2021 (11) TMI 331 - HC - Income Tax

Violation of the principles of natural justice - Availing remedy of appeal - Petitioner submits that it is a settled proposition of law that when there is violation of principles of natural justice, the aggrieved party can invoke the writ jurisdiction of the High Court under Article 226 of the Constitution of India notwithstanding availability of alternative remedy - HELD THAT - Adverting to the facts of the present case, we are not convinced that it is a case of no notice or no hearing. Whether opportunity of hearing granted and availed was adequate or reasonable would depend upon the facts and circumstances of each case. There cannot be any straight jacket formula. If as the petitioner contends the opportunity of hearing was inadequate which affected his right to make a proper response, certainly the same can be gone into by the appellate authority, since it may require examination of facts which we are not inclined to do in exercise of our writ jurisdiction. Petitioner is relegated to the forum of appeal before the first appellate authority i.e., Commissioner of Income Tax (Appeals) under Section 246A of the Income Tax Act, 1961. To enable the petitioner to effectively avail the remedy of appeal, we direct that for the next 30 days from today, no coercive steps shall be taken by the respondent against the petitioner in terms of the impugned assessment order dated 04.09.2021. It would be open to the petitioner to file necessary application either before the assessing officer or before the appellate authority for interim stay. Needless to say, if such application is filed, the same shall be considered on its own merit and in accordance with law. We express no opinion.

Summary

Issues:
Challenge to assessment order for the assessment year 2017-18 under Article 226 of the Constitution of India. Allegation of violation of principles of natural justice. Invocation of writ jurisdiction under Article 226 despite availability of alternative remedy.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
- The petitioner sought to quash the assessment order for the assessment year 2017-18, alleging violation of principles of natural justice. The petitioner received an opportunity to respond to the draft assessment order but requested additional time due to the auditor's illness. The respondent granted a limited extension, which the petitioner argued was insufficient given the complexity of the assessment. Despite submitting a general response, the final assessment order was passed under relevant sections of the Income Tax Act, 1961.

2. Writ Jurisdiction under Article 226:
- The petitioner contended that the case involved a violation of natural justice principles, justifying the invocation of writ jurisdiction under Article 226 of the Constitution of India. Citing a recent Supreme Court decision, the petitioner argued that such violations allow for the High Court's intervention, even if alternative remedies exist. The respondent, however, argued that the petitioner was duly notified and had the opportunity to respond, making the writ jurisdiction unnecessary.

3. Judicial Precedents and Legal Principles:
- The court referenced established legal principles regarding the High Court's extraordinary jurisdiction under Article 226. It highlighted that in cases of natural justice violations, challenges to statutes' vires, or excess of jurisdiction, the High Court can intervene despite the availability of alternative remedies. The court emphasized the consistency of this legal doctrine over time, citing relevant precedents to support its position.

4. Decision and Remedial Measures:
- After considering the arguments, the court found that the case did not warrant immediate intervention through writ jurisdiction. It concluded that the petitioner should pursue the alternative remedy of appeal before the Commissioner of Income Tax (Appeals) under Section 246A of the Income Tax Act, 1961. To facilitate this process, the court directed a 30-day moratorium on coercive actions based on the assessment order. The petitioner was advised to seek interim stay through appropriate applications before the assessing officer or the appellate authority.

5. Disposition of the Writ Petition:
- In light of the above analysis, the court disposed of the writ petition, directing the petitioner to pursue the appeal route for further redressal. The court clarified that any pending miscellaneous applications would be closed, and no costs were awarded in the matter.

This detailed analysis of the judgment highlights the key issues raised, legal arguments presented, judicial considerations, and the final decision rendered by the High Court in the case.