2024 (6) TMI 658 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner argued that the re-assessment proceedings were time-barred as per the first proviso to the un-amended section 147, asserting that no re-assessment can be initiated after four years in the absence of any omission or failure on the part of the Assessee to make a disclosure - HELD THAT - The conduct of the petitioner disentitles him from invoking the extraordinary writ jurisdiction of this Court in the instant cases due to delayed filing of return in response to notice u/s 148 of the Act, as the petitioner did not comply either with notice u/s 142(1) in the re-assessment proceedings or with the show-cause notice proposing the claim of deduction, as clearly stated in the impugned assessment order itself. Appears that the petitioner never challenged either the re-assessment notice, or the reasons to believe as furnished to the petitioner, or the sanction granted u/s 151 of the Act on either jurisdictional grounds, or on any other grounds; whatsoever, and now when the re-assessment proceedings stands concluded resulting in passing of assessment orders, the petitioner without preferring the statutory appeal as per the Act, after the expiry of prescribed limitation period, has invoked the writ jurisdiction of this Court. The instant matters require factual adjudication which is beyond the scope of proceedings under Article 226 of the Constitution of India. Such factual aspects being whether at all there was delay in statutory audit by the State Government or whether at all the State Government failed to appoint auditors under the Jharkhand Co-operative Societies Act for the A.Y. 2013-14 and A.Y. 2014-15, or whether petitioner at all requested the State Government for statutory audit under the Jharkhand Co-operative Societies Act; whether petitioner prepared statement of accounts, etc. and submitted to the Registrar under Rule 58 of the Jharkhand Co-operative Societies Rules, 1959. All these facts were never brought on record by the petitioner in course of the re-assessment proceedings. The aforesaid factual aspects do not make this matter fall within any of the exceptions which would justify the Petitioner in invoking the extra-ordinary writ jurisdiction of this Court having not availed the alternative appellate remedy as provided for under the Act. The contention of the petitioner on the doctrine of merger is also misconceived, inasmuch as, the original assessment proceedings which was assailed before the CIT(A) was not on the aspect whether the deduction u/s section 80-P claimed by the petitioner was rightfully claimed, whether the petitioner has fulfilled the condition of statutory audit under the provisions of the Jharkhand Co-operative Societies Act read with section 80-P of the Act read with section 44AB of the Act, etc; rather the reassessment proceedings are on the basis of the aforesaid aspects, and hence, there will be no application of the doctrine of merger in the instant case. We are conscious that though the petitioner has not availed the appellate jurisdiction and the time for the same has already expired but the limitation can be condoned by the competent appellate authority, if the statutory appeal will be filed before it for the relevant assessment years. Accordingly, we are refraining from giving any opinion on the merits of the case regarding audit under the provisions of Jharkhand Co-operative Societies Act etc. We are of the considered opinion that the petitioner has failed to make out any case for interfering with the respective re-assessment/penalty orders avoiding the alternative remedy given to the petitioner and accordingly all these writ applications are hereby, dismissed. Petitioner would be at liberty to challenge the respective re-assessment orders/penalty orders before the competent appellate authority and if the petitioner assails the same along with the petition for condonation of delay, the learned appellate authority should decide the application for condonation of delay in accordance with law and keeping in view the fact of pendency of these writ applications before this Court.

Issues Involved:
1. Legality of reassessment proceedings u/s 147.
2. Validity of penalty proceedings u/s 271 (1) (c).
3. Availability and exhaustion of alternative statutory remedies.

Summary:

1. Legality of reassessment proceedings u/s 147:
The Petitioner-Assessee challenged the notices issued u/s 148, the assessment orders passed u/s 147 read with section 144B, and the consequent demand and penalty notices for A.Y. 2013-2014 and 2014-2015. The petitioner argued that the reassessment proceedings were time-barred as per the first proviso to the un-amended section 147 of the Act, asserting that no reassessment can be initiated after four years from the end of the relevant assessment year without any omission or failure on the part of the Assessee to make a disclosure. The petitioner also contended that the reassessment was based on a change of opinion and a mechanical grant of sanction by the superior authority, making the proceedings illegal and without jurisdiction. The Court found that the petitioner did not challenge the reassessment notice, reasons to believe, or the sanction granted u/s 151 during the reassessment proceedings. The Court held that the petitioner's conduct, including delayed filing of returns and non-compliance with notices, disentitled him from invoking the writ jurisdiction, emphasizing the need for factual adjudication beyond the scope of Article 226.

2. Validity of penalty proceedings u/s 271 (1) (c):
The petitioner argued that the penalty proceedings u/s 271 (1) (c) were solely based on the findings in the assessment order without fresh consideration in the penalty proceedings, making the imposition of penalty bad in law. The petitioner reiterated that the Revenue cannot disallow a statutory claim of deduction u/s 80-P in the absence of a stipulation for obtaining a statutory audit under the Jharkhand Co-operative Societies Act. The Court did not specifically address the merits of the penalty proceedings but highlighted the petitioner's failure to exhaust statutory remedies.

3. Availability and exhaustion of alternative statutory remedies:
The Respondent argued that the petitioner had not availed the statutory remedy of appeal under the Act and invoked the writ jurisdiction only after the expiry of the period of limitation for filing an appeal. The Court emphasized that the Act provides a complete machinery for challenging assessment and penalty orders and that the petitioner could not bypass this mechanism by invoking the writ jurisdiction. Citing precedents, the Court reiterated that the existence of an alternative remedy must be considered, and the writ jurisdiction should not be invoked as a matter of course. The Court dismissed the writ applications, granting the petitioner liberty to challenge the reassessment and penalty orders before the competent appellate authority, which should decide on the application for condonation of delay in accordance with law.

Conclusion:
The writ applications were dismissed, and the petitioner was advised to pursue the statutory appellate remedies provided under the Income-tax Act, 1961.

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