2014 (4) TMI 675 - HC - Income Tax

Maintainability of petition - Correctness and sustainability of order Denial of exemption Alternate remedy available Held that - The assessee is having an effective alternative remedy by way of appeal before the appellate authority and in the that circumstance, interfere is not liable to be made relying upon Income Tax and Others v. Chhabil Dass Agarwal 2013 (8) TMI 458 - SUPREME COURT - the denial of exemption is not a blanket denial - the correctness of the figures will have to be examined by the competent authority with reference to the relevant records - This cannot be pursued in a proceeding under Article 226 of the Constitution of India, more so when the assessee is having an effective alternative remedy by way of appeal Decided against assessee.

Summary

Issues:
Challenge to Ext.P5 assessment order denying exemption under Section 11 of the Income Tax Act and violation of principles of natural justice.

Analysis:
The petitioner challenged the Ext.P5 assessment order, claiming denial of exemption as a 'Trust' under Section 11 of the Income Tax Act, and alleging a violation of natural justice principles. The respondent's counsel argued that the exemption claim was not entirely denied, but rather analyzed thoroughly. The assessment order detailed the computation of income, application of revenue, and disallowed depreciation, providing relief where necessary and rejecting claims based on factual figures. The respondent highlighted the availability of an alternative remedy through an appeal before the appellate authority, citing legal precedent from Commissioner of Income Tax v. Chhabil Dass Agarwal [2013] 357 ITR 357 (SC) to discourage interference as a matter of course.

The Court observed that the denial of exemption was not absolute but required a detailed examination of figures by the competent authority based on relevant records. Considering the petitioner's right to appeal, the Court emphasized that such issues should be pursued through statutory remedies rather than under Article 226 of the Constitution of India. The petitioner was directed to avail the statutory appeal remedy within two weeks, with the option to file an application for stay. The Court ordered that if such proceedings were initiated promptly, the stay application would be considered within one month, maintaining the status quo on coercive actions. The petitioner was instructed to submit a copy of the judgment and the writ petition to the appellate authority for further action.

In conclusion, the writ petition challenging the Ext.P5 assessment order was disposed of, emphasizing the need for the petitioner to pursue statutory remedies through the appellate process. The Court's decision highlighted the importance of following established legal procedures and exhausting available remedies before seeking judicial intervention.