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TMI Blog2014 (7) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... can be exercised. The decision in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] followed - challenge was made to the correctness or otherwise and the notices u/s 148 of the Act, re-assessment orders passed and the consequential demand notices - neither has the assessee described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction - the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued u/s 148 of the Act, the re-assessment orders passed and the consequential demand notices issued - where an adjudicatory process is involved on merits, then the only remedy open to an assessee is to go through the procedure provided under the enactment. If an income chargeable to tax has been under assessed or such income has been assessed at too low a rate or such income has been made the subject of excessive relief under this Act or excessive loss or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 148 or speaking order or show cause notice issued under Section 143(2) of the Act. 3. The writ petitions in W.P.Nos.27007 of 2012, 3413, 8252, 10568, 34420 of 2013 and 594 and 2772 of 2014 are filed challenging the speaking order, wherein the original assessment orders have been passed under Section 143(1) / under Section 144 and the reassessment notice has been issued within four or six years. 4. The writ petitions in W.P.Nos.201 to 203, 1924, 1925, 3005, 7137, 7138, 7643, 8171, 12357, 24770, 31937, 31938 of 2013 and 1941, 2771, 3275 to 3277 and 8495 of 2014 have been filed challenging the speaking order wherein the notice for reassessment has been issued within four years from the relevant assessment year wherein original orders have been passed under Section 143(3) / under Section 147. 5. The writ petitions in W.P.Nos.19871, 27609, 29467, 30610, 34985, 34986 of 2012, 1441, 6111, 6768, 7044, 7275, 12358, 12359, 33844 of 2013 and 3847 and 5744 of 2014 are filed challenging the speaking order wherein the notice for reassessment has been issued after four years and within six years from the relevant assessment year wherein orders have been passed under Section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objections and an assessment order. When a issue is considered in the original assessment, a subsequent reopening is impermissible in law. Merely based upon audit objection, a reopening cannot be done. In most of the cases, where reopening was effected, the objections made have been rejected. Therefore, it is no ground to state that the assessment order would look into the case of the assessee objectively. The alternative remedy is not effective and efficacious. The assessing officer does not have the power to reopen the case which has already been concluded. When the petitioners are harassed by the proceedings initiated by the assessing officer, then the remedy sought for before this Court cannot be denied to them. In support of the submission, learned counsel have made reliance upon the following judgments: 1. Raza Textiles Ltd., v. Income-tax Officer, Rampur, ((1973) 1 SCC 633); 2. Shrisht Dhawan v. M/s.Shaw Brothers, ((1992) 1 SCC 534); 3. Arun Kumar and others v. Union of India and others, ((2007) 1 SCC 732); 4. Godrej Sara Lee Ltd. v. Assistant Commissioner (AA) and another, ((2009) 14 SCC 338); 5. Calcutta Discount Co.Ltd. v. ITO, [(1961) 41 ITR 191 (SC)]; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Pvt.Ltd. v. Deputy Director of Income-tax - W.P.No.10910 of 2011 dated 29.10.2011 (Unreported); 32. Communidado of Chicalim v Income-tax Officer, Goa ((2010) 10 SCC 209); 33. Himmatlal Harilal Mehta Vs. State of MP (AIR 1954 SC 403); 34. Tata Engineering and Locomotive Ltd. v. The Assistant Commissioner of Commercial Taxes and another, (AIR 1967 SC 1401); 35. Mukesh Modi vs DCIT (267 CTR 409); and 36. Ajanta Pharma Ltd. Vs. ACIT, (267 ITR 200 (Bombay). 10. Submissions made by the learned counsel for revenue: Per contra, Mr.T.Pramodkumar Chopra, learned counsel appearing for the revenue submitted that none of the writ petitioners made a challenge that there is no reason to believe'', which is available in terms of Section 147 of the Act. An issue regarding a change of opinion is nothing but an adjudicatory fact. There is no challenge to the jurisdictional fact to assess/re-assess. After the judgment rendered in G.K.N.Driveshafts (India) Limited Vs. Income-tax Officer, ((2003) 1 SCC 72 - 259 ITR 19(SC)), the only option open to the assessee is to exhaust the statutory remedy under the Act. The reopening has been made only by exercising power that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is barred by limitation or lacks inherent jurisdiction. To put it differently, in a case, where no adjudication is required on facts, then certainly jurisdiction of this Court under Article 226 of the Constitution of India can very well be invoked. Therefore, to such a limited extent, we are inclined to hold that the jurisdiction of this Court under Article 226 of the Constitution of India can be exercised. 13. Considering the said principle, the Supreme Court in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, ((2014) 1 SCC 603), was pleased to hold as under: 15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, (AIR 1964 SC 1419), Titagarh Paper Mills case ((1983) 2 SCC 433) and other similar judgments that the High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or the procedure required for decision has not been adopted. (See: N.T. Veluswami Thevar vs. G. Raja Nainar, (AIR 1959 SC 422); Municipal Council, Khurai vs. Kamal Kumar, ((1965) 2 SCR 653); Siliguri Municipality vs. Amalendu Das, ((1984) 2 SCC 436); S.T. Muthusami vs. K. Natarajan, ((1988) 1 SCC 572); Rajasthan SRTC vs. Krishna Kant, (1995) 5 SCC 75; Kerala SEB vs. Kurien E. Kalathil, ((2000) 6 SCC 293); A. Venkatasubbiah Naidu vs. S. Chellappan, ((2000) 7 SCC 695); L.L. Sudhakar Reddy vs. State of A.P., ((2001) 6 SCC 634); Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha vs. State of Maharashtra, ((2001) 8 SCC 509); Pratap Singh vs. State of Haryana, ((2002) 7 SCC 484) and GKN Driveshafts (India) Ltd. vs. ITO, ((2003) 1 SCC 72). 16. Statutory remedy:- When in a fiscal statute, hierarchy of remedy of appeals are provided, the party has to exhaust them instead of seeking relief by invoking the jurisdiction of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r remedy for enforcing it. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to. The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd., 1919 AC 368 and has been reaffirmed by the Supreme Today With All High Courts Page 4 of 6 Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd., 1935 AC 532 (PC) and Secy. of State v. Mask and Co., AIR 1940 PC 105 It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine. 14. In Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 B.P.Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77) 77. So far as the jurisdiction of the High Court under Article 226 or for that matter, the jurisdiction of this Court under Article 32 is concerned, it is obvious that the provisions of the Act cannot bar and curt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the notice issued under Section 148 and 143(2) of the Income-tax Act, 1961. The notice issued under section 148 was issued for the following reason:- Warrantee has wrongly been claimed on provision basis in excess of actual payment by ₹ 10,91,854/-''. Similarly notice under Section 143(2) has been issued in connection with the return of income as further information was required by the Department. 19. The Division Bench of the Delhi High Court dismissed the writ petition by holding that the petitioner therein was not justified in invoking the extraordinary jurisdiction of the Court at that stage as it was pre-mature. A challenge was made to the Supreme Court, wherein, by a brief order, the appeals were dismissed with certain observations. The following paragraph is apposite: 5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he strict sense of the term. It is only meant for the purpose of understanding the basis of the notice. Therefore, the decision has to be understood to mean that a pre-adjudication proceedings not deciding the issues shall not be put into challenge while exercising the discretionary power under Article 226 of the Constitution of India, which in the process, takes away the right of the assessing officer to proceed further. Therefore, the Order passed, as directed by the Supreme Court, cannot be termed as a substitute to the assessment order. To put it differently, it does not take away the power of the assessing officer to decide the issue on the plea of the assessee or on a consideration of the records. It is to be remembered that the assessing officer was directed to pass orders only on the objections given by the assessee. The further fact that such an order is required to be passed before proceeding with the assessment would make the said position clear. Furthermore, if the order on the objections can be entertained, then the Supreme Court would not have directed the appeals to be disposed of by the appellate authority instead of setting them aside. This also indicates that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... native remedy would be a mirage and an exercise in futility. 17. In the instant case, neither has the assessee-writ petitioner described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of instant case. In light of the same, we are of the considered opinion that the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon. 18. In view of the above, we allow this appeal and set aside the judgment and order passed by the High Court in Writ Petition (Civil) No.44 of 2009. We grant liberty to the respondent, if he so desires, to file an appropriate petition/appeal against the orders of re-assessment passed under Section 148 of the Act within four weeks' time from today. If the petition is filed before the appellate authority within the time granted by this Court, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so be a fact, it can be safely divided into two parts, the first part, being an authority concerned, on the face of it, does not have any power that can be exercised under Section 147 of the Act. The second part, being on the determination of a fact in issue or an adjudicated fact, the authority justifies his jurisdiction. First, he assumes jurisdiction and on completion of assessment confirms it. In the first category, there is no adjudication of any fact that is required. In the second category, a fact has to be necessarily adjudicated, which will have a bearing on the jurisdiction of the authority concerned. Such a jurisdictional issue is ancillary or prelude to an adjudicating fact. As we discussed earlier, regarding the first part of the jurisdictional fact, there is no difficulty in invoking the discretionary jurisdiction of this Court. However, where element of adjudication is required, then the said exercise will have to be done by the assessing officer or by the appellate authority before approaching the Court of law. Therefore, what is required is the mere existence of a jurisdictional fact apparent on the face of it. Once this is done, then the process of adjudication wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive. 27. The judgments referred supra will have to be construed and understood in the context of the present case. Accordingly, we hold that where an adjudicatory process is involved on merits, then the only remedy open to an assessee is to go through the procedure provided under the enactment. 28. Provisions of the Income-tax Act, 1961:- We would like to go through the provisions governing the case only for the purpose of deciding the issues framed. Section 148 of the Act deals with the issuance of notice when an income has escaped assessment. Section 148(2) of the Act mandates that the assessing officer has to record his reasons for doing so before issuing any notice under the said Section. Section 148(1) prescribes a procedure, which is required to be done before making the assessment, reassessment or recomputation, as the case may be. Accordingly, the assessing officer is required to ask the assessee to furnish a return of his income as required to be furnished under Section 139. 29. Under Section 147 of the Act, the assessing officer has the power to assess or re-assess the income. Such a power has to be exercised by the assessing officer alone. The pre-requisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather wide. 31. We are concerned in all these cases not on the sufficiency of reasons on the part of the assessing officer for his belief at this stage. The legislative intent is to allow the assessing officer to go through the process of assessment. Even under Section 147 of the Act, a Court of law cannot presume a lack of jurisdiction, when a fact in issue requires an adjudication. It has to be exercised in terms of Sections 139, 143(2) and 143(3). Therefore, considering the scheme of the enactment, particularly, with reference to Sections 147 to 153 of the Act, we are of the view that an order passed on the objections of the assessee over adjudicating facts is not open to challenge by way of filing a writ petition. 32. Learned counsels appearing for the petitioners submitted that the objections raised have not been considered properly by the assessing officer. It is also submitted that when a speaking order is required to be passed, the same is amenable to challenge. We are not able to countenance the said argument. We have already held that the order passed on a consideration of the objections raised cannot be termed as the order having civil consequences. The assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go into the said issues involving conclusion arrived at earlier on the exercise of power under Article 226 of the Constitution of India. As all these issues involve an adjudicatory process, we leave them open to be decided by the authorities concerned. 35. For the foregoing reasons, both the issues are answered against the assessees and in favour of the revenue and the writ petitions are dismissed, subject to the general observations made above. In pursuant to the appeals filed in W.A.Nos.347 to 349 of 2014 against the interim orders made in M.P.Nos.1 of 2014 in W.P.Nos.3275 to 3277 of 2014, arguments have been heard in W.P.Nos.3275 to 3277 of 2014. Accordingly, those writ petitions are also dismissed and consequently the Writ Appeals are allowed. However, in cases, where the assessment/ reassessment orders are passed, we are inclined to grant a further period of four weeks from the date of receipt of copy of this judgment to file statutory appeals before the appellate authority. As and when the statutory appeals are filed, the appellate authority is directed to decide the same on merits and in accordance with law without taking note of the period of limitation. However, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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