2021 (11) TMI 352 - HC - Income Tax

Faceless Assessment - Whether it cannot be gainsaid that one day time given qua SCN is too short as the writ petitioner has chosen to reply the very next day i.e., 22.09.2021 and it has also not chosen to ask for a personal hearing, though there is an option to ask for personal hearing vide sub-paragraph (c) of Paragraph 3 of SCN? - HELD THAT - The first point urged i.e., a mere one day time qua SCN under the normal circumstances would have certainly been a formidable argument, but not in this case qua writ petitioner as writ petitioner has a) chosen to reply on the very next day i.e., 22.09.2021 and has also not chosen to ask for a personal hearing vide sub-paragraph (c) of Paragraph 3 of SCN. This draws the curtains on the first point. Availability of alternate remedy available to the writ petitioner vide a statutory appeal under Section 246A - A perusal of adumbration of the exceptions read in the context of narrative, discussion and dispositive reasoning supra brings to light that none of the exceptions set out by Hon'ble Supreme Court qua Commercial Steel case 2021 (9) TMI 480 - SUPREME COURT law is attracted in the case on hand. The sequitur to the discussion and dispositive reasoning thus far is, this is a fit case to relegate the writ petitioner to alternate remedy of statutory appeal inter alia under Section 246 A of IT Act subject of course to pre-deposit condition, if any and limitation. If the writ petitioner chooses to take the alternate remedy rule and file a statutory appeal, the Appellate Authority shall consider all the arguments/ grounds of appeal of the writ petitioner (including those raised in the instant writ petition) uninfluenced / untrammelled by observations made in this writ petition order. In other words, the appeal shall be considered and decided on its own merits and in accordance with law untrammelled by this order. The campaign of the writ petitioner against the impugned order comes to a conclusion, it fails and the sequitur is captioned main writ petition is dismissed albeit preserving the rights of the writ petitioner to prefer a statutory appeal, if so advised and if so desired. Consequently, the aforementioned WMPs also are dismissed

Summary

Issues:
Challenging assessment order under Section 143(3) of the Income-tax Act, 1961 with reference to Faceless Assessment under Section 144B.

Detailed Analysis:

1. Short Show Cause Notice (SCN) Period:
The petitioner challenged the assessment order primarily on the grounds of a short time period provided in the show cause notice (SCN) dated 21.09.2021, which was digitally signed on the same day, with a response deadline of 22.09.2021. The argument was that the time given was insufficient, especially considering the proposed variation. However, the court noted that the petitioner responded promptly on 22.09.2021 without requesting a personal hearing, which weakened this argument.

2. Review Unit Assignment Under Section 144B:
Another contention raised was the failure to assign the draft assessment order to a review unit in a Regional Faceless Assessment Centre, as required under Section 144B(1)(xvi)(c). The petitioner questioned the likelihood of this review being conducted, as the impugned order was issued on 23.09.2021, just a day after the petitioner's response to the SCN. The Revenue counsel argued that automation made this process feasible and highlighted the availability of an alternate statutory appeal under Section 246A of the IT Act.

3. Alternate Remedy Rule:
The court emphasized the principle of the alternate remedy rule, which requires parties to exhaust statutory remedies before seeking writ jurisdiction. Citing precedents like Dunlop India, Satyawati Tandon, and K.C.Mathew cases, the court reiterated that the rule should be applied rigorously in fiscal matters. The court also referenced the Commercial Steel case, where exceptions to the rule were outlined, such as breach of fundamental rights, violation of natural justice principles, excess of jurisdiction, or challenge to statutory vires. None of these exceptions applied in the present case.

4. Conclusion:
Considering the arguments and legal principles, the court dismissed the main writ petition, directing the petitioner to pursue the alternate remedy of a statutory appeal under Section 246A of the IT Act. The court preserved the petitioner's rights to appeal while emphasizing that the appellate authority should consider the grounds of appeal independently and in accordance with the law, without being influenced by the observations in the writ petition order. The court also dismissed related Writ Miscellaneous Petitions (WMPs) with no order as to costs.