2025 (1) TMI 38 - HC - Income Tax

Maintainability of writ petition against reassessment proceedings - HELD THAT - The change of opinion is to be verified from the records regarding the assessment which has been made on earlier occasion is proper one, or the subsequent assessment is the proper one. If such a situation is there, then the same is to be deliberated upon by the authority by going through the documents available on record and on consideration of the rival submissions advanced on behalf of the parties, meaning thereby, the same pertains to the adjudication of fact. Also while considering the change in opinion, the order must not be non-speaking and based upon non-speaking order, there cannot be any consideration of the fact that the assessment is based upon the change in opinion. This Court in order to consider the said aspect has gone through the order impugned and found therefrom that the order is not cryptic, rather it is a detailed order basis upon the documents which were assessed/scrutinized by the Assessing Officer and basis upon the same, the assessment order was made, but when subsequently it was found that the disclosure of the documents needs to be statement in the income tax which is also based upon the material document which led the revenue to issue notice. It is, thus, evident from the impugned order that the said order is not a cryptic one, rather it is a detailed order on consideration of the rival submissions of the parties based upon the appreciation of the documents. This Court is of the view that in such a factual aspect where the assessment order is being disputed by the petitioner on fact, then it will not be proper for this Court to exercise its extraordinary jurisdiction conferred under Article 226 of the Constitution of India in a situation where the effective alternative remedy of appeal is available under Section 246A of the Income Tax Act, 1961. However, it is left open for the petitioner to avail the alternative remedy as provided under Section 246A of the Income Tax Act, 1961.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment include:

Whether the writ petition challenging the reassessment notice and order under the Income Tax Act, 1961, is maintainable under Article 226 of the Constitution of India.
Whether the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, constitute a jurisdictional error due to a change of opinion.
Whether the petitioner should be relegated to the alternative remedy of appeal under Section 246A of the Income Tax Act, 1961.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of the Writ Petition

Relevant Legal Framework and Precedents: The court considered the principles laid down in the case of Chhabil Dass Agarwal, which emphasized the availability of an alternative remedy as a bar to the maintainability of a writ petition. The court also referred to Whirlpool Corpn. Vs. Registrar of Trade Marks regarding exceptions to the rule of alternative remedy.
Court's Interpretation and Reasoning: The court noted that while there is no restriction on exercising power under Article 226, there is a self-imposed restriction when an effective alternative remedy is available. The court emphasized that jurisdictional errors or violations of natural justice could warrant the exercise of writ jurisdiction.
Key Evidence and Findings: The court found that the petitioner had an alternative remedy under Section 246A of the Income Tax Act, 1961, which provides a complete mechanism for redressal of grievances related to tax assessments.
Application of Law to Facts: The court applied the principles from the precedents to determine that the writ petition was not maintainable due to the availability of an effective alternative remedy.
Treatment of Competing Arguments: The petitioner argued for jurisdictional error due to a change of opinion, while the Revenue contended the availability of an alternative remedy. The court favored the latter, emphasizing the statutory appeal mechanism.
Conclusions: The writ petition was held to be not maintainable, and the petitioner was directed to pursue the alternative remedy of appeal.

Issue 2: Jurisdictional Error and Change of Opinion

Relevant Legal Framework and Precedents: The court referred to Techspan India Private Limited regarding the concept of change of opinion and its impact on jurisdiction.
Court's Interpretation and Reasoning: The court distinguished between jurisdictional errors and factual disputes, noting that a change of opinion does not constitute a jurisdictional issue.
Key Evidence and Findings: The court examined the impugned order and found it to be detailed and based on an assessment of documents, rather than being cryptic or perfunctory.
Application of Law to Facts: The court applied the principles from Techspan India Private Limited to conclude that the issue of change of opinion was a factual dispute, not a jurisdictional error.
Treatment of Competing Arguments: The petitioner's claim of jurisdictional error was rejected as it was deemed a factual issue suitable for appeal rather than writ jurisdiction.
Conclusions: The court concluded that the claim of a change of opinion did not warrant interference under Article 226.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable."
Core Principles Established: The court reiterated the principle that the existence of an effective alternative remedy bars the maintainability of a writ petition unless there are jurisdictional errors or violations of natural justice.
Final Determinations on Each Issue: The writ petition was dismissed as not maintainable due to the availability of an alternative remedy. The petitioner was advised to file an appeal under Section 246A of the Income Tax Act, 1961.

The judgment underscores the importance of exhausting statutory remedies before invoking the writ jurisdiction of the High Court, except in cases of jurisdictional errors or violations of natural justice. The court's decision reflects a careful application of established legal principles to the facts of the case, emphasizing the role of appellate mechanisms in tax disputes.

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