Anil Kumar Malhotra V. Union of India and Others

WPMS/1506/2022

AI Insights

Anil Kumar Malhotra filed multiple writ petitions challenging the assessment orders issued by the Union of India for the financial years 2013-14 to 2017-18. These challenges were based on the rejection of his stay applications by the appellate authority, which required a 20% deposit of the disputed tax demand as a precondition for interim relief, according to an Office Memorandum dated 29th February 2016. The High Court found that the petitioner had already availed the statutory remedy of appeal, which was pending, and thus could not simultaneously challenge the assessment orders through writ petitions. The court emphasized that the tax law provides specific statutory remedies, and the principles of natural justice, while fundamental, do not override the statutory framework in this context.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 692507 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 29-06-2022
• Assessment Year: misc
• Other Referred Cases: SPL Gold India Private Limited Vs. Asstt. Commissioner of Income Tax, Central Circle 4(3), Mumbai & Another, Shubham Thakral Vs. Income Tax Officer, Ward 49(1), Delhi, MMG Constructions LLP Vs. Union of India & Others
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PANKAJ RASTOGI; HARI BHATIA
• Assessee Lawyers: ARVIND VASHISTH; HARSH DHANIK
• Keywords: Assessment Order; Interim relief; Natural Justice; Review; Revision; Stay Application
• Section: 147; 271(1)(c); 271(1)(b); 264; 144B; 254(2)(a)

Judgement Text

"HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition (M/S) No. 1496 of 2022 Anil Kumar Malhotra … Petitioner Vs. Union of India and Others … Respondents And Writ Petition (M/S) No. 1499 of 2022 Anil Kumar Malhotra … Petitioner Vs. Union of India and Others … Respondents And Writ Petition (M/S) No. 1504 of 2022 Anil Kumar Malhotra … Petitioner Vs. Union of India and Others … Respondents And Writ Petition (M/S) No. 1505 of 2022 Anil Kumar Malhotra … Petitioner Vs. Union of India and Others … Respondents And Writ Petition (M/S) No. 1506 of 2022 Anil Kumar Malhotra … Petitioner Vs. Union of India and Others … Respondents Advocates : Mr. Arvind Vashisth, Senior Advocate, assisted by Mr. Harsh Vardhan Dhanik, Advocate, for the petitioner Mr. Pankaj Rastogi, Standing Counsel, for the Union of India Mr. Hari Mohan Bhatia, Advocate, for the respondents. Hon’ble Sharad Kumar Sharma, J. In each of these writ petitions, the petitioner had questioned the Assessment Orders, as it had been passed by the respondents for the assessment years 2016-17, 2015-16, 2014-15, 2013-14 and 2017-18 respectively, as it engages 2 consideration in all the writ petitions, referred to above. As a consequence of the proceedings, which was drawn under Section 147 to be read with Section 144B of the Income Tax Act, as passed by respondent No. 4, assessing the petitioner’s the consequential recovery of penalty has been resorted to by initiation of the proceedings under Section 271(1)(b) and Section 271(1)(c) by the impugned orders passed by the respondents. 2. It is not in controversy, that as against the respective Assessment Orders for the respective Financial Years referred to in the relief ‘a’, of each of the writ petitions, the petitioner had already invoked an Appellate Forum, and has filed an Appeal, which are still pending consideration before the appellate authority, and has not yet been adjudicated on its own merits. 3. During the pendency of the Appeal itself, the petitioner herein had filed a Stay Application, for the grant of an interim relief, as against the respective Assessment Order, which was the subject matter of judicial scrutiny, before the Appellate Forum, but the Appellate Authority had declined to grant an interim order, on the ground, that as per the Office Memorandum No. 404/72/93/ITCC, as it had been issued by the Ministry of Finance on 29th February 2016, it stipulated a precondition, that on a preference of an Appeal against an order of assessment, the pre-condition for 3 the grant of interim relief would be subject to depositing of the 20% of the disputed demand of tax, where the demand is contested before the CIT(A). Consequent to non-fulfilment of the conditions, as provided by the Office Memorandum dated 29th February 2016, the Stay Application of the petitioner has been rejected by the Appellate Authority, by one of the impugned orders, which are under challenge in the present writ petitions. 4. In accordance with the Policy itself, if sub-clause (c) of clause (4) of the Policy is taken into consideration, it provides, that if an assessee is aggrieved by the approach of the CIT(A) or CIT itself, he may either prefer a Revision or a Review of the decision taken by the Assessing Officer. Even otherwise also, as per Section 254(2)(a) of the Income Tax Act, which reads, that when the Appellate Tribunal considers an application on merits, and passes an order of stay of any proceedings or the recovery as a consequence thereto, if there is any grievances left to be agitated, which in the instant case is, as against the rejection of the stay application, which was filed before CIT(A), the recourse available to the petitioner would be, to prefer a Revision, because the nature of order, as it had been passed by the learned Appellate Authority, would be falling for a subject matter of consideration in the exercise of its revisional powers under Section 264 of the Act, which is wide enough to include within it any order, which is passed by any 4 Authority, subordinate to the Principal Chief Commissioner or the Chief Commissioner of the Income-Tax. 5. In view of the provisions contained under Section 264 to be read with sub clause (C) of Clause 4 of the office memorandum dated 29th February 2016, and particularly, in the light of the fact, that when the petitioner has already submitted himself to the appellate jurisdiction by filing of an appeal, which he has already been pursued on merits, and pending consideration, carving out an exception of filing of a writ petition, under the garb of rejection of the stay application by the appellate authority by putting a challenge to the rejection of the stay application and then questioning the Assessment Order, under the garb of it, this Court is of the view that, it would amount to that the petitioner has attempted to have a resort to two judicial forums and remedies i.e. simultaneously for redressal of his grievances as against the principal Assessment Order, which under any legal perception is not permissible in the eyes of law. 6. In order to assess the argument, which has been extended by the learned counsel for the petitioner, that irrespective of the fact of pendency of his Appeal before CIT(A), still he could question the propriety of the Assessment Order in the writ jurisdiction, under Article 226 of the Constitution of India, on the ground that the Assessment Order, itself happens to be in flagrant violation 5 of the principles of natural justice, is not acceptable by this Court, for the reason being that the Taxing Law, has had to be tested under a different judicial procedural pedestal, when it relates to a revenue. The “Appeals” under the taxing law, would always fall to be a “statutory remedy”, and not an “alternative remedy”. The two terminologies, where the legislature has used the word “appeal”, against an order of assessment, it would always denote to a statutory remedy under an Act, which the petitioner has availed, and hence he cannot be permitted to be revert back and argue that despite pendency of his Appeal against the Assessment Order, still he could invoke Article 226 of the Constitution in of India, to question the Assessment Order, the issue which is sub judice before the appellate authority on the pretext, that when an order is suffering from the vices of the principles of natural justice, it could always be left open scrutinized by the writ Courts under Article 226 of the Constitution of India. 7. In fact, this argument as has been sought to be impressed upon by the learned counsel for the petitioner, by making reference to three judgements, which have been rendered by the Division Benches of the different High Courts, with regard to the scope of interference by the High Courts, against the Assessment Order, passed under Section 143 (3) of the Income Tax Act. 6 8. The first judgement, which has been referred to by the learned counsel for the petitioner is that as rendered by the High Court of Judicature at Bombay, in Writ Petition No. 1368 of 2021, SPL Gold India Private Limited Vs. Asstt. Commissioner of Income Tax, Central Circle 4(3), Mumbai & Another, where the Division Bench of the Bombay High Court, by the judgement dated 28th October 2021, has ventured into the matter, and in view of the observations, which had been made in para 4 of the judgement, which is extracted hereunder, the Court has remitted the matter back for consideration to the Assessing Officer, to decide afresh, after making an observation, that the Assessment Order was passed without granting of an opportunity of hearing. “4. With the Assistance of Dr. Shivaram and Mr. Suresh Kumar, we have gone through the Petition and the documents annexed thereto. We have also considered the Assessment Order. It is true that between 20/05/2021 and 25/05/2021 there was a lockdown in Mumbai and 22/05/2021 and 23/05/2021 were holidays. Therefore, even with a superhuman effort, Petitioner would not have been able to file the huge number of documents called for in the short period granted and therefore, passing of the Assessment Order without granting sufficient time to Petitioner is certainly violative of the principles of natural justice. We are inclined to quash the Assessment Order dated 25/05/2021 which we hereby do. The matter is remanded for de novo consideration.” 9. This may not be factually the same situation, which is prevailing herein in these writ petitions. Granting of an opportunity of hearing, and its gravity of opportunity, will 7 always and would always, be based on a subjective consideration, in each of the respective cases. Before the Bombay High Court, as it could be inferred from the observations made in para 4, which has been extracted above, there it was a case, where the Assessment Order, was challenged, when it was passed without granting of any opportunity of hearing or time, to raise any objection. 10. With all due reverence at my command, and with a respectful disagreement of Division Bench’s judgement, the aspect of an “alternative remedy” or a “statutory remedy”, in the context in which this Court has already observed above, as to whether the remedy under taxing law, would not be an alternative remedy but rather a statutory remedy, was not an aspect, which was even addressed to by the Division Bench of the Bombay High Court, and that too, particularly, when the petitioner’s action for putting a challenge to the Assessment Order by preferring of statutory appeal, on the basis of his own wisdom, has already been questioned in an Appeal, which is pending consideration before appellate authority. Hence, I am not in agreement to apply the ratio, as decided by the Bombay High Court, in the judgement dated 28th October 2021, as it happens to be under altogether a different and distinct prospective and circumstances of that case. 8 11. The second judgement, which the learned Senior Counsel for the petitioner has made reference to, is a judgement, which has been rendered by the Division Bench of the Delhi High Court on 3rd June 2022, in the matters of Shubham Thakral Vs. Income Tax Officer, Ward 49(1), Delhi as decided in W.P.(C) 9293 of 2022. In fact, the reasons for remanding the matter therein, as observed in para 3 and 4, was based on the basis of the logic which had been assigned in para 3, on the ground that the notice of demand which was issued under Section 148A(b) of the Income Tax Act of 1961, was providing a period of less than seven days for filing a response to it. Para 3 and 4 of the aforesaid judgment is extracted hereunder:- “3. Learned Counsel for the Petitioner relies on the decision of this Court in Shri Sai Co-operative Thrift and Credit Society Ltd Versus ITO, Ward 43-6 [W.P.(C) No.7385/2022], wherein it has been held that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the Assessee to file its reply to the show cause notice. 4. Issue notice. Learned counsel for the Respondent on instructions states that the Respondent-Revenue has no objection if the present matter is remanded back to the Assessing Officer for a fresh decision in accordance with law.” 12. This is yet again factually a distinct situation altogether, because there, it was a question which was challenging the propriety of the very notices under Section 148A(b) of the Act, because of providing of a lesser time, than that as it was prescribed under a statute for filing a reply. Hence, it would not be applicable, because the 9 Division Bench of the Delhi High Court too has not dealt with the matter, as to whether at all a challenge given to the notice, what would be its impact, qua the availability of remedy under the Act, and quite obviously, once it was a notice, which was put to challenge due to non compliance of the statutory period provided for submission of the reply the matter was remanded. Factually, this case referred to, it was too an absolutely a distinct matter, then what is involved consideration in the present case. 13. The third judgement, which has been referred to by the learned Senior Counsel for the petitioner is a Division Bench judgement, rendered by the Karnataka High Court on 13th December 2021, in the matters of MMG Constructions LLP Vs. Union of India & Others, as decided in Writ Petition No. 21638/2021 (T-IT). In that case, the Assessment Order was put to challenge, which stood concluded therein on 29th September, 2021, on the ground of breach of principles of natural justice. But, what is more important to be considered is, that the Court has ventured into to scrutinize the Assessment Order dated 29th September 2021, based on the breach of principle of natural justice, under the garb of the fact, and as to the manner, in which the relief was modulated before the Division Bench of Karnataka High Court, whereby, filing of the writ petition, the provisions of sub Section (8) of Section 144B of the Income Tax Act, the vires of which, has been put to challenge, which quite 10 obviously, would only fall for consideration within the domain of exercise of powers under Article 226 of the Constitution of India, and not by the Appellate Court created under the Act. 14. Hence, in that view of the matter, the Karnataka High Court’s judgement, too was altogether under a different prospective, where under the garb of challenging the vires of the provisions of an Act, the Assessment Order was put to challenge and there a question of alternative remedy was though considered, but in view of the observations made in para 5, it was observed that since the vires has been put to challenge, and the learned counsel, before the Division Bench of the Karnataka High Court undertook to withdraw the Appeal, the Division Bench of the Karnataka High Court has ventured into the matter on merits, para 5 is extracted hereunder:- “5. Learned counsel for the petitioner placing reliance on the judgment of the High Court of Bombay in the case of Vodafone India Limited -vs- Union of India' as well as the ruling of the Hon'ble Apex Court in the case of Magadh Sugar and Energy Limited -vs- The State of Bihar and Others and the Circular No. F.No.225/97/2021/ITA-II dated 06.09.2021 submitted that the case on hand would fall under the exception to the rule of alternative remedy for violation of principles of natural justice. The notice issued on 28.09.2021 was generated at 5.46 p.m. and the short notice was provided to file objections by 29.09.2021. The petitioner - assessee has filed its reply on 29.9.2021. The Assessing Officer without considering the same has proceeded to pass the impugned assessment order under Section 143(3) of the Act, which is accompanied with notices issued under Sections 156, 274 read with 270A and 271AAC(1) of the Act. The status of the petitioner has been mentioned as \"non- resident\" in the impugned assessment order. Again a Corrigendum was issued on 30.09.2021 stating that assessment has been framed under Section 144 of the Act instead of Section 143(3) of the Act. Hence, learned counsel 11 submits that notwithstanding a statutory appeal filed against the impugned assessment order, the same being in gross violation of the principles of natural justice, the writ petition is maintainable. However, learned counsel undertakes before the court that the appeal filed by him before the Commissioner of Income Tax (Appeals) would be withdrawn subject to the assessment order impugned is annulled by this court and restored to the file of the Assessing Officer.” 15. This Court, before the learned Senior Counsel for the petitioner attempted to address the Court on the respective Assessment Orders, based on the alleged grounds of being in violation of principles of natural justice and that too, under the circumstances of the cases, where his own Appeal is pending consideration before the CIT(A), had opened the argument, subject to the condition that the petitioner withdraws his Appeal, because as against the same order, he cannot be permitted to take the liberty to agitate his grievances between the two parallel Forums, but in the absence of the instructions, the learned Senior Counsel for the petitioner, was not in a position to give any undertaking, as such. But, still he addressed that since the order being in violation of the principles of natural justice, it could always be scrutinized by the writ Courts, in the light of the judgements, referred to above. 16. If that be the situation, the bona-fide of the petitioner would have been explicit. If the petitioner would have challenge the respective Assessment Order, straight away before the High Court, without preferring an Appeal and without even waiting for rejection of the stay application in 12 the pending Appeal. Under the garb of rejection of the Stay Application, in a pending Appeal by the impugned order dated 2nd June 2022 (Annexure 5 to the WPMS Nos. 1496/2022, 1504/2022, 1499/2022 & 1506/2022), and in WPMS No. 1505 dated 13.06.2022 (Annexure 5 to the writ petition), he cannot take the liberty to argue, that an alternative remedy is not an absolute bar in view of the judgements referred to above. 17. Apart from it, since as against the Policy itself, particularly, as per sub-clause (c) of clause 4 of the Office Memorandum dated 29th February 2016, to be read with Section 264, which is wide enough to encompass within itself and the orders, which are passed on the Stay Application, if harmoniously the two provisions provided under the office memorandum to be read with Section 264 of the Act, is taken into consideration, the petitioner’s statutory remedy which would be available to him would be, to file a Revision, against the order of rejection of his stay application in a pending appeal. 18. In view of the aforesaid, this Court is not inclined to interfere in the writ petitions at this stage, however it will be a liberty left open for the petitioner, to put a challenge to the impugned order of rejection of his stay application before the revisional forum, provided under the Office Memorandum, as well as under the Act. 13 19. Subject to the aforesaid the writ petitions stand dismissed. 20. Lastly, it was requested by the learned Senior Counsel for the petitioner, that it may be made clear that the observations made by this Court, may not be construed by the Appellate Court, that this Court has expressed any opinion on the merits of the Assessment Orders, which are still left to be decided in the pending Appeals on its own merit. (Sharad Kumar Sharma, J.) 29.06.2022 Mahinder/ "