2021 (9) TMI 939 - HC - Income Tax

Assessment u/s 143(3) r.w.s. 144-B - gross violation of principles of natural justice - Non providing of adequate opportunity - maintainability of a Writ Petition, when an alternative remedy was available - HELD THAT - We have referred to the factual positions to demonstrate that the appellant-assessee has been dealt with in a most unfair manner. The appellant is an individual and to the best of his knowledge and ability, he has furnished the details. The Assessing Officer, while completing the assessment, false the appellant for not furnishing the statement of account of the credit cards. The appellant has stated as to why there was a delay in furnishing the details, as he had to obtain the same from the concerned banks and nine particulars called for were voluminous. It may be true that the assessment was an E-Assessment. Nevertheless, if it is a scrutiny assessment under Section 143(3) of the Act, the Assessing Officer is bound to provide adequate opportunity to the appellant. Adequacy of the opportunity would vary from case to case, and there is no straight jacket formula on the same. In case of Companies registered under the Companies Act or other financial institutions, they would have a large team of legal experts to assess and who can appear before the Assessing Officer or who can furnish details, as called for by the Assessing Officer. This may not be a case, when it comes to an individual-assessee. Especially, when a person, like an appellant, who states that he is employed and carrying on a part time business, who being a multi-level marketing person in a chain of marketing persons, who handle projects, manufactured / marketed by M/s. Amway. Assessment order has been passed in violation of principles of natural justice and therefore, the Writ Petition was maintainable.

Summary

Issues:
Challenge to assessment order under Income Tax Act, 1961 on grounds of violation of principles of natural justice.

Analysis:
The appellant challenged the assessment order under Section 143(3) of the Income Tax Act, 1961, alleging a violation of natural justice principles. The appellant, an individual-assessee, contended that he was not familiar with the E-Assessment Scheme and was unaware of the e-notice sent by the Assessing Officer. Despite facing time constraints and voluminous document requests, the appellant diligently provided the necessary details within the stipulated period. However, the assessment order was passed without considering the appellant's submissions, prompting the appellant to approach the Writ Court.

The High Court deliberated on the maintainability of the Writ Petition in light of the availability of alternate remedies under the law. Citing the decision in Radha Krishnan Industries case, exceptions to the rule of alternate remedy were highlighted, including instances of non-compliance with legal provisions, violation of natural justice, or lack of jurisdiction. The Court emphasized that if a violation of natural justice is established, despite the existence of an alternate remedy, the appellant is entitled to seek relief through the Writ Court.

Furthermore, referencing the Assistant Commissioner of State Tax case, the Court reiterated that the presence of an alternate remedy does not categorically bar the maintainability of a Writ Petition. Exceptional circumstances, such as breaches of fundamental rights, violations of natural justice, excess of jurisdiction, or challenges to statutory validity, warrant the consideration of a Writ Petition. In this case, the Court found that the appellant's situation fell within the exception related to the violation of natural justice, justifying the maintainability of the Writ Petition.

In conclusion, the Court observed that the assessment order was passed in contravention of natural justice principles, necessitating intervention. The Writ Appeal was allowed, setting aside the previous order and quashing the assessment. The matter was remanded to the appropriate authority for a fresh assessment, with directions to afford the appellant reasonable opportunity and sufficient time to present all necessary records. The authority was instructed to consider any additional objections from the appellant before completing the assessment in accordance with the law.