2021 (5) TMI 556 - HC - Income Tax

Maintainability of writ petition - bypassing the option to file statutory appeal as provided u/s 246A - Penalty u/s 271 (1)(c) on addition u/s 68 - Writ applicant instead of filing a statutory appeal as provided under Section 264A of the Act, has directly approached this Court by invoking the writ jurisdiction under Article 226 of the Constitution of India - HELD THAT - The writ applicant has also challenged the final assessment order dated 05.12.2018 by way of the Special Civil Application wherein, after considering the law laid down in the case of Commissioner of Income Tax Ors. Vs. Chhabil Dass Agrawal 2013 (8) TMI 458 - SUPREME COURT and facts and circumstances of the case, this Court has taken a view that the writ application ought not to be entertained when there is an efficacious statutory remedy available to the writ applicant and accordingly, the writ applicant is relegated to avail the remedy of appeal before the appellate authority under the provisions of the Income Tax Act. Here in this case also, the penalty proceedings on the basis of the assessment order being made final and it is being challenged directly before this Court without availing the alternative efficacious remedy as provided under the Income Tax Act, 1961. We decline to entertain this writ application as no case is made out to interfere with the impugned order, with a liberty to the writ applicant to file an appeal before the competent authority. If the appeal is filed, the appellate authority shall not raise the technical issue of limitation and decide the same on merits, in accordance with law. It is made clear that, we have not expressed any opinion on merits on the case including the issue of principles of natural justice as raised by the writ applicant. The writ application is disposed of in the aforesaid terms. Interim relief, if any, stands vacated.

Summary

Issues:
Challenge to penalty order under Section 271(1)(c) of the Income Tax Act, 1961 for A.Y. 2016-17 directly through a writ application under Article 226 of the Constitution of India without availing statutory appeal under Section 264A.

Analysis:
The petitioner filed a writ application challenging the penalty order dated 28.06.2019 passed by the Income Tax Officer under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed for the assessment year 2016-17. The petitioner's case was subject to scrutiny assessment, resulting in an ex parte final assessment order under Section 144 of the Act on 05.12.2018, assessing the total income and making additions under Section 68 of the Act. Subsequently, penalty proceedings were initiated under Section 271(1)(c), leading to the impugned penalty order.

The petitioner, instead of opting for the statutory appeal process under Section 264A of the Act, directly approached the High Court invoking writ jurisdiction under Article 226 of the Constitution of India. During the proceedings, the Court heard arguments from both parties' counsels. The petitioner had also challenged the final assessment order dated 05.12.2018 through a separate application, where the Court had directed the petitioner to pursue the statutory remedy of appeal before the appellate authority under the Income Tax Act. The Court noted that the penalty proceedings were challenged directly without availing the statutory remedy, similar to the assessment order challenge.

The Court, based on previous decisions and the principle of statutory remedies, declined to entertain the writ application challenging the penalty order. The petitioner was directed to file an appeal before the competent authority as per the provisions of the Income Tax Act. The Court emphasized that the appellate authority should decide the appeal on merits without raising technical issues of limitation. It was clarified that the decision not to interfere with the penalty order did not imply any opinion on the merits of the case, including issues related to natural justice raised by the petitioner. Consequently, the writ application was disposed of with no order as to costs, and any interim relief was vacated.