2021 (6) TMI 822 - HC - Income Tax

Acceptable ground for the purpose of entertaining a Writ Petition - power of judicial review of the High Court - Reopening of assessment u/s 147 - as contended that the very initiation of reopening the proceedings under Section 147 issuance of notice under Section 148 and the reasons furnished are untenable and therefore the assessment order is liable to be quashed - HELD THAT - This Court is of the considered opinion that the mixed question of fact and law is to be decided with reference to the original documents and evidences by the appellate authority in the present case as statutory appeal is contemplated under the provisions of the Income Tax Act. Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly writ proceedings may be entertained before exhausting the appellate remedy. It is to be ensured that there is an imminent threat or gross injustice warranting urgent relief to be granted. Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise. Thus dispensing with an appellate remedy is to be granted cautiously in view of the fact that the very purpose and object of legislation providing an appellate remedy cannot be diluted nor the benefit be denied to the aggrieved person to exhaust the same. The statutory appellate authorities are the final fact finding authorities. Thus the finding to be made by such appellate authorities with reference to the documents and evidences are of paramount importance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated but not the decision itself. Thus the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a rowing enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants the disputed facts cannot be concluded. Thus the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The 2nd Writ Petition is filed challenging the original assessment order. Thus the petitioner is at liberty to prefer an appeal contemplated under the statute for redressal of his grievances by following the procedures.The petitioner is at liberty to prefer such an appeal within a period of four weeks from the date of receipt of a copy of this order.

Summary

Issues:
Challenge to the order dated 31.10.2014 for reopening of Assessment under Section 147 of the Income Tax Act, 1961; Validity of reasons for reopening assessment; Entitlement to judicial review under Article 226 of the Constitution of India before exhausting appellate remedy; Preferability of entertaining a Writ Petition without exhausting appellate remedy; Importance of appellate forums in fact-finding; Acceptable grounds for entertaining a Writ Petition; Direction to prefer an appeal for redressal of grievances against the assessment order.

Analysis:
The judgment concerns a Writ Petition challenging the order dated 31.10.2014 for reopening the assessment under Section 147 of the Income Tax Act, 1961. The petitioner, a Company in the field of Aviation, objected to the reopening of the assessment, leading to subsequent legal proceedings. The petitioner contended that the grounds raised in the first Writ Petition remain valid despite the passing of the assessment order. The Court emphasized that the appellate authority is crucial for deciding mixed questions of fact and law, as statutory appeal is provided under the Income Tax Act, and the appellate forums are final fact-finding authorities.

The Court highlighted the importance of exhausting appellate remedies before resorting to Writ Petitions, stating that entertaining a Writ Petition without exhausting the appellate remedy should be an exception rather than the rule. It emphasized that appellate authorities are final fact-finding bodies with expertise in specific fields, and their findings are crucial for judicial review under Article 226 of the Constitution of India. The Court cautioned against undermining the appellate institutions and stressed that the High Court's role is to scrutinize the decision-making process rather than the decision itself.

Regarding the grounds for entertaining a Writ Petition, the Court noted that delay could be a valid reason but cautioned against the increasing trend of filing Writ Petitions to avoid statutory requirements. The judgment directed the petitioner to prefer an appeal within four weeks against the assessment order, allowing the appellate authority to consider and adjudicate the appeal on its merits while affording due opportunities to the concerned parties. Both Writ Petitions were disposed of without costs, and connected Miscellaneous Petitions were closed, providing a comprehensive resolution to the legal dispute.