2013 (1) TMI 335 - HC - Income Tax

Search u/s 132 was conducted at the premises of the educational institution run by the Trust and at the residences of the Trustees Opportunity of being heard - Issuance of pre assessment notice Assessee file an WRIT Petition against assessment order u/s 144 with High court invoking Article 226 Whether the writ petition is maintainable in view of the statutory remedy provided in law Whether there exists any special or extra ordinary circumstances which warrants interference of this court, despite availability of an effective statutory remedy Held that - This court is not in a position to accept contentions regarding existence of any such ground to exercise the discretionary power vested on this court. The petitioners ought to have filed statutory appeal against the impugned assessments, instead of approaching this court by invoking Article 226. The writ petitions are disposed of directing the petitioners to file appeal before the Commissioner of Income Tax (appeals) under section 246 (A), within a period of two weeks from the date of receipt of a copy of this judgment. Appeal to be filed with CIT(A)

Summary

Issues:
Challenge against order of assessments under section 153 A read with section 144 of the Income Tax Act 1961 for a Trust and trustees. Allegation of assessments being finalized without compliance of principles of natural justice. Denial of effective opportunity for objections and personal hearing before finalizing the assessment.

Analysis:
1. The judgment addresses three writ petitions challenging assessments finalized by the 1st respondent against a Trust and trustees under section 153 A read with section 144 of the Income Tax Act 1961. The assessments pertained to income derived from the Trust. The cases were consolidated and disposed of through a common judgment due to identical grounds raised. The petitioners alleged that the assessments were finalized without providing them a reasonable opportunity, violating principles of natural justice. They contended that failure to furnish copies of seized documents hindered their ability to contest the assessments effectively.

2. The petitioners argued that the respondents' failure to provide photocopies of seized records impeded their ability to file accurate returns and net wealth statements, thus affecting their ability to contest the assessments. The petitioners claimed that they were denied the opportunity to peruse seized records before finalization of assessments, rendering the assessments violative of natural justice principles. The respondents, however, asserted that ample opportunities were provided, and the petitioners failed to cooperate by not responding to various notices issued.

3. The petitioners further contended that they were denied effective opportunity post issuance of pre-assessment notices, as no chance for objections or personal hearing was provided before finalizing the assessment. The respondents argued that due to the petitioners' non-compliance with notices issued under section 142(1), there was no requirement for additional opportunities before finalizing the assessment.

4. The judgment highlighted the statutory remedy of appeal available under section 246A, allowing appeals to the Commissioner of Income Tax (Appeals) from assessments under section 153A. The court emphasized that the appellate authority had the power to alter, modify, or cancel the assessment, making the appeal an efficacious remedy. Citing legal precedents, the court noted that interference by the High Court was unwarranted in the absence of special circumstances, and the petitioners should have pursued the statutory appeal instead of invoking Article 226.

5. In light of settled legal precedents, the court directed the petitioners to file appeals before the Commissioner of Income Tax (Appeals) within two weeks. The appellate authority was instructed to entertain the appeals as if filed within the statutory limitation period and dispose of them on merits. The court also granted a 6-week stay on further recovery proceedings related to the impugned assessments and directed the respondents to withhold finalization of penalty proceedings until the appeal disposal.