2019 (6) TMI 155 - HC - Income Tax

Assessment u/s 153A - petitioner contends that the impugned demand notices are liable to be struck down though the petitioners had filed the Returns much before the prescribed date, the respondent-Income Tax Officer conveniently has ignored the same and wrongly stated that no Returns were filed - alternate and efficacious remedy of appeal - HELD THAT - The Constitution Bench of the Apex Court in the case of Garikapati Veeraya V. N.Subbiah Choudhry and Other 1957 (2) TMI 54 - SUPREME COURT , has held that the right of appeal is a creature of law and where the law prescribes certain conditions, the right is conditioned/curtailed and that the litigant can avail his right of appeal subject to complying with such conditions if any. That being so, the explanation offered by the petitioners for not availing the statutory appeal remedy, does not constitute a valid ground. The contention of the petitioner that he had sought for reasons for issuing the impugned notices from the Revenue and that the said solicitation having not been complied with, the action of the Revenue is vulnerable, is sustainable. However, much is not deliberated on this issue in as much as the learned counsel for the Revenue fairly submits that the petitioner would be furnished the reasons in view of the fact that he has now filed the Returns. There is one aspect of equity which the Writ Court needs to take into account; the petitioner has invoked the writ jurisdiction of this Court much before the Re-assessment Orders were passed by the first respondent-Income Tax Officer; there appear to be some procedural defects in making these orders, as pointed out by learned counsel for the assessee; however, deeper consideration at the hands of the Appellate Authority, if and when an appeal is filed, may be warranted in this regard. In view of this, the petitioner need to be given some limited protection in order to make his right of appeal meaningful as held by the Hon ble Bombay High Court in the case of UTI Mutual Funds Vs. Income Tax Officer 2012 (3) TMI 333 - BOMBAY HIGH COURT These writ petitions succeed in part; the respondent-Income Tax Officer shall furnish reasons to the petitioners for issuing of the subject notices forthwith; the petitioner is reserved liberty to lay challenge to the Re-assessment Orders in appeal before the Commissioner of Income Tax (Appeals) or such other competent authority within a period of four weeks; if appeals are accordingly filed, the issue of limitation and delay shall not be raised by the Appellate Authority; the petitioner shall not be coerced with the Re-assessment Orders or the impugned notices to make payment for a period of four weeks so that the filing of the appeal is meaningfully facilitated.

Summary

Issues:
Challenge to impugned notices dated 11.09.2017 and 10.10.2018 issued by the Income Tax Officer under Section 153A of the Income Tax Act, 1961. Invocation of writ jurisdiction under Articles 226 and 227 of the Constitution of India. Availability of alternate remedy of appeal. Refusal to furnish reasons for notice issuance. Procedural defects in Assessment Orders.

Analysis:
The petitioner sought to quash the impugned notices issued by the Income Tax Officer and to compel the officer to furnish reasons for the notice under Section 153A of the Income Tax Act, 1961. The petitioner argued that the demand notices were issued in violation of the law, claiming errors in stating that no Returns were filed despite timely submission. The Revenue, represented by panel counsel, contended that the petitioner had an alternate and efficacious remedy of appeal under the Income Tax Act, which should have been pursued. The panel counsel emphasized that in fiscal disputes, writ jurisdiction is generally not invocable, unless under exceptional circumstances not applicable to the petitioner's case.

The petitioner's plea for reasons behind the notice issuance was countered by the Revenue, citing a pre-condition of filing Returns before soliciting such information. The court considered the arguments from both sides, including references to relevant legal precedents, emphasizing the importance of statutory remedies like appeals provided under the Income Tax Act. The court noted that the right of appeal is subject to compliance with statutory conditions, and failure to avail such remedies does not constitute a valid ground for invoking writ jurisdiction.

Regarding the refusal to furnish reasons, the court acknowledged the petitioner's claim that the action of the Revenue was vulnerable due to non-compliance. However, the court indicated that the petitioner would be provided with the reasons as Returns had been filed subsequently. The court also highlighted the need for limited protection for the petitioner to ensure a meaningful right of appeal, citing a case where coercive actions were cautioned against before exhausting legal remedies.

In the final judgment, the court partially allowed the writ petitions, directing the Income Tax Officer to furnish reasons for the notices promptly. The petitioner was granted the liberty to challenge the Assessment Orders through appeal within a specified period, with assurances that issues of limitation and delay would not impede the process. The petitioner was protected from coercion to make payments pending the appeal filing, ensuring a fair opportunity for appeal. All contentions of the parties were kept open, with the order tailored to the specific circumstances of the case to prevent its use as precedent.