2024 (12) TMI 122 - HC - Income Tax

Maintainability of writ petition filed against the assessment order and demand notice u/s 147 - petitioner having availed all the statutory remedy of preferring an appeal before the Statutory Authority, namely the Commissioner (Appeals) of the Department and the present appeal is still pending - petitioner is an indigenous person belonging to a declared Scheduled Tribe of the State of Nagaland - HELD THAT - The petitioner having availed all the statutory remedy, this Court, without the said appeal being disposed of and more particularly when the said appeal was filed prior to filing of the present writ petition, this Court is disinclined to accept the contention of the writ petitioner. The petitioner has not raised this contention before the Court by referring to the relevant provisions and/or the orders passed by the departmental authorities that the appeal before the Appellate Authority is not efficacious and will not provide adequate relief as prayed for by that forum. It appears from the facts urged that the only reason for approaching this Court is to evade payment of the statutory deposit which is prescribed under the Act while preferring the appeal. Such attempt may be made by the petitioner cannot be permitted, more particularly in the manner sought to be done by taking recourse to filing a writ petition before this Court during the pendency of the statutory appeal already filed by the petitioner. Section 249 (4) prescribes that where an appeal is filed before the Appellate Authority it shall not be entertained unless the Assessee has paid the tax due on the income return by him wherein return is filed and where no returns are filed the Assessee shall pay an amount equal to the amount of tax payable by him. Any application that may be filed by the petitioner will necessarily be required to be considered appropriately in terms of the proviso to Section 249 (4) of the Income Tax Act and pass appropriate orders. The contentions raised by the writ petitioner before this Court can also be raised before the Appellate Authority which is presently in seisin of the matter. The petitioner is granted liberty to file necessary applications before the Commissioner, Income Tax Appeal, raising all grounds to assail the Assessment Order dated 31.03.2022 before the Commissioner (Appeals). The Commissioner (Appeals) in its turn will proceed to hear and dispose of the appeal filed by the petitioner and pending before the said authority as per the provision of law. The petitioner is permitted 2 (two) weeks time to file all necessary papers.

Issues Involved:
1. Legitimacy of the writ petition filed against the assessment order and demand notice.
2. Availability and adequacy of the statutory alternative remedy.
3. Exemption from income tax for the petitioner as a member of a Scheduled Tribe.
4. Procedural requirements for appealing the assessment order.

Detailed Analysis:

1. Legitimacy of the Writ Petition:
The petitioner challenged the assessment order dated 31.03.2022, which imposed a tax liability of Rs. 3,17,17,890/-. The petitioner sought to set aside this order and the consequential demand notice. The Income Tax Department argued that since an appeal against the assessment order was already pending, the writ petition was not maintainable. The court emphasized that when an appeal is already filed and pending, the High Court typically refrains from intervening through a writ petition, aligning with the principle that statutory remedies should be exhausted first.

2. Availability and Adequacy of the Statutory Alternative Remedy:
The court reiterated the principle that the Income Tax Act provides a complete mechanism for addressing grievances through appeals to the Commissioner (Appeals). This statutory remedy must be pursued before seeking relief under Article 226 of the Constitution, unless exceptional circumstances justify such intervention. The court referenced several Supreme Court judgments, including Chhabil Dass Agarwal, which underscore the rule of self-imposed restraint by the High Courts in entertaining writ petitions when an effective alternative remedy exists.

3. Exemption from Income Tax for Scheduled Tribe Members:
The petitioner claimed exemption from income tax under Section 10(26) of the Income Tax Act, asserting his status as a member of the Khiamniungan (Naga) Tribe, a Scheduled Tribe in Nagaland. Although this claim was not disputed by the respondents, the court noted that the petitioner had already availed the statutory remedy by filing an appeal. The petitioner was advised to raise this exemption claim before the Appellate Authority, which is equipped to address such contentions.

4. Procedural Requirements for Appealing the Assessment Order:
The court observed that the petitioner had not demonstrated that the statutory appeal process was ineffectual or inadequate. The petitioner was advised to comply with Section 249(4) of the Income Tax Act, which requires payment of tax due or filing an application for exemption from such payment before the appeal can be entertained. The court granted the petitioner two weeks to submit necessary documents and applications to the Commissioner (Appeals), emphasizing that the petitioner could seek exemption from the statutory deposit if justified.

Conclusion:
The writ petition was disposed of, allowing the petitioner to pursue the appeal with the Commissioner (Appeals) and file necessary applications for exemption from the statutory deposit. The interim order was extended for three weeks to facilitate this process. The court underscored the importance of adhering to statutory remedies and procedural requirements before invoking the extraordinary jurisdiction of the High Court.

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