2022 (8) TMI 628 - HC - Income Tax

Validity of reopening of assessment u/s 148 - non-issuance of sanction order under Section 151 by competent authority - Maintainability of writ petition when alternative statutory remedy is available - Ld. Single Judge observed that writ petition can be entertained in exceptional circumstances and the case presented by the petitioner was not a case of that kind which required invocation of power under Article 226 of the Constitution of India and holding thus, relegated the petitioner to avail alternative remedy available under Section 246(A) - HELD THAT - HELD THAT - We concur with the observation of the learned Single Judge that present is not a case warranting exercise of powers under Article 226 of the Constitution of India, having regard to the fact that the petitioner has adequate efficacious alternative remedy. We are, however, of the opinion that if the learned Single Judge wanted the petitioner to avail alternative remedy, findings as recorded in paragraphs 6 and 7 ought not to have been recorded. We are not inclined to examine in the present proceeding whether the findings recorded by the learned Single Judge is correct or not, as we have opined that the petitioner may avail alternative remedy. In order not to cause any prejudice to the petitioner, we make it clear that the findings recorded by the learned Single Judge will not come in the way of the petitioner urging the very same points as well as other points before the appellate authority and the appellate authority, without being influenced by any such findings recorded by the learned Single Judge, in the event of filing of any appeal, shall decide the same in accordance with law.

Summary

Issues:
1. Validity of sanction order under Section 151 of the Income Tax Act, 1961.
2. Availability of alternative remedy under Section 246(A) of the Act.
3. Furnishing of reasons for initiating proceedings under Section 148 of the Act.
4. Compliance with CBDT Circular No. 19 of 2019 regarding DIN number.

Analysis:

Issue 1: Validity of sanction order under Section 151 of the Income Tax Act, 1961:
The appeal challenged an order regarding the initiation of proceedings under Section 148 of the Income Tax Act, 1961, based on the contention that the sanction under Section 151 was not properly accorded. The petitioner argued that the Document Identification Number (DIN) mentioned in the sanction order was incorrect, rendering the entire proceeding illegal. However, the respondents countered by stating that the DIN was indeed present in the sanctioning order and that a digital signature was not required for internal communication. The learned Single Judge observed that the sanction order bore the DIN and document number, mentioning the name and designation of the authority granting approval under Section 151 of the Act. The Judge found no merit in the petitioner's submission, emphasizing the presence of the DIN in the documents.

Issue 2: Availability of alternative remedy under Section 246(A) of the Act:
The learned Single Judge determined that the case did not warrant the exercise of powers under Article 226 of the Constitution of India, as the petitioner had an alternative remedy under Section 246(A) of the Act. The Judge noted that the petitioner's case did not necessitate invoking Article 226 and directed the petitioner to pursue the available alternative remedy. The appellant's counsel argued that the reasons for initiating proceedings were not provided promptly and lacked essential details like the signature of the issuing authority, date, and time. The appellant also raised concerns about the DIN number not being a computer-generated one as required by a CBDT Circular.

Issue 3: Furnishing of reasons for initiating proceedings under Section 148 of the Act:
The appellant contended that the reasons for initiating proceedings under Section 148 were not furnished within a reasonable period and lacked crucial details. Citing a Supreme Court decision, the appellant argued that the reasons provided were unreliable due to missing signatures and essential information. The respondents maintained that the arguments lacked merit and could be raised before the appellate authority. They supported the Single Judge's decision to direct the petitioner to pursue the alternative remedy available under the Act.

Issue 4: Compliance with CBDT Circular No. 19 of 2019 regarding DIN number:
The appellant raised concerns about the DIN number in the sanction order not being compliant with a CBDT Circular, emphasizing that it was not a computer-generated DIN number. The respondents dismissed these concerns, suggesting that any alleged irregularities could be addressed before the appellate authority. They argued that the Single Judge's order directing the petitioner to pursue the alternative remedy was lawful and did not contain any legal flaws.

In conclusion, the High Court upheld the Single Judge's decision to relegate the petitioner to avail the alternative remedy under Section 246(A) of the Income Tax Act, emphasizing that the findings recorded should not prejudice the petitioner's right to raise the same points before the appellate authority. The Court disposed of the writ appeal without costs, allowing the appellant to file an appeal within 45 days for a merit-based decision without considering the limitation period.