2022 (3) TMI 1357 - HC - Income Tax

Validity of assessment order passed u/s 147 read with Section 144 - appellants contended that the assessment order is vitiated on account of non-service of notice or in other words, failure to follow the procedure under the Act and the Rules framed therein in the matter of service of notice - respondent submitted that the assessee despite having been granted sufficient opportunity did not submit the return of income which has been specifically recorded by the assessing officer - HELD THAT - Firstly, the question of jurisdiction, as raised by the appellants in the instant case, is not purely a question of law. It is a mixed question of fact and law and, therefore, a vigilant assessee should raise such an issue at the earliest point of time. This is shown to have not done by the aseessee despite issuance of show cause notice and it has been canvassed for the first time in the writ petition. To decide such an issue, facts have to be examined. Such exercise cannot be done in a writ petition. It would be well open to the appellate authority to reexamine the facts, call for all details as to the manner and procedure adopted by the assessing officer while completing the assessment, examine the procedure for its correctness, whether it satisfies statutory requirement and then take a decision apart from the fact that the appellate authority will also be entitled to re-appreciate the facts which the assessee may place before the appellate authority. Therefore, to state that the appellants are purely questioning the assessment order on account of jurisdictional error, is not acceptable. We are of the considered view that the appellants should avail the alternative remedy of appeal before the Commissioner of Income Tax (Appeals). We find no ground to interfere with the order passed by the learned Single Judge. Hence, the appeal fails and is dismissed. Consequently, the connected application also stands dismissed.

Summary

Issues:
Challenge to assessment order under Income Tax Act, 1961; Jurisdictional error in assessment order; Validity of notice served; Alternative remedy of appeal under Section 246A of the Act; Applicability of Section 144B; Compliance with procedural requirements; Relevance of government notifications; Validity of transfer of assessment file; Applicability of legal precedents.

Analysis:
The High Court judgment involved an intra-Court appeal against an order passed in a writ petition challenging an assessment order under the Income Tax Act, 1961. The appellants contended that the assessment order lacked jurisdiction, was illegal, and violated procedural requirements under Section 144B of the Act and a CBDT notification. They argued for setting aside the order and remanding the matter for fresh consideration. The respondents, however, highlighted that the assessee failed to submit the return of income despite opportunities provided, and the show cause notice issued was not objected to by the assessee at that time. The respondents emphasized the relevance of Section 144B(8) and government notifications to the case.

The Court observed that the jurisdictional issue raised by the appellants was not solely a question of law but a mixed question of fact and law. The Court stated that the appellants should have raised this issue at an earlier stage, and the appellate authority was better suited to examine the facts and procedural correctness of the assessment. The Court differentiated the present case from legal precedents cited by the appellants, emphasizing the need for a detailed factual examination before reaching a decision.

The Court concluded that the appellants should pursue the alternative remedy of appeal before the Commissioner of Income Tax (Appeals) rather than seeking relief through a writ petition. The Court dismissed the appeal, granting the appellants the liberty to file an appeal within 30 days. The Court clarified that its observations were made to support the conclusion that a writ petition was not suitable in this case, and the appellate authority should independently consider the appeal on its merits and in accordance with the law, without being influenced by the Court's findings.

In summary, the High Court upheld the dismissal of the writ petition, emphasizing the importance of following the statutory appeal process for addressing issues related to assessment orders under the Income Tax Act. The judgment highlighted the need for a detailed factual examination by the appellate authority and clarified the appellants' right to raise all relevant issues before the appellate authority.