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TMI Blog1974 (10) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in the writ petitions as to why the petitioners chose not to file appeals but to file these writ petitions. The challenge to the impugned orders is two-fold, namely, (a) that the conditions to be fulfilled before the Additional Commissioner could assume jurisdiction under section 263 to revise the orders of the Income-tax Officer were not fulfilled, and (b) that on merits the orders of the Income-tax Officer were correct and should not have been interferred with by the Additional Commissioner. The first question to which this court has to apply its mind is whether to admit such a writ petition for being considered as a whole. Once the merits of such a writ petition are considered, the court may find either that the writ petition deserves to be allowed or that it is liable to be dismissed. In either event, the decision will be on merits. After consideration of the merits, there is little point in the court deciding the preliminary question whether the writ petition should have been entertained even though the petitioner has not availed himself of the opportunity of filing the statutory appeal. In view of the decisions of the Supreme Court in Sheo Nath Singh v. Appellate As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e record of the assessment, issued notices to the company and the firm to show cause why the assessment should not be revised and after hearing them passed the impugned orders cancelling the assessments and directing the Income-tax Officer to make fresh assessments. The preliminary question for consideration is whether the writ petitions should be entertained at all in view of the failure of the petitioners to avail of the alternative remedy of appeals against the impugned orders under section 253 of the Act. On the one hand, it is rightly argued for the petitioners that the jurisdiction of this court under article 226 is very wide. In law this court certainly has jurisdiction to entertain a writ petition challenging the validity and legality of the order of a quasi-judicial authority. But the very width of this jurisdiction must make this court circumspect. If writ petitions were entertained merely because this court can legally do so, two evils will follow. Firstly, the writ jurisdiction of this court which is extraordinary civil jurisdiction will cease to be so and will be like the ordinary original jurisdiction of a civil court where a party has a right to file a suit and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f granting writs and where, such a remedy exists, it will be a sound exercise of discretion for the High Court to refuse to entertain a petition under article 226 unless there are good grounds therefor...In the present case no explanation has been given by the appellant in the writ petition for not preferring an appeal under the Act and justifying a recourse to the special jurisdiction of the High Court under article 226 of the Constitution. In our opinion, the High Court would have been justified in the circumstances of this case in dismissing the writ petition of the appellant in limine." The same rule had been affirmed earlier in Standard Mills Co. Ltd. v. M. Ramalingam. The latest decision affirming the rule is Champalal Binani v. Commissioner of Income-tax , in the following words : " Before parting with the case we deem it necessary once more to emphasize that the Income-tax Act provides a complete and self-contained machinery for obtaining relief, against improper action taken by the departmental authorities, and normally the party feeling himself aggrieved by such action cannot be permitted to refuse to have recourse to that machinery and to approach the High Court di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal. This vertical judicial review given to him by the statute is a matter of right of the assessee. If he wishes to abandon this right and seek a collateral review of an impugned order in this court under articles 226 or 227, he must make out a strong case why this court should entertain his writ petition and make an exception to the general rule. Since the petitioners have given absolutely no explanation why they did not file appeals against the impugned orders, their case is really covered by the general rule and the writ petitions are liable to be dismissed in limine simply on the ground that no explanation is given why the alternative remedy of appeal has not been pursued by the petitioners. What is the nature of this rule ? It is not a rigid rule of law. Had it been so, it would have been a rule of thumb to be followed in a routine manner in every case. No writ petitions would then have been entertained whenever a statutory appeal, review, revision or reference was available to the petitioner. No discretion would have been left to the court to make an exception even in hard cases in the interests of justice. This would have been contrary to the very object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the existence of the jurisdictional facts if necessary : (Delhi Transport Corporation v. Delhi Administration). Otherwise, the inquiry into the questions of fact, even if it is jurisdictional in nature, is primarily the function of the statutory authority which is equipped to carry out full investigation into facts by taking evidence. Similarly, the aggrieved party is entitled as of right to appeal on questions of fact as well as of law. In the present case, for instance, the Income-tax Appellate Tribunal would have heard an appeal against the impugned order under section 253 on law as well as facts. A writ petition would not, therefore, be normally admitted by this court where jurisdiction is challenged on factual grounds. A petitioner would be on a better footing when he challenges the jurisdiction of the authority passing the impugned order on purely legal grounds such as the construction of the statutory provision under which the order is passed and the facts on which the order is based are not disputed. The classic decision relied on by he assessees in such a case is Calcutta Discount Co. Ltd. v. Income-tax Officer. In its return the company (assessee) had stated all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation v. Mysore Road Transport Appellate Tribunal (Civil Appeal No. 1801 of 1970 decided on August 8, 1974) referring to an essay on "determining the ratio decidendi of a case" by A. L. Goodhart : "...the principle of a case is determined by taking into account the facts treated by the judge deciding a case as material and his decision as based thereon." The ratio of the decision in Calcutta Discount Co.'s case cannot apply to the facts of the present case following reasons : (i) Under section 34, the duty of the assessee is only to state the material facts necessary for the purpose of assessment. Once these facts are accepted and an assessment is made, the Income-tax Officer cannot reopen the assessment unless he had reason to believe that the material facts were not truly disclosed. The reason why the reopening of the assessment is thus made somewhat difficult is to preserve the finality of the previous decision which should not be destroyed except for a good reason. Once it is found that the disclosure of facts was complete, no jurisdiction could arise for the reopening of the assessment. (ii) On the other hand, the condition for the assumption of jurisdiction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 of the report that : " There was ample material to show that the Income-tax Officer made the assessments in undue hurry...the assessee made a declaration giving the facts regarding initial capital, the ornaments and presents received at the time of marriage, other gifts received from her father-in-law, etc., which should have put any Income-tax Officer on his guard. But the Income-tax Officer without making any inquiries to satisfy himself passed the assessment order... A short stereo-typed assessment order was made for each assessment year... No evidence whatsoever was produced in respect of the money-lending business done...No names were given as to the parties to whom the loans were advanced ......" In Tara Devi Aggarwal v. Commissioner of Income-tax also the Income-tax Officer, Howrah, while remarking that the source of income of the assessee was income from speculation and interest on investments stated that neither the assessee was able to produce the details and vouchers of the speculative transactions made during the accounting year nor was there evidence regarding the interest received by the assessee from different parties on her investments. Notwithstanding thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. The company and the partnership in this case were formed in the same year with many members common in both. The fact that the company purchased the land but handed over construction work to the partnership even though the object of the company was to make such construction should naturally provoke a query as to why this was done. The partnership was required to be in existence as a genuine firm in the previous year before it could be registered under section 185 of the Act. Such registration gives a substantial advantage to it for the purpose of taxation. In the very first assessment of the company and the firm, the advantage of the registration was given to the firm. The question would naturally arise whether the firm was formed merely for the purpose of get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not disclose any error of law apparent on the face of the record. In Joharmal Murlidhar and Co. v. Agricultural Income-tax Officer, the Supreme Court held that the assessments were arbitrary and that the fact that the appellant had not appealed under the Act was a good ground for refusing to give relief to the appellant. But taking into account the amount involved and the simple nature of the proof required, the Supreme Court directed the Income-tax Officer to issue fresh notice to the assessee to produce the Central income-tax assessment orders and if the assessee produced those orders, the agricultural income-tax assessment shall stand cancelled and the officer shall make fresh assessments. If the facts of a case are undisputed and the question of law can be answered without difficulty in favour of the assessee, then the High Court may exercise its discretion in entertaining a writ petition to give a quick relief to the assessee to avoid the delay involved in his resorting to the departmental appeals, etc. But this exception would apply only when the error of law is apparent on the face of the record which, according to the Supreme Court, would mean only such error as would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the writ petition may be entertained even though the alternative remedy is not availed of by the petitioner. In J. S. Parkar v. V. B. Palekar, the whole of the property of the petitioner was attached. The writ petition was allowed to remain pending in the High Court for two years before it came up for hearing. It was then thought by the court that it would cause too much hardship to the petitioner if the writ petition were to be thrown out in limine at that stage on the ground that the petitioner had not availed of the statutory remedies which would be time-consuming and even likely to cause harassment to the petitioner. (7) Infringement of a fundamental right may be caused either by a quasi-judicial order or by a direct executive order. We are here concerned with only the former and not with the latter. It is settled by the decision of the Supreme Court in Ujjambai v. State of Uttar Pradesh, that the order of a quasi-judicial tribunal cannot be attacked on the ground of having infringed a fundamental right in a writ petition filed in the Supreme Court under article 32 of the Constitution. The infringement of a fundamental right cannot, therefore, be a reason to persuade this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of those decisions would, therefore, constitute a sufficient reason why the normal rule should be departed in the two writ petitions before us. The rule was established by a five judges' Bench of the Supreme Court in Lalji Haridas, and we have been recently reminded in Mattulal v. Radhe Lal, that in case of conflict between two decisions of the Supreme Court, the decision of a larger Bench would prevail against the decision of a smaller Bench even if the latter was subsequent to the former. These decisions may, however, explain that the petitioners may have thought that their writ petitions may be admitted as some others had been previously admitted without this court raising the preliminary question of alternative remedy as a condition precedent to admission. The petitioners have not filed appeals under section 253. If they were to file the appeals now and wish to advance the above reason as being a sufficient cause for the delay in filing the appeals, we may also mention that on 24th of June, 1974, when the writ petitions were first filed, interim stay of operation of the impugned orders was granted by this court in both the writ petitions. This stay would come to an end only b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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