2021 (4) TMI 1378 - HC - Income Tax

Deduction u/s 80P - petitioner claiming to be a Primary Agricultural Credit Society - impugned assessment order completely flouts the judgment of the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT - assessment order was issued in violation of the principles of natural justice HELD THAT - There is no quarrel with regard to the proposition laid down in Union of India and others v Kamalakshi Finance Corporation Ltd. 1991 (9) TMI 72 - SUPREME COURT Judicial discipline demands that all authorities follow orders of the superior authority. When the order of the Supreme Court clearly specifies and declares a law, all authorities are bound by the same and cannot depart from the conclusions arrived at therein. If however an authority is alleged to have departed from a binding decision of the Supreme Court, and appreciation of facts and materials are required, however limited it may be, the remedy of a statutory appeal is the appropriate remedy. Assessees cannot insist that, in every such case, this Court must exercise its jurisdiction to set aside even an assessment order. As a matter of fact, the Supreme Court had directed in the judgment in Mayilavi s case 2021 (1) TMI 488 - SUPREME COURT that the assessing officers must consider each case on the basis of the decision rendered by it. The said direction gives ample authority to the assessing officer to consider the case of the petitioner also on merits. Thus, in passing the impugned assessment order, the AO had the requisite jurisdiction. Petitioner does not have any allegation that the order was issued in violation of the principles of natural justice. The grievance of the petitioner in the instant case stems from the nature of appreciation and analysis carried out by the assessing officer while passing the impugned assessment order. Taking note of the nature of the assessment order impugned in this writ petition, it can be seen that the petitioner has an alternative remedy available, which is equally efficacious. No circumstances are pointed out to exercise the extraordinary jurisdiction under Article 226. Accordingly, there is no merit in this writ petition and the same is dismissed, reserving the liberty of the petitioner to pursue the statutory remedies available.

Summary

Issues:
Challenge to assessment order under Article 226 based on conflict with Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. case; Claim for deduction under Section 80P of Income Tax Act, 1969; Disallowance of deductions by assessing authority; Invocation of writ jurisdiction under Article 226 vs. resorting to statutory appeal; Allegation of assessment order being in contempt of Supreme Court judgment; Application of principles of natural justice in assessment process.

Analysis:
The petitioner, a Primary Agricultural Credit Society, challenged an assessment order for the year 2018-19 under Article 226, alleging it contradicted the Supreme Court judgment in Mavilayi case. The petitioner claimed deduction under Section 80P but faced disallowance by the assessing authority, despite meeting queries with explanations and documents. The assessing officer's decision was deemed to be in direct conflict with the Supreme Court ruling, leading to the petitioner's contention that the assessment order bordered on contempt of court. The petitioner argued that the assessing authority disregarded established legal principles, including the binding nature of higher authorities' orders, such as in Union of India v Kamalakshi Finance Corporation Ltd.

The court considered the rival contentions and emphasized the limited scope of writ jurisdiction under Article 226 in tax matters. It highlighted that the court generally refrains from interfering in assessment orders unless they are wholly without jurisdiction, violate natural justice, or for exceptional reasons. The judgment cited precedents like Veerappa Pillai v. Raman & Raman Ltd and State of Bombay v. United Motors Ltd. to underscore the importance of following statutory remedies in tax matters, except in cases of fundamental rights infringement. The court reiterated that the Income Tax Act provides a comprehensive mechanism for addressing improper or erroneous orders by taxing authorities.

Regarding the petitioner's plea for the court to set aside the assessment order, the judgment emphasized that the assessing officer had the jurisdiction to issue the order, as directed by the Supreme Court in the Mavilayi case. The court noted that the petitioner had an alternative and efficacious remedy available through statutory appeal, making it unnecessary to invoke extraordinary jurisdiction under Article 226. The judgment concluded that there was no merit in the writ petition and dismissed it, while allowing the petitioner to pursue statutory remedies as available.