2022 (11) TMI 830 - HC - Income Tax

Maintainability of the writ petitions against E-Assessment u/s 147 read with Section 144B - issue of jurisdiction to issue notice u/s 148 not raised before the assessment order passed - statutory remedy by way of an appeal under Section 246 (1) - HELD THAT - The respondent have specifically asserted that they have proceeded to re-open the assessment in the light of the information uploaded on Insight Portal. The same is quoted to be a reason to believe that the income chargeable to tax had escaped assessment. It has also been asserted that the Income Tax Officer has not received any books of account or documents or assets seized or requisitioned during the search at M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited in the case of the petitioner. We therefore find that it would necessary for the petitioners to contest and challenge the assessment orders on merits so as to substantiate the stand that the re-opening of the proceedings under Section 147 of the Act of 1961 was not at all justified and thus without jurisdiction. In reply to the show cause notice the petitioners did not seek to challenge the re-opening on the ground that it was without jurisdiction since the assessment was not sought to be re-opened in the light of Section 153C -Having responded to the show cause notice and having contested the same, the petitioners have permitted the orders of assessment to be passed. It would have been a different matter had the petitioners challenged the notice issued under Section 148 seeking to re-open the proceedings at that stage itself. The petitioners permitted the authorities to proceed under Section 147 by responding to the notice. It is only after passing of the assessment orders that is now sought to be urged that the re-opening was without jurisdiction and it ought to have been only under Section 153C of the Act of 1961. We may not be understood to have stated that in no case could such challenge be raised to the jurisdiction to re-opening of the proceedings. However in the facts of the present cases when in the reply to the show cause notice such stand as regards lack of jurisdiction was not raised and the same is being now raised after passing of the assessment orders, we are not inclined to invoke extra ordinary jurisdiction in favour of the petitioners especially since an efficacious statutory remedy is available. There can be no dispute with the proposition that if the impugned exercise is without jurisdiction, extra ordinary jurisdiction under Article 226 of the Constitution of India could be invoked. Similarly, acquiescence of a party would also not be relevant in that regard. However in the facts of the present cases when it is asserted by the respondents that the re-opening of the proceedings is based on the information uploaded on Insight Portal, the same is found sufficient for not invoking the extra ordinary jurisdiction. For all these reasons we are not inclined to entertain the writ petitions as filed. By clarifying that it would be open for the petitioners to invoke the statutory remedy as provided under the Income Tax Act, 1961 and by stating that this Court has not examined the impugned orders of assessment on merits, the writ petitions are not entertained.

Issues Involved:
1. Maintainability of writ petitions under Article 226 of the Constitution of India.
2. Jurisdiction to re-open assessment under Section 148 of the Income Tax Act, 1961.
3. Applicability of Section 153C versus Section 148 of the Income Tax Act, 1961.
4. Efficacy of statutory remedy under Section 246(1) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Maintainability of writ petitions under Article 226 of the Constitution of India:
The respondents raised a preliminary objection to the maintainability of the writ petitions, arguing that the petitioners had an efficacious statutory remedy by way of an appeal under Section 246(1) of the Income Tax Act, 1961. The court held that in the absence of any jurisdictional aspect being involved, the writ petitions under Article 226 of the Constitution of India do not deserve to be entertained. The court emphasized that the petitioners should avail the statutory remedy available under the Act of 1961.

2. Jurisdiction to re-open assessment under Section 148 of the Income Tax Act, 1961:
The petitioners contended that the respondents had no authority to re-open the assessment under Section 148 of the Act of 1961. They argued that the re-opening was pursuant to the search and seizure carried out in the case of M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited, and thus, the respondents should have proceeded under Section 153C of the Act of 1961. The court noted that the reasons for re-opening the case under Section 147 of the Act of 1961 were indicated, and it was based on information uploaded on the Insight Portal and flagged as high-risk CRIU/VRU information. The court found that the stand of the respondents was sufficient to refuse to entertain the writ petitions filed under Article 226 of the Constitution of India.

3. Applicability of Section 153C versus Section 148 of the Income Tax Act, 1961:
The petitioners argued that the re-opening of the assessment should have been done under Section 153C of the Act of 1961, as the search and seizure operations were carried out at M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited. The respondents countered that the re-opening was justified under Section 148 of the Act of 1961, as the information was shared by the Assistant Commissioner of Income Tax and uploaded on the Insight Portal. The court observed that the respondents had specifically asserted that the re-opening was based on information uploaded on the Insight Portal and not on any books of account or documents seized during the search. Therefore, the provisions of Section 153C were not applicable.

4. Efficacy of statutory remedy under Section 246(1) of the Income Tax Act, 1961:
The court emphasized that the petitioners should have contested and challenged the assessment orders on merits through the statutory remedy available under Section 246(1) of the Act of 1961. The court noted that the petitioners did not challenge the re-opening on jurisdictional grounds in their reply to the show cause notice but raised this issue only after the assessment orders were passed. The court held that in the facts of the present cases, the petitioners should invoke the statutory remedy and that the extraordinary jurisdiction under Article 226 of the Constitution of India should not be invoked.

Conclusion:
The writ petitions were dismissed, with the court clarifying that it would be open for the petitioners to invoke the statutory remedy as provided under the Income Tax Act, 1961. The court did not examine the impugned orders of assessment on merits and stated that the observations made were only for considering the preliminary objection. The parties were directed to bear their own costs.

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