2024 (9) TMI 1381 - HC - Income Tax

Revision u/s 263 - order of assessment passed under sec.153A - additions u/s 69A - Maintainability of the writ petition despite the availability of an alternative remedy of appeal under Section 246(A) - HELD THAT - It is settled principle of law that the alternative remedy of appeal would not be a bar to exercise jurisdiction under Article 226 of the Constitution of India. However the same, as held by the apex court, is subject to certain limitations that warrants the exercise of jurisdiction, viz., where the order impugned is without jurisdiction, is in gross violation of principles of natural justice or is beyond the jurisdiction, or where the vires of the provisions of the Act are under challenge. I In the instant case, pursuant to the order of Revision passed by the CIT u/s.263 of the Act, the assessing officer has issued notices u/s 142 (1) calling for details of the un-secured hand loans and confirmations from the said creditors. The petitioner has failed to furnish relevant information asked for, except to state, that the material that was relied upon by the assessing officer to come to a conclusion that the petitioner had accepted unsecured loans, is bogus material and the same is resultant of the fraud played by his ex-employees. When the assessing officer had asked for the details, such as name, address and designation, of such of those employees who alleged to have played fraud on the petitioner and the details of the action taken against such employees, the petitioner did not respond to the same. Thus, the petitioner has failed to discharge the burden cast upon him. In the absence of any other material placed by the petitioner, the assessing officer proceeded with the assessment. The contention of the petitioner, that, the material that formed the basis for making the addition is Xerox copies of the promissory notes found at the premises of M/s.Raki Avenues Private Limited, which does not belong to him, and based on the said material the assessing officer could have made no addition, would involve a disputed questions of fact and the same would not be within the realm of this court under Art.226 of the constitution of India to be gone into. The act of the assessing officer bringing to tax a receipt of a sum, which the assessee has failed to explain, cannot be said to be without jurisdiction under the provisions of the Income-tax Act. It is for the assessee to establish before the assessing officer that the receipt is not his receipt or that the same is not taxable. Petitioner has not demonstrated any of the exceptional situations referred to above that would require this Court to interfere under Art.226 of the Constitution of India. Following the judicial dicta on the issue, without going into the issue of taxability of unexplained unsecured loans in the form of promissory notes, we are of the view that the order of the assessing officer cannot be construed as without jurisdiction or in violation of the principles of the natural justice. We hold that the petitioner has not made out any case justifying the bypass of statutory effective remedy of appeal and approaching this Court under Art 226 of the Constitution of India. The writ petition is, therefore, not entertainable. Writ Petition is accordingly dismissed. We however grant liberty to the petitioner to approach the appellate authority under Section 246A of the Income Tax Act.

Issues Involved:
1. Validity of the assessment order under Section 143(3) read with Section 263 of the Income Tax Act, 1961.
2. Jurisdiction of the assessing officer regarding the admissibility of xerox copies of promissory notes.
3. Maintainability of the writ petition despite the availability of an alternative remedy of appeal under Section 246(A) of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of the assessment order under Section 143(3) read with Section 263 of the Income Tax Act, 1961:
The petitioner, Managing Director of M/s. Raki Avenues Pvt. Ltd., faced a search and seizure operation on 10.01.2020 under Section 132 of the Income Tax Act, 1961. Subsequent notices under Section 153A were issued, and the petitioner filed returns for assessment years 2016-17 to 2019-20. The assessments were completed on 28.09.2021, accepting the returned income. However, the Principal Commissioner of Income Tax, exercising jurisdiction under Section 263, revised these assessments, deeming them prejudicial to the interests of the Revenue. The assessing officer then issued notices under Section 142(1), which led to the addition of unexplained money based on unsecured loans.

2. Jurisdiction of the assessing officer regarding the admissibility of xerox copies of promissory notes:
The petitioner contended that the additions under Section 69A were based solely on xerox copies of promissory notes, claimed to be bogus and resultant from fraud by ex-employees. The petitioner argued that the onus was on the department to establish the taxability of the said income. The assessing officer, however, required the petitioner to provide details of the ex-employees involved in the alleged fraud, which the petitioner failed to furnish. Consequently, the assessing officer completed the assessment based on the material available, adding unsecured loans as unexplained money under Section 69A.

3. Maintainability of the writ petition despite the availability of an alternative remedy of appeal under Section 246(A) of the Income Tax Act, 1961:
The petitioner argued that the writ petition was maintainable as the assessing officer's order was without jurisdiction, particularly regarding the admissibility of xerox copies of promissory notes. The petitioner relied on the Supreme Court's decision in M/s. Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer Cum Assessing Authority & Ors, which states that the availability of an alternative remedy does not oust the jurisdiction of the High Court under Article 226. The petitioner also cited exceptions where writ jurisdiction could be invoked, such as violation of fundamental rights, principles of natural justice, orders without jurisdiction, or challenges to the vires of an Act.

Court's Findings:
The court considered the rival submissions and focused on the preliminary issue of the writ petition's entertainability. It noted that the impugned assessment order was a consequence of the Principal Commissioner's order under Section 263, which had become final. The court emphasized that the alternative remedy of appeal under Section 246(A) is not an absolute bar but is subject to certain limitations, such as orders without jurisdiction or in violation of natural justice. The court found that the petitioner failed to demonstrate any exceptional situations warranting interference under Article 226. The court held that the assessing officer's actions were within jurisdiction and not in violation of natural justice principles.

Conclusion:
The court dismissed the writ petition, granting liberty to the petitioner to approach the appellate authority under Section 246(A) of the Income Tax Act. The observations made were for the purpose of deciding the present petition and would not affect the appellate authority's adjudication. No order as to costs was made, and pending interlocutory applications were closed.

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