2025 (3) TMI 601 - HC - Income Tax

Validity of Order of assessment under the provisions of the Income Tax Act 1961 issued by the ACIT - allegation of violation of the principles of natural justice - as submitted petitioner was not served with any communication regarding the draft assessment order. Therefore complaining that the completion of assessment is against the provisions of Section 144B the petitioner approached this Court in the writ petition. Single Judge refused to exercise the discretion and entertain the writ petition as found that the question raised in the writ petition falls within the realm of disputed questions of fact and directed the petitioner to approach the statutory authority with an appeal within a period of two weeks from the date of the judgment. HELD THAT - On consideration of the rival submissions raised across the bar we are of the view that there is no merit in the contentions raised by the writ appellant. As rightly observed by the learned Single Judge the question as to whether there was a proper notice or not is certainly a disputed question of fact which cannot be gone into in a proceedings under Article 226 of the Constitution of India. Hence we see no reason as to why we should interfere with the judgment of the learned Single Judge. Accordingly the appeal lacks merit and the same is dismissed. We might observe that this Court by order dated 24.5.2023 had admitted the appeal and granted interim stay of all further proceedings pursuant to Ext.P2. Since we have declined to interfere with the judgment of the learned Single Judge necessarily the appellant/petitioner will have to resort to the alternate remedy of preferring an appeal. Thus we permit the appellant to file the appeal against the assessment order within a period of one month from the date of receipt of a copy of this judgment and in such event the appellate authority shall treat the appeal as one filed within the time and decide the same on merits in accordance with law after hearing the parties.

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment was whether the order of assessment issued under the provisions of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax was open to challenge on the grounds of a violation of the principles of natural justice. Specifically, the question was whether the petitioner was properly notified of the assessment proceedings, and whether the alleged lack of notice constituted a breach of natural justice that warranted judicial review under Article 226 of the Constitution of India, despite the existence of an alternate remedy.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework primarily involved the provisions of the Income Tax Act, 1961, particularly Section 144B, which governs the procedure for assessment. Additionally, the principles of natural justice, which require adequate notice and the opportunity to be heard, were central to the petitioner's claims. The procedural aspect was whether these principles were adhered to in the issuance of the assessment order.

Court's Interpretation and Reasoning

The Court interpreted the issue as a factual dispute regarding whether proper notice was served to the petitioner. The Court concurred with the learned Single Judge's view that such a dispute involves questions of fact, which are not typically adjudicated in writ proceedings under Article 226. The Court emphasized that the writ jurisdiction is not the appropriate forum for resolving factual disputes, especially when an alternate statutory remedy is available.

Key Evidence and Findings

The respondent produced evidence indicating that notices were issued electronically to the petitioner's registered email and that SMS alerts were sent. Additionally, postal records were provided to demonstrate the service of notice. The petitioner contended that these notifications were not received, thus alleging a breach of natural justice. However, the Court found that these contentions involved factual determinations unsuitable for resolution in writ proceedings.

Application of Law to Facts

Applying the principles of natural justice and the procedural requirements under the Income Tax Act, the Court found that the petitioner's claims of not receiving notice were inherently factual. The Court held that such factual disputes should be addressed through the statutory appellate process rather than through writ jurisdiction.

Treatment of Competing Arguments

The appellant argued that a writ petition is maintainable in cases of natural justice violations, notwithstanding the availability of an alternate remedy. The Court acknowledged this legal position but clarified that the present case involved disputed facts regarding notice, which are not appropriate for resolution under Article 226. The respondent's evidence of notice service was deemed sufficient to establish that there was no prima facie breach of natural justice warranting writ intervention.

Conclusions

The Court concluded that the appeal lacked merit as the primary issue involved disputed facts unsuitable for writ adjudication. The appellant was directed to pursue the alternate remedy of filing an appeal with the statutory authority.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning

The Court held: "As rightly observed by the learned Single Judge, the question as to whether there was a proper notice or not is certainly a disputed question of fact, which cannot be gone into in a proceedings under Article 226 of the Constitution of India."

Core Principles Established

The judgment reinforces the principle that writ jurisdiction under Article 226 is not the appropriate forum for resolving disputed questions of fact, especially when an alternate statutory remedy is available. It also underscores the necessity of exhausting statutory remedies before seeking judicial review, unless there is a clear breach of natural justice that can be adjudicated without delving into factual disputes.

Final Determinations on Each Issue

The Court dismissed the appeal, affirming the decision of the learned Single Judge. The appellant was granted the opportunity to file an appeal against the assessment order within one month, with the appellate authority instructed to treat the appeal as timely and decide on its merits. This determination underscores the procedural pathway for addressing grievances related to assessment orders under the Income Tax Act.

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