdened, but usurping the powers of the appellate authority is certainly not desirable. Regarding the contentions raised on behalf of the writ petitioner with reference to the jurisdiction and violations of the principles of natural justice, they are not striking the conscious of this Court, so as to invoke the extraordinary jurisdiction, as the adjudication on disputed facts became necessary. The point of jurisdiction and principles of natural justice are pleaded commonly, which all are deeply associated with the disputed facts and circumstances. Thus, an elaborate adjudication with reference to the original documents and records are necessary. Undoubtedly, the appellate authority or the Tribunal, as the case may be, are the quasi-judicial authorities and competent to adjudicate the ground raised regarding jurisdiction and violations of principles of natural justice. Thus, the opportunity of an aggrieved person to adjudicate the legal grounds must be allowed to be provided before the appellate authority or before the Tribunal, as the case may be. The High Court cannot adjudicate the disputed facts in a writ proceedings for the purpose of considering certain legal grounds. When the appellate authority is competent to adjudicate such legal grounds, the opportunity and the benefit of an appeal cannot be denied to an aggrieved person. In such circumstances, the aggrieved persons are loosing one opportunity of adjudication for the purpose of redressing their grievances. This Court emphatically made it clear that all the Orders-in-Original are to be decided before the appellate authority, in the event of an appeal provision under the statute concerned. Thus, in the present case, the petitioner is at liberty to prefer an appeal before the jurisdictional appellate authority in the prescribed format and by complying with the provisions of the statute.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Jurisdiction of the authority issuing the assessment orders.
3. Compliance with mandatory requirements under the proviso to Section 147 of the Income Tax Act.
4. Exhaustion of appellate remedies before approaching the High Court.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner contended that the assessment orders were passed in violation of principles of natural justice as they were not given an adequate opportunity to present their case. The petitioner argued that the lack of opportunity to be heard resulted in prejudice against them. The court noted that the principles of natural justice must be adhered to in all proceedings and cited precedents where the failure to provide a reasonable opportunity to the assessee warranted setting aside the assessment orders and remanding the matter for fresh consideration.

2. Jurisdiction of the Authority:
The petitioner argued that the authority who issued the assessment orders lacked jurisdiction. The court examined previous judgments, including the case of Canon India Private Limited, which emphasized that the power to reassess and recover duties must be exercised by the same authority or their successor who initially assessed the goods. The court reiterated that the proper officer must be the one who assessed the goods in the first instance, and any deviation from this would render the proceedings without jurisdiction.

3. Compliance with Mandatory Requirements under Proviso to Section 147:
The petitioner contended that the mandatory requirements under the proviso to Section 147 of the Income Tax Act were not adhered to. The court referred to the judgments in International Flavours Fragrances India Pvt. Ltd. and M/s. Kone Elevators (India) Pvt. Limited, which highlighted that for reassessment beyond four years, it must be established that the assessee failed to disclose fully and truly all material facts necessary for assessment. The court emphasized that mere non-disclosure is insufficient; there must be an intention or motive to suppress facts.

4. Exhaustion of Appellate Remedies:
The court underscored the importance of exhausting appellate remedies before approaching the High Court. It was noted that the appellate authority is the final fact-finding authority and their findings are crucial for the High Court to exercise judicial review effectively. The court stressed that writ petitions should not be entertained routinely without exhausting the statutory appeal provisions, except in exceptional circumstances where the order is issued by an incompetent authority or allegations of malafides are raised. The court cited several judgments, including those from the Supreme Court, which consistently insisted on exhausting the appellate remedy provided under the statute.

Conclusion:
The court concluded that the petitioner must exhaust the appellate remedy provided under the Income Tax Act before approaching the High Court. The writ petitions were disposed of with the liberty for the petitioner to file an appeal before the jurisdictional appellate authority, which is bound to adjudicate the issues on merits and in accordance with law. The court emphasized that entertaining writ petitions without exhausting appellate remedies undermines the statutory provisions and the expertise of the appellate authorities.