2021 (12) TMI 261 - HC - Income Tax

Assessment made u/s143(3) - alternate remedy inter alia u/s 246(A) - assessment order proceeds on the basis that the selling price is only Ex- Quarry price - assessment order proceeds on the basis that the raising-cum-selling agreement i.e., aforementioned 30.11.2005 agreement between the petitioner and TAMIN requires the difference between the selling price and the raising rate to be paid for production of minerals with taxes - HELD THAT - As in the case on hand, none of the exceptions are attracted as would be evident from the narrative (narrative that includes capturing rival submissions) and discussion which has been set out supra. The arguments that there should have been reopening of six previous assessment orders, that the reply from TAMIN ought to have been considered and that the first respondent should not proceeded on the basis of the reply / response of the writ petitioner may well qualify as grounds of appeal but they do not warrant interference in writ jurisdiction as it is neither excess of jurisdiction or any other issue leading to a jurisdictional issue. It is nobody's case that there was any violation of 'principles of natural justice' ('NJP') in the case on hand. Case on hand is not challenge to a statute or subordinate legislation. There is nothing demonstrable qua breach of fundamental rights. To put in a nutshell, none of the Commercial Steel exceptions are attracted. Writ petitioner is under the impression that appeal remedy is available under Section 248 of the IT Act. Considering the impugned order, it may not be under Section 248 of the IT Act as that pertains to 'Tax Deduction at Source' (TDS). However, in the case on hand, the appeal remedy will be under 246-A of the IT Act. It is not necessary to dilate further on this and for the purposes of this case it will suffice to say that there is a appeal remedy and there is nothing to demonstrate that appeal remedy is not efficacious. When the appeal remedy is available and there is nothing to demonstrate that it is not efficacious, in the light of the discussion and dispositive reasoning thus far, this Court has no hesitation in holding that this is a fit case for relegating the writ petitioner to the alternate remedy under Section 246-A of IT Act. If the writ petitioner files an appeal, as already alluded to supra, subject to limitation and subject to pre-deposit condition if any, the said appeal shall be considered on its own merits and in accordance with law by the appellate authority. It is also made clear that it is open to the writ petitioner to seek exclusion of time spent in the captioned writ petition under Section 14 of the Limitation Act and if the writ petitioner chooses to do so, the Appellate Authority shall decide the same on its own merits and in accordance with law.

Summary

Issues Involved:
1. Legitimacy of the assessment order under Section 143(3) of the Income Tax Act, 1961.
2. Adequacy of opportunity provided to the petitioner during the assessment process.
3. Applicability of alternate remedy under Section 246(A) of the Income Tax Act.
4. Consideration of reply from Tamil Nadu Minerals Limited (TAMIN).
5. Reopening of previous assessment years.
6. Imposition of penalty under Section 143(3) of the Income Tax Act.
7. Application of the alternate remedy rule and exceptions.

Detailed Analysis:

1. Legitimacy of the Assessment Order:
The petitioner challenged the assessment order dated 30.12.2016 made under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2014-2015. The petitioner, a partnership firm engaged in quarrying and marketing granites, claimed an increased value of granite for a specific period. The assessment was conducted to verify the genuineness of 'other expenses'. The court found that the assessment order was based on the difference between the selling price and the raising rate for the production of minerals, considering the selling price as Ex-Quarry price.

2. Adequacy of Opportunity Provided:
The court observed that the petitioner was given adequate opportunity to present their case. The petitioner appeared, made submissions, and sent replies during the assessment process. Therefore, the court refrained from expressing any opinion on the correctness of the assessment order, as the petitioner had been given a fair chance to be heard.

3. Applicability of Alternate Remedy:
The respondent argued that the petitioner had an alternate remedy under Section 246(A) of the Income Tax Act, which was efficacious. The court emphasized that the alternate remedy rule is a rule of discretion and self-imposed restraint in writ jurisdiction. The court cited several Supreme Court judgments, including Dunlop India, Satyawati Tandon, and K.C. Mathew, to reinforce the principle that alternate remedies should be strictly enforced, especially in fiscal matters.

4. Consideration of Reply from TAMIN:
The petitioner contended that the first respondent made the assessment order while awaiting a reply from TAMIN regarding the ledger account. The respondent countered that the assessment was based on the reply from the petitioner's representative. The court found that this issue could be a ground for appeal but did not warrant interference in writ jurisdiction.

5. Reopening of Previous Assessment Years:
The petitioner argued that the assessment order bifurcated the sum for six previous assessment years without reopening those years. The court noted that this argument could be raised in an appeal but did not constitute a jurisdictional issue for writ intervention.

6. Imposition of Penalty:
The petitioner claimed that the question of penalty did not arise under Section 143(3) as suppression was not an issue. The court clarified that no penalty had been levied and the first respondent had only reserved the right to initiate penalty proceedings. Any future penalty proceedings could be contested by the petitioner through appropriate legal channels.

7. Application of the Alternate Remedy Rule and Exceptions:
The court examined the exceptions to the alternate remedy rule, such as breach of fundamental rights, violation of natural justice principles, excess of jurisdiction, or challenge to the vires of the statute. None of these exceptions were found applicable in this case. The court concluded that the petitioner's arguments did not demonstrate a violation of natural justice or any jurisdictional issues, and the statutory appeal remedy was adequate and efficacious.

Conclusion:
The court dismissed the writ petition, directing the petitioner to seek the alternate remedy under Section 246-A of the Income Tax Act. The petitioner was advised to file an appeal, subject to limitation and pre-deposit conditions, and could seek exclusion of time spent in the writ petition under Section 14 of the Limitation Act. The court also dismissed the connected miscellaneous petition and ordered no costs.