2023 (6) TMI 284 - HC - Income Tax

Maintainability of appeal - assessment completed as per Section 143(3) - alternate remedy in the form of an appeal u/s 246A - During the search, certain incriminating materials relating to the petitioner firm and other dealers were seized by the respondent and based on this search, it was found that the group had been using a customized software, called 'J PACK' solely for the purpose of recording the unaccounted gold and cash transactions - HELD THAT - As rightly pointed out by respondent, a mere perusal of the impugned assessment order would clearly show that the authority below has taken into consideration the defenses raised by the petitioner herein and on a comparison of the ledger of the petitioner with the ledger maintained by M/S.Mohanlal Jewelers (P) Ltd, the nexus between the two has been set out in the tabulated statement in paragraph No.8.1 of the impugned order. The impugned order also goes on to state that some of the entries in the 'J PACK' does not find place in the ledger of the petitioner. The respondent has considered each of the submissions made, particularly, the defense with reference to the plea for cross-examination and had passed the order. Therefore, it cannot be stated that the order is a non-speaking one. The petitioner has also appeared for an enquiry before the concerned authority. Therefore, in all fairness and relying upon the judgment of the Hon'ble Supreme Court in PIRAI CHOODI 2010 (11) TMI 26 - SC ORDER , interests of justice require that the petitioner invokes the alternate remedy available to him, which is an effective alternative remedy. All the contentions raised now before this Court can very well be agitated by the petitioner before the appellate authority. WP dismissed.

Summary

Issues involved: Challenge to order passed by respondent, violation of principles of natural justice, availability of alternate remedy under Section 246A of the Income Tax Act.

Challenge to Order Passed by Respondent:
The petitioner, a jewelry business partnership firm, challenged the order passed by the respondent based on a search conducted under Section 132 of the Income Tax Act, revealing incriminating materials related to the petitioner. The respondent centralized the case and initiated proceedings without providing the petitioner with an opportunity to rebut the allegations, leading to the writ petition.

Violation of Principles of Natural Justice:
The petitioner contended that the order was based on third party documents without allowing them to cross-examine the third parties. They argued that the proceedings were initiated without affording them a chance to rebut the presumption, violating principles of natural justice. The petitioner sought relief under Article 226 of the Constitution of India, citing judgments supporting their position.

Availability of Alternate Remedy under Section 246A:
The respondent argued that the impugned order provided opportunities for the petitioner to submit objections and scrutinize the software used as evidence. They emphasized the availability of an alternate remedy through an appeal under Section 246A of the Income Tax Act, stating that the High Court cannot directly intervene without exhausting statutory remedies. The respondent relied on a Supreme Court judgment to support their position.

Decision:
The High Court dismissed the writ petition, emphasizing the need for the petitioner to utilize the alternate remedy available through the appellate authority. The court noted that the impugned order considered the petitioner's defenses and interactions, indicating a fair process. The judgment highlighted the importance of following statutory procedures before seeking relief from the High Court, with the option for the petitioner to approach the appellate authority for further redress.