2025 (1) TMI 828 - HC - Income Tax

Writ jurisdiction of the High Court to challenge an intimation u/s 143(1) - AO's failure to adjudicate the rectification application under Section 154, due to the pending writ petition - HELD THAT - If the officer was of the view that our ad-interim order amounts to restraining himself from adjudicating this issue in regular assessment proceedings, then, he should have approached this Court for clarification. We are clear that at no stage we had restrained the Respondents from adjudicating this issue in regular assessment proceedings. Petitioner had made an application on 31 July 2023 for rectification of the intimation. The said application of the Petitioner was never decided by the AO on the ground that issue of Section 143 (1) adjustment is pending before this Court. We once again clarify that we had not restrained the Respondents from passing any order to decide the rectification application filed by the Petitioner on 31 July 2023. We fail to understand that in the absence of any restraint order by this Court the stand of the Respondents not to adjudicate the rectification application is misconceived. The officer ought to have adjudicated this rectification application in accordance with law. The intimation under challenge is an appealable u/s 246A (1) (a) of the IT Act - In Section 246A there is no provision of mandatory pre-deposit for admitting and entertaining the appeal, and therefore, the contention of Mr. Sheth that the intimation raises a huge demand of Rs.6600 crores, and therefore, the remedy of appeal is not efficacious remedy, is rejected. Certainly the Petitioner has the remedy of making an application for stay of the demand and any order passed thereon, if the Petitioner is aggrieved, can be challenged in accordance with law. Therefore, although huge demand is raised, but in the absence of any pre-deposit for admitting and entertaining the appeal, this Court cannot interfere with the impugned intimation in writ proceedings. Order - Petitioner is at liberty to challenge the impugned intimation by filing an appeal within a period of four weeks from the date of uploading of the present order. Respondent No. 2 is directed to decide the rectification application dated 31 July 2023 within a period of two weeks from the date of uploading the present order.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the writ jurisdiction of the High Court should be exercised to challenge an intimation under Section 143(1) of the Income Tax Act, 1961, given the substantial demand raised.
Whether the absence of a pre-deposit requirement for appeals under Section 246A of the IT Act affects the efficacy of the appellate remedy.
Whether the Assessing Officer's failure to adjudicate the rectification application under Section 154, due to the pending writ petition, was justified.
Whether the absence of a pre-notice before the issuance of the intimation under Section 143(1) constitutes a jurisdictional error.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Exercise of Writ Jurisdiction

Relevant Legal Framework and Precedents: The writ jurisdiction under Article 226 of the Constitution of India is invoked when there is no efficacious alternative remedy. The petitioner contends the demand of Rs. 6600 crores justifies this jurisdiction.
Court's Interpretation and Reasoning: The court emphasized that the intimation under Section 143(1) is appealable under Section 246A(1)(a) of the IT Act, which does not require a pre-deposit, thereby providing an efficacious remedy.
Key Evidence and Findings: The court noted the petitioner's argument about the absence of a pre-deposit requirement and the substantial demand raised.
Application of Law to Facts: The court found that the absence of a pre-deposit requirement allows the petitioner to seek an appeal without financial burden, thus not warranting writ jurisdiction.
Treatment of Competing Arguments: The petitioner's argument for writ jurisdiction due to the large demand was rejected, as the appellate process provides adequate remedy.
Conclusions: The court concluded that the petitioner should pursue the appeal process, given its adequacy and lack of pre-deposit requirement.

Issue 2: Rectification Application

Relevant Legal Framework and Precedents: Section 154 of the IT Act allows for rectification of mistakes apparent from the record. The petitioner filed such an application, which was not adjudicated.
Court's Interpretation and Reasoning: The court clarified that its interim orders did not restrain the Assessing Officer from deciding the rectification application.
Key Evidence and Findings: The court found the Assessing Officer's inaction unjustified, as there was no court order preventing the adjudication of the rectification application.
Application of Law to Facts: The court directed the Assessing Officer to decide the rectification application within two weeks, ensuring procedural fairness by requiring a personal hearing.
Treatment of Competing Arguments: The respondent's justification for inaction was dismissed, as the court had not issued any restraining order.
Conclusions: The court mandated timely adjudication of the rectification application with due process.

Issue 3: Pre-notice Requirement

Relevant Legal Framework and Precedents: The petitioner alleged a lack of pre-notice before the intimation under Section 143(1), raising a jurisdictional issue.
Court's Interpretation and Reasoning: The court noted the factual dispute regarding the issuance of a pre-notice, which it deemed unsuitable for writ proceedings.
Key Evidence and Findings: The court recorded the respondent's claim that a pre-notice was issued, but the petitioner did not respond.
Application of Law to Facts: The court suggested that factual adjudication on the pre-notice issue is best suited for the appellate process.
Treatment of Competing Arguments: The court acknowledged the factual nature of the dispute, directing it to be resolved through the appellate mechanism.
Conclusions: The court declined to adjudicate the factual dispute in writ proceedings, emphasizing the appellate remedy.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "In Section 246A there is no provision of mandatory pre-deposit for admitting and entertaining the appeal, and therefore, the contention of Mr. Sheth that the intimation raises a huge demand of Rs.6600 crores, and therefore, the remedy of appeal is not efficacious remedy, is rejected."
Core Principles Established: The availability of an appeal without a pre-deposit requirement constitutes an efficacious remedy, limiting the necessity for writ jurisdiction.
Final Determinations on Each Issue: The court directed the petitioner to pursue the appellate remedy, ordered the Assessing Officer to adjudicate the rectification application, and left the factual dispute on pre-notice to be resolved in the appeal process.

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