2024 (12) TMI 388 - HC - Income Tax

Maintainability of writ petition against Assessment Order - appeal before CIT(A) is presently pending but no effective order has been passed thereon - Department submits that since there is already an appeal which is preferred against the Assessment Order and the same is presently pending, the writ petition ought not to have been filed by the petitioner as he had already taken recourse to the statutory alternative remedy prescribed - HELD THAT - Petitioner having availed all the statutory remedy, this Court, without the said appeal being disposed of and more particularly when the said appeal was filed prior to filing of the present writ petition, this Court is disinclined to accept the contention of the writ petitioner. The petitioner has not raised this contention before the Court by referring to the relevant provisions and/or the orders passed by the departmental authorities that the appeal before the Appellate Authority is not efficacious and will not provide adequate relief as prayed for by that forum. It appears from the facts urged that the only reason for approaching this Court is to evade payment of the statutory deposit which is prescribed under the Act while preferring the appeal. Such attempt may be made by the petitioner cannot be permitted, more particularly in the manner sought to be done by taking recourse to filing a writ petition before this Court during the pendency of the statutory appeal already filed by the petitioner. Any application that may be filed by the petitioner will necessarily be required to be considered appropriately in terms of the proviso to Section 249 (4) of the Income Tax Act and pass appropriate orders. The contentions raised by the writ petitioner before this Court can also be raised before the Appellate Authority which is presently in seisin of the matter. The petitioner is granted liberty to file necessary applications before the Commissioner, Income Tax Appeal, raising all grounds to assail the Assessment Order dated 31.03.2022 before the Commissioner (Appeals). The Commissioner (Appeals) in its turn will proceed to hear and dispose of the appeal filed by the petitioner and pending before the said authority as per the provision of law.

Summary

Issues Involved:

1. Validity of the assessment order and demand notice issued against the petitioner.
2. Maintainability of the writ petition in light of the pending statutory appeal.
3. Applicability of tax exemption under Section 10(26) of the Income Tax Act for the petitioner.
4. Availability and adequacy of alternative remedies under the Income Tax Act.

Detailed Analysis:

1. Validity of the Assessment Order and Demand Notice:

The petitioner challenged the Assessment Order dated 31.03.2022, which was issued for the Assessment Year 2015-2016 under Section 147 of the Income Tax Act, following a notice under Section 148. The assessment resulted in a demand of Rs. 5,28,13,970/-, including tax, interest, and penalty. The petitioner argued that the assessment was incorrect, as they claimed exemption from income tax under Section 10(26) of the Income Tax Act, being a member of a Scheduled Tribe in Nagaland. The court acknowledged the petitioner's claim of exemption but did not delve into the merits of the assessment itself due to the pending appeal.

2. Maintainability of the Writ Petition:

The court examined whether the writ petition was maintainable given the pending statutory appeal before the Commissioner (Appeals). The Income Tax Department argued that the writ petition should not have been filed since the petitioner had already availed of the statutory remedy. The court agreed, emphasizing that the existence of an alternative remedy typically precludes the exercise of writ jurisdiction unless exceptional circumstances are demonstrated. The court cited precedents from the Apex Court, reinforcing the principle that writ jurisdiction is discretionary and should not bypass statutory mechanisms unless the alternative remedy is inadequate or ineffective.

3. Applicability of Tax Exemption under Section 10(26):

The petitioner contended that they were exempt from income tax under Section 10(26) of the Income Tax Act, as they belonged to a Scheduled Tribe in Nagaland. This claim was not disputed by the respondents. However, the court noted that this issue should be addressed within the framework of the statutory appeal, rather than through a writ petition, given the pending appeal process.

4. Availability and Adequacy of Alternative Remedies:

The court reiterated that the Income Tax Act provides a comprehensive mechanism for addressing grievances related to assessment orders, including appeals to the Commissioner (Appeals). The court highlighted that the petitioner had not demonstrated that the statutory remedy was inadequate or ineffective. The petitioner had already filed an appeal, which was pending, and the court emphasized that the petitioner should pursue this statutory route rather than seeking relief through a writ petition. The court also noted that the petitioner could seek exemption from the statutory deposit required for the appeal under Section 249(4) of the Income Tax Act.

Conclusion:

The court concluded that the writ petition was not maintainable due to the pending statutory appeal and the availability of an adequate alternative remedy. The petitioner was granted liberty to file necessary applications before the Commissioner (Appeals) to raise all grounds against the Assessment Order. The court disposed of the writ petition, allowing the interim order to continue for three weeks to enable the petitioner to file necessary documents before the Commissioner (Appeals).