Scope of appeals under Income-tax Act is wider- Courts need not entertain Writ Petitions when there is effective remedy available by way of appeal and revision.

[CA DEV KUMAR KOTHARI]

2019 (11) TMI 1118 - SUPREME COURT  -GENPACT INDIA PRIVATE LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX & ANOTHER. And case laws referred to therein.

Appeal remedy under Income-tax Act, 1961:

Earlier there was S.246 and now S.246A governs provisions of first appeal against orders of Assessing Officers under the  Income-tax Act, 1961.

There is also remedy by way of revision u/s 264 on application of assesse to the CIT.

Appealable orders -wider expressions used:

The mindset that orders passed under specific sections are only appealable is wrong notion in minds of many tax payers, practioners and tax officers. It can be said that specific orders mentioned with reference to sections under which such orders are passed are illustrative. Over a period of time new sections have been introduced for levy of tax. However, some provisions are not specifically mentioned in list of appealable orders. In fact, if one go by spirit, there is no need to mention any specific order against which appeal is provided.

It seems that due to impression that only specific orders are appealable the petitioners in case of Genpact (supra) preferred Writ Petitions challenging tax determination on buy-back of shares under S.115QA.

We find that there is wider expression used in provision relating to first appeal:

Section 246A which is in force now relevant portion reads as follows:

246A. Appealable orders before Commissioner (Appeals).– (1) Any assessee or any deductor or any collector aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against–

(a) an order passed by a Joint Commissioner under clause (ii) of sub-section (3) of section 115VP or an order against the assessee where the assessee denies his liability to be assessed under this Act or ……….

Section 246 which was in force earlier,  relevant portion read as follows:

"246. Appealable orders - (1) Subject to the provisions of sub-section (2), any assessee aggrieved by any of the following orders of an Assessing Officer other than the Joint Commissioner may appeal to the Deputy Commissioner (Appeals) before the 1st day of June, 2000 against such order–

(a) an order against the assessee, where the assessee denies his liability to be assessed under this Act,

S.30 of the Income-tax Act, 1922

“30.(1) Any assessee objecting to the amount of income assessed under Section 23 … or the amount of tax determined under Section 23 … or denying his liability to be assessed under this Act … may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order:”

We find that expressions used in three sections prevalent at relevant times  had similar  meanings and going by intentions and purpose it can be said that any order determining any tax liability under the Act, is appealable.

  Section 30 of the Income Tax, 1922 came up for consideration before the Supreme Court  Court in Commissioner of Income Tax, U.P., Lucknow v. Kanpur Coal Syndicate 1964 (4) TMI 18 - SUPREME COURT

The contention raised by the assessee was considered as under:-

“The Income Tax Officer may reject its contention and may assess the total income of the association as such and impose the tax on it. Under Section 30 an assessee objecting to the amount of income assessed under Section 23 or the amount of tax determined under the said section or denying his liability to be assessed under the Act can prefer an appeal against the order of the Income Tax to the Appellate Assistant Commissioner. It is said that an order made by the Income Tax Officer rejecting the plea of an association of persons that the members thereof shall be assessed individually does not fall under one or other of the three heads mentioned above. What is the substance of the objection of the assesses? The assessee denies his liability to be assessed under the Act in the circumstance of the case and pleads that the members of the association shall be assessed only individually. The expression “denial of liability” is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. In either case the denial is a denial of liability to be assessed under the provisions of the Act. In one case the accessee says that he is not liable to be assessed to tax under the Act, and in the other case the assessee denies his liability to tax under the provisions of the Act if the option given to the appropriate officer under the provisions of the Act is judicially exercised. We, therefore, hold that such an assessee has a right of appeal under Section 30 of the Act against the order of the Income Tax Officer assessing the association of members instead of the members thereof individually.”

It was concluded that the expression “denial of liability” is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances.

Examples of some particular circumstances under IT Act 1961:

We can find some particular circumstances for levy, assessment or demand of tax and such demand may not arise from order under particular sections. For example S.115J, 115JA, 115JB, 115O, 115K, 115R … etc. In some situations demand may be raised through any specifically appealable order and in some situations without any specifically appealable orders.

If any such demand is raised, in either way, the assesse can challenge the same by way of appeal under the wider expressions used in relation to appeal as discussed above and as discussed and held in the judgment under study and some  judgments on provisions of tax laws, referred to therein.

In the judgment there are also discussions and references relating to Writ Jurisdictions of Courts and self-imposed limitations etc.

A short provision is required:

By insertion of several sections in provisions relating to appeals complexity has been enlarged. Whereas it is desirable that the provision should be drafted in wider and general terms to make any order levying tax, interest, fees and penalty appealable. The provision can be on the following lines:

    Appealable orders before Commissioner (Appeals).–

1. Any assessee or any deductor or any collector aggrieved by any orders passed by any Assessing Officer, determining, levying or demanding any tax, interest, fees and penalty under this Act may appeal to the Commissioner (Appeals).

Improper exercise of Writ Jurisdiction:

In the following article author had expressed view that it was not proper for any to adopt and avail route of Writ Jurisdiction of High Court. Author had also expressed that for  honorable High Court also  it was not proper to admit and adjudicate dispute between tax payer and tax department on simple appealable issue of disallowance of employees PF contributions due to delayed payment. 

Excerpts from the article:

Employees contributions- S. 2.24.x , 36.1.va and 43B addition challenged in WP and considered by Madras High Court – improper course and actions by all  An Article By: - CA DEV KUMAR KOTHARI    November 3, 2018

Judgment under present study:

M/S. UNIFAC MANAGEMENT SERVICES (INDIA) PRIVATE LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATION CIRCLE 3 (2) , CHENNAI 2018 (10) TMI 1386 - MADRAS HIGH COURT (in short UNIFAC)

About the Court the author wrote as follows:

“ Sorry to say that Honourable  judge of High Court erred by admitting WP and by not following binding precedence and not applying judicial discipline :

Judges are also human being, so they are also not immune from committing errors and omissions. Sometimes there can be bias even in minds of judges.

Sometimes judgment are influenced by other factors like  mood, pressures, bias, presumptions, and different type of  mood prevailing in mind and soul of the judge.

With utmost respect to the lordship of honourable Madras High Court, author express that the course adopted by honourable Justice Mr. Justice K. Ravichandrabaabu is not correct. For the following reasons:

(a) First of all, in this case WP should not have been admitted, because challenge was not to the virse of provisions but only to additions made in assessment order and there was very effective alternate remedy available to the petitioner. Proper Course was to reject WP on this ground, and to allow time to petitioner to file appeal before CIT(A).  By  not doing so, author, with due respect feel that honourable justice has not followed basic fundamental rules about WP and has also not followed judicial precedence.

(b) Honourable Court must have regard to the ruling of the Supreme Court in case of Alom Extrusions. In that case though the question was not on S.2.24.x and S.36.1.va, but honourable Supreme Court had considered these provisions. Therefore, even an obiter dicta, of the honourable Supreme Court is binding on other Courts.

(c) Judgment of Madras High Court was not considered.

(d) Other High Courts have also adopted and applied reasoning in case of Alom Extrusion.

(e) The honourable Court must have adopted a view which is in favour of assesse. There are majority of judgments in which S.43B has been applied in relation to contributions covered u/s 2.24.x.

A fit case for recall of the judgment:

With due respect and regard, author feels that it is a fit case for recall  and review of  the judgment  not only to render justice and also to follow rules of binding precedence and judicial discipline, which appears to have been totally ignored by honorable justice.”

Unquote:

In view of recent judgment of the Supreme Court , under study in this article , author reiterate his views about the judgment in case of Unifac Management Services (supra.)